During the 2008 recession, the gaming industry was often described as a bright spot in the economy and even recession-proof as companies like Nintendo (NTDOY -3.00%) continued to sell millions of consoles and games. However, the introduction of microtransactions and considerable price hikes altered the gaming industry significantly, with some analysts uncertain it can weather an economic downturn as successfully as in 2008.

However, even a $60 game can potentially be played for hundreds of hours and stretch to months of entertainment. Meanwhile, free-to-play games are a bargain for consumers and can be incredibly lucrative for companies using ads and in-game purchases.

With a recession on the horizon in 2023, now might be the perfect time to add a gaming stock to your portfolio. Nintendo, Nvidia (NVDA 3.52%), and Microsoft (MSFT 0.12%) are excellent options worth considering in January.

Nintendo

The new year will see Nintendo enter its 134th year of business, with its stock down 10% year to date. The moderate decline in its shares is impressive, considering its biggest competitors, Sony and Microsoft, have had their stocks fall 39% and 28%, respectively, in the same period. 

As the home of some of the world's biggest franchises -- such as Super Mario, Pokémon, and Zelda -- and best-selling consoles, Nintendo's dominating position in gaming makes it a great stock pick.

In the first half of fiscal 2022, Nintendo reported a 19.2% year-over-year decline in hardware sales, primarily owed to shortages of semiconductors and other components. Despite the reduced hardware figures, the company had a revenue increase of 5.2% to 656.9 billion Japanese yen ($4.4 billion) in the six months ending Sept. 30. Meanwhile, operating income rose 0.5% to 220.3 billion yen ($1.5 billion), and ordinary profit increased 36.4% to 322.4 billion yen ($2.1 billion).

Moreover, the company's Nintendo Switch console hit 114.3 million units sold since first released in 2017, making it the fifth-best-selling console of all time after 2000's Sony Playstation 2, Nintendo's DS and Game Boy between 1989 and 2004, and the PlayStation 4 in 2013. The Switch has been incredibly successful for Nintendo, with a potential sequel in 2023 making its stock an attractive buy this January.

Since 2017, Nintendo has released a Switch console variant every two years, with a Lite version in 2019 and an OLED Switch in 2021. A redesigned sequel in 2023 would significantly boost sales as Switch owners would look to upgrade their current consoles. Along with the launch of multiple highly anticipated game releases, such as the next Zelda installment and The Super Mario Bros. Movie in the new year, January is a great time to invest in Nintendo.

Nvidia

Nvidia's stock plunged 51% since January, as steep declines in the graphics card (GPU) market have sent investors running for the hills. According to Jon Peddie Research, GPU sales have slumped to a 20-year low, and Nvidia's majority 72% market share hasn't reassured Wall Street.

However, Nvidia's stock remains up 170% over the last five years, with other parts of its business offering promising prospects. The company exclusively powers the Nintendo Switch with its system on a chip providing the console's graphics and processing. Increased Switch console sales in 2023 resulting from a redesigned device would grant Nvidia a significant revenue boost.

Additionally, while Nvidia is best known in gaming for its PC contributions with GPUs, it's also home to a booming data center business. In its third quarter of 2022, data centers made up the biggest portion of Nvidia's revenue. The segment earned $3.8 billion, rising 30.5% year over year and accounting for 64.6% of the quarter's revenue.

The GPU market won't be down forever and will likely improve as the economy does. When that does happen, Nvidia will be home to a lucrative position in consoles and a thriving data center business.

Microsoft

Japanese companies have long dominated the gaming industry, with companies such as Sony and Nintendo selling hundreds of millions of consoles since the 1980s. However, Microsoft is the first Western company to truly hold its own as a competitor with its Xbox brand.

The goings were tough when Xbox first started in 2002, but the Microsoft subsidiary has become the fourth-largest gaming company by revenue and plans to become the third-largest in 2023.

In 2017, Microsoft launched its subscription service, Xbox Game Pass, with the goal of becoming the Netflix for games. From 2020 to 2022, the service grew from 10 million to 25 million subscribers -- an increase of 150% -- and has motivated Microsoft to acquire more game developers to fuel the service with engaging content.

In 2021, Microsoft acquired ZeniMax, the parent company of game developer Bethesda, for $7.5 billion and a lucrative library of games, including the Fallout and Elder Scrolls franchises. In 2023, the Windows company wants to purchase Activision Blizzard (NASDAQ: ATVI), the developers of one of the most profitable game series of all time, Call of Duty.

Regulators around the world have held up the deal as they investigate antitrust concerns. However, if the purchase succeeds, Microsoft will be the world's third-largest game company and have a compelling piece of content to attract gamers to its consoles and subscription service.

With a steadily growing games business and strong positions in other lucrative industries, Microsoft makes a great investment in January.