The video game industry is constantly evolving. PC and console games are becoming more graphically advanced, digital distribution platforms are displacing brick-and-mortar players, and the number of mobile games is surging.
But there are also disruptive forces within this industry that are changing how games are played. Let's examine four of those disruptors -- Nintendo (NASDAQOTH:NTDOY), Sony (NYSE:SNE), Microsoft (NASDAQ:MSFT), and Tencent (NASDAQOTH:TCEHY).
The wild card: Nintendo
Many investors left Nintendo for dead after the Wii U failed to match the sales of its predecessor, the Wii, or catch up to Microsoft's Xbox One and Sony's PS4. But Nintendo pulled a rabbit out of the hat earlier this year with the Switch, a hybrid console that doubles as a portable device and a home console.
The Switch wasn't as powerful as the Xbox One or PS4, but its flexible form factor and desirable first-party games like The Legend of Zelda: Breath of the Wild and Mario Kart 8 made it the fastest-selling console this year.
Nintendo reported that it sold 4.7 million units in late July, which outpaced both the initial launches of the 3DS and Wii U during their first four months on the market. NPD also recently reported that it outsold the PS4 in July.
If the Switch's popularity continues rising, we could see other companies launch similar hybrid devices, which would likely prioritize modular designs over raw horsepower.
The VR pioneer: Sony
Facebook's (NASDAQ: FB) Oculus Rift and HTC's Vive are reportedly struggling due to their high price tags and the requirement that users have high-end PCs. But Sony's PlayStation VR is faring well, with sales of over a million units since its launch last October.
That figure might seem low relative to the 61 million PS4s it sold across the world so far, but it actually represents a solid foothold. Back in February, SuperData estimated that Facebook and HTC had respectively sold just 240,000 and 420,000 headsets.
The success of the PSVR is easy to comprehend. It has the lowest price tag ($399 with the camera included) of a high-end headset and requires the least expensive hardware -- a new PS4 currently costs around $300, while the PS4 Pro costs $400. As a result, many game publishers are now adding PSVR-exclusive features to their games -- which could finally push VR gaming into the mainstream market.
The AR innovator: Microsoft
Microsoft hasn't launched a VR headset for the Xbox One, but it's been investing heavily in the AR market with HoloLens. The HoloLens projects digital objects onto real-world ones by sensing depth, edges, and surfaces. As a result, gamers can play Minecraft on coffee tables or shoot virtual enemies in their living rooms.
Microsoft hasn't commercially launched the HoloLens yet, but developers have already unveiled AR demos of Portal and Pokemon Go with impressive results. Other native games, like the detective thriller Fragments and shooters RoboRaid and Vivo, also demonstrate the possibilities of playing holographic games in real-world environments.
The social gamer: Tencent
Chinese tech giant Tencent is the largest video game publisher in the world. It owns the e-sports favorite League of Legends, and its portfolio of mobile games include massively popular games like Clash of Clans and Honor of Kings. Tencent also owns WeChat, the largest mobile messaging app in China with nearly a billion monthly active users.
Tencent united those two ecosystems via "social gaming" in WeChat. Players log in to its latest mobile games with WeChat or QQ, Tencent's older PC-based messaging platform. Their rankings are then automatically displayed to their WeChat and QQ friends, which encourages competition and promotes the game to new players.
We've seen Facebook try this before with single sign-ins for mobile games and mini-games in Messenger, but the world's biggest social network still doesn't own a vast portfolio of games like Tencent.
The key takeaways
Some casual gamers might assume that "gaming" merely consists of using a controller or swiping a smartphone screen. Yet new form factors like the Switch are blurring the lines between console and portable games, VR and AR headsets could change how we interact with games, and social gaming platforms could keep games relevant longer while expanding a gamer's social network. These trends should all make the video game industry a fascinating one to watch over the next few years.
Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Leo Sun owns shares of Tencent. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.