People are spending a lot of time playing video games these days. And I do mean a lot. 

Electronic Arts(NASDAQ:EA)saw gameplay hours for Madden NFL 15 jump 30% last quarter as compared to the prior year. And gamers spent an average of three hours per day playing Destiny in the first few months after launch, according to publisher Activision Blizzard(NASDAQ:ATVI).

Those banner engagement figures powered a massive profit spike at both gaming companies. EA managed an all-time high 68% profit margin last quarter, while Activision posted 51% higher earnings -- a record $1.42 per share. But whereas EA shares surged by over 100% in the past year, Activision stock has hardly budged.

So, does that make the owner of the Call of Duty and Skylanders franchises the obvious investment choice from here? Let's compare the two biggest publishers in the video game industry, starting with a few key statistics:

Metric Activision EA
Market cap $16 billion $18 billion
Revenue $4.4 billion $3.6 billion
Sales growth (4%) (6%)
Profit margin 65% 68%
P/E ratio 20 23
P/S ratio 3.7 4.3

Revenue and sales growth are based on the last complete fiscal year. Profit margin is trailing 12 months. Source: Company filings

Broadly speaking, Activision looks like the cheaper investment. You can buy it at a discount to EA whether you are considering price-to-earnings or price-to-sales multiples. In fact, Activision has EA beat on all of the major metrics except one: profitability.

Electronic Arts is winning the digital war
Profitability has been the main driver behind the amazing gains EA shares have enjoyed the past year. Gross profit margin is up from 58% of sales in 2011 to a projected 71% this year. The company even beat its larger rival on this key metric last quarter.

EA Gross Profit Margin (TTM) Chart

EA Gross Profit Margin (TTM) data by YCharts.

EA managed that feat through a few big wins, including its best yet Dragon Age game launch and solid improvements in the FIFA, Madden, and Sims franchises. But the biggest reason for the profit bounce has been its success with downloadable content sales. 

Digital revenue accounted for a record 49% of sales last quarter, up 35% from the prior year. And on a trailing 12 month basis, those highly profitable digital sales now represent more than half of EA revenue. The trend promises to keep lifting earnings higher in the next few years.

Source: Bungie

Activision Blizzard expands its portfolio
Activision is also benefiting from that digital shift: The channel was responsible for 46% of sales in the past year, up 50% from 2013. That is particularly impressive when you consider how much revenue Activision gets from retail toy sales tied to its Skylanders kids franchise. 

But the best reason to like Activision Blizzard right now is its growing portfolio of AAA game brands. At the beginning of 2014, just three franchises, Call of Duty, World of Warcraft, and Sklyanders, accounted for the vast majority of sales and profit. 

But with Destiny and Hearthstone added to the mix last year, and with Heroes of the Storm, Overwatch, and Call of Duty Online slated for 2015, the portfolio will be packed with 10 blockbuster franchises by the end of this year.  

Foolish wrap
While both businesses are performing well, I believe Activision Blizzard is the better investment. Yes, EA profitability should march higher, particularly as it rings the register on the recent Battlefield: Hardline release. However, those profit gains seem to be reflected in a stock that is now valued at 23 times trailing earnings, up from 17 times just three months ago.

The valuation gap alone suggests that Activision will outperform its smaller publishing rival over the next five years. Investors now have two great choices if they want diverse exposure to the surging video game market. But they can get that exposure at a comparative steal through Activision.