The video game industry has seen an uptick in consolidation in 2022 as some large companies took the opportunity to add gaming studios to their list of operations. Microsoft (MSFT 0.74%) started the year by announcing plans to acquire the home of Call of Duty, Activision Blizzard (ATVI), for a historic $68.7 billion. Meanwhile, Sony bought four studios throughout the year, the biggest being Bungie for $3.7 billion. 

While Microsoft and Sony were duking it out to see who would be crowned console king, Take-Two Interactive (TTWO 1.49%) made a promising acquisition to expand its business and diversify earnings. In May, the company purchased mobile gaming titan Zynga for $12.7 billion.

Take-Two and Activision Blizzard are both dealing with some short-term issues as companies and that has actually made their stocks somewhat attractive to long-term investors. Investors looking to add a gaming stock to their portfolio would be right to look at either of these industry-leading companies. But which is the better buy? Let's find out. 

Take-Two Interactive: An excellent long-term outlook

Take-Two's stock has fallen 34% year to date, taking hits from slowing consumer demand for video games and an expensive acquisition leading to a disappointing quarterly report. In the company's fiscal 2023 Q1 report (for the quarter ending June 30), earnings fell short of analysts' estimates, which caused its stock to tumble 6% on Aug. 8. Take-Two's projected bookings of $1.5 billion to $1.55 billion were below Wall Street estimates of $1.73 billion. Meanwhile, its 2023 bookings guidance of $5.8 billion to $5.9 billion didn't quite meet expectations for $6.4 billion.

Despite a falling forecast stemming from "macroeconomic and geopolitical factors," the company remains a solid buy for investors willing to hold for the long term. Take-Two's valuable content library and participation in growing markets make it a business with a lot of potential. 

Take-Two Interactive has made a name for itself in the industry with two of its biggest game publishers: Rockstar Games and 2K. These studios have released megahits like Grand Theft Auto (GTA), Red Dead Redemption, and NBA 2K. Additionally, the 2013 title GTA V has permeated the gaming community like few games before it. After becoming the fastest entertainment product to make $1 billion, GTA V became the most financially successful media title of all time by reaching $6 billion in total revenue in 2018. The Take-Two game continues to earn $911 million a year through new content and microtransactions, which has created a great deal of investor anticipation for the franchise's next installment, expected to release within the next couple of years. 

In addition to promising game releases on the way, Take-Two's recent acquisition of Zynga has seen it enter the lucrative mobile gaming market. Analysts expect the market to rise from $149.5 billion in 2022 to $173.4 billion in 2026, which bodes well for Take-Two's future earnings. With a significant drop in share price in 2022, the game maker's stock is a bargain for investors willing to hold for the long term. 

Activision Blizzard: A possibility of short-term gains 

Activision Blizzard has occupied media headlines this year thanks to Microsoft's acquisition bid. Although the news was announced in January, the purchase is still undergoing a lengthy review process from regulators worldwide. It's one of the industry's most expensive acquisitions, but it's also one of the most scrutinized deals of the year because of antitrust concerns. Microsoft also owns one of the most popular gaming consoles around as well as a few gaming studios.

Microsoft has put out multiple statements over the last few months, reassuring investors that progress on the deal is being made and saying it feels optimistic the deal will close by June 2023.

Activision Blizzard's share price is around $72 as of Oct. 17, and Microsoft has agreed to buy the company at $95 a share. Consequently, pending regulatory approval, an investment in Activision would yield an approximate 32% return at the moment.

Warren Buffett, CEO Berkshire Hathaway (BRK.A 0.58%) (BRK.B 0.38%) apparently has faith in the merger going through. The conglomerate held 68 million shares of Activision at the end of Q2 2022. However, investors should plan to hold the game maker's stock long-term in case the deal fails to get approval. 

Activision Blizzard's most valuable asset is the Call of Duty franchise, with annual spending by its users accounting for about 1% of the entire video game market. The series is immensely popular but has seen a reduction in interest in the last year. In fact, declining player participation was the leading reason Activision's revenue decreased by 25% in the first half of 2022. Activision's next game in the series Call of Duty: Modern Warfare II is set to release on Oct. 28 and anticipation of its arrival could explain some of the decreases. It could also spark increased revenue in the coming quarters.

The company has a strong library of other games as well, such as World of Warcraft and Overwatch, but Call of Duty is unquestionably its bread and butter. Activision's stock will likely dip further if the Microsoft deal does not close, but its strong presence in the industry still makes it an attractive long-term buy. 

Which is the better buy?

If the choice comes down to buying Take-Two or Activision Blizzard stock, the safer option at the moment is Take-Two. Take-Two does not have such an uncertain immediate future and is more likely to rake in significant returns for patient investors.