It's hard to find under-the-radar video game companies in the public markets. With so much consolidation in the industry, there just aren't that many stocks left to buy. But over the past few years, investors have gotten increasingly bullish on new-age video game companies like Roblox and Sea Limited, and even back-end development platforms like Unity.

Traditional studios and publishers haven't gotten much love. That's why I think many of these legacy studios are underappreciated by investors right now. Two top examples are Electronic Arts (EA 0.42%) and Take-Two Interactive (TTWO -0.31%). Here's why you can buy both stocks and hold on for solid returns over the next decade. 

A person holding a gaming controller.

Image source: Getty Images.

1. Electronic Arts

Electronic Arts (EA) is a large conglomerate of various gaming studios and publishing arms. It is well-known for its sports franchises like FIFA Soccer and Madden NFL, but it also publishes many popular non-sport franchises like The Sims, Apex Legends, Battlefield, and a variety of Star Wars games. 

While the diversification is helpful in smoothing out revenue each year, the two most important franchises for EA are FIFA Soccer and Apex Legends. FIFA is the most popular sports game around the world and was the top-selling game in the Western world in 2021. The continued growth of FIFA has helped the EA Sports division grow net bookings (the video game equivalent for revenue) by 10% year to date at the end of December for the fiscal year that ended this March.

Apex Legends is smaller than FIFA, but it's the fastest-growing of EA's franchises. The free-to-play battle royale game grew users 30% year over year last quarter, with net bookings expected to reach close to $1 billion this fiscal year. For reference, EA is guiding for $7.5 billion in consolidated net bookings for the year.

Management is guiding for $1.9 billion in operating cash flow this fiscal year. At a market cap of $35 billion, that gives the stock a price-to-operating-cash-flow (P/OCF) ratio of 18.4, or below the market average. With the expected growth of the gaming industry from $178 billion in consumer spending last year to $269 billion in 2025, EA's durable sports franchises, and the fast-growing Apex Legends, I think EA stock can be a quality investment over the next decade. 

2. Take-Two Interactive 

Unlike EA, which has a basket of diversified gaming assets, Take-Two focuses on investing heavily in a few key franchises that drive revenue. Right now, these are Grand Theft Auto (GTA), Red Dead Redemption, and NBA 2K

The NBA 2K franchise is similar to most sports games, releasing a new version each season that creates a durable and growing revenue base. However, GTA and Red Dead Redemption are a lot different, taking many years in between game releases. This makes it crucial for Take-Two to execute when releasing these games since they need to generate revenue for many years. Luckily, Take-Two may have the best track record in the industry for putting out high-quality games. For example, the last two releases in both the GTA and Red Dead Redemption franchises make the list of the top 10 best-reviewed games of all time.

Specifically, GTA V has been an absolute blockbuster for Take-Two since its release in late 2013, selling 160 million units over its lifetime. This makes it the top-selling game of the last decade. On top of the premium title, Take-Two has built a recurring business with GTA Online, a virtual multiplayer world for GTA fans. GTA Online makes money through microtransactions when players purchase virtual currency and goods.

I also shouldn't forget to mention Take-Two's recent acquisition of Zynga for $12.7 billion, which is expected to close later this Spring. This is a huge purchase for a company of Take-Two's size (current market cap of $16 billion) and will allow it to enter the mobile gaming and advertising space. There is a lot of uncertainty around what the combined businesses will look like a few years down the line, but with Take-Two's strong track record of success over the past decade, I am confident it can make it worthwhile for shareholders.

With the lumpiness of revenue and the acquisition of Zynga, it is tough to value Take-Two's business. We don't know when GTA VI will come out, but when it does, sales growth will hopefully accelerate if the game is well-received. But even though there is uncertainty, I am confident Take-Two can be a strong investment over the next decade because of the broad growth of the video game industry and the company's phenomenal track record of producing well-loved content.