Investing in Video Game Stocks

Video game developer and publisher Capcom is thriving, thanks to successful releases that have strengthened its key franchises and produced impressive sales and earnings growth. In addition to its Resident Evil and Monster Hunter franchises, the company's properties include Mega Man, Devil May Cry, and Street Fighter. Capcom also has a deep library of lesser-known but beloved classic games.

There are many reasons to like this longstanding business, which has been a video game industry stalwart for decades and created some of the medium's most memorable gaming experiences. Capcom's remake of Resident Evil 4 had topped 9 million units sold through December 2024 since its March 2023 launch, and the company's ability to tap into its library of classic games and series makes it one of the most promising players in the industry.

Capcom pays a dividend and, through its dividend payments, aims to return roughly 30% of its annual profits to shareholders. Earnings can be erratic in the video game industry, but Capcom's management clearly prioritizes returning cash to shareholders.

Microsoft is primarily a productivity software and cloud computing company, but the tech giant is also one of the most prominent players in the video game industry. Microsoft is behind the Xbox game console, its Windows operating system is the de facto standard for PC gaming, and it owns a wide variety of game studios.

Microsoft owns Minecraft developer Mojang and Elder Scrolls developer Bethesda, and it also acquired video game juggernaut Activision Blizzard in a blockbuster $70 billion deal, winning a final appeal by the Federal Trade Commission in May 2025. Activision Blizzard owns some iconic franchises, including Call of Duty, World of Warcraft, and Candy Crush.

Activision is an early leader in the esports space, and it has a major presence in mobile games. Perhaps most important for Microsoft, the Activision acquisition gives it a much stronger hand as tech companies race to develop and dominate the metaverse.

Nintendo is a pioneer in the video game console industry. The Japanese company launched its Nintendo Entertainment System in the 1980s, following it up with a series of popular systems. The Switch console has sold more than 152 million units worldwide since its launch in 2017, and the Switch 2 system is poised to power a major new growth phase for the company.

Nintendo is notable for making many of the most popular games on its own systems. Iconic franchises such as Mario, Zelda, Super Smash Bros., Animal Crossing, and Pokemon have spawned an endless series of games and hundreds of millions of unit sales over the years.

The staying power of Nintendo, despite all of the changes in the gaming industry over the past few decades, makes it one of the best video game stocks to own.

The video game industry is a large, growing sector that still has significant long-term expansion potential. While performance for leading companies in the space tends to be hit-dependent and somewhat cyclical, the future looks bright for the video game industry.

Take-Two Interactive's valuation has grown rapidly due to stellar performances by its core franchises. Grand Theft Auto is the company's biggest and most important property, and, as a series, one of the most profitable in all of gaming entertainment. Take-Two's Red Dead Redemption series has been very well-received, and its NBA 2K basketball series is a leader in the sports game category. The company also owns a variety of smaller series and other development initiatives that help to drive growth.

Game development is typically complicated and resource-intensive, but the development studios of Take-Two's top franchises have repeatedly delivered outstanding products. Take-Two is skilled at delighting players and sparking high levels of both engagement and in-game spending. The company's strong financial position enables it to aggressively pursue new growth opportunities in categories such as mobile games and esports.

Take-Two also used its strength in 2022 to acquire mobile and social gamemaker Zynga in a $12.7 billion deal. Bringing Zynga under its umbrella added slate of popular mobile franchises to its portfolio and is allowing the company to leverage Zynga's expertise in free-to-play games.

Founded in 1982, Electronic Arts continues to play a defining role in the progression of the interactive entertainment industry. It's the second-largest video game company by revenue and maintains a leading position in the sports subgenre of gaming.

The pioneering game publisher owns popular licensed franchises, including Madden NFL and its EA Sports FC soccer game, in addition to a stable of high-profile original assets, including The Sims, Apex Legends, Battlefield, and Dragon Age. Electronic Arts is also positioning mobile games and in-game advertising as key growth drivers.

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Video gaming is likely to continue to grow

People love all kinds of entertainment, and video games offer a broad range of experiences that can be uniquely compelling. The global popularity of video games will likely continue to grow in the coming decades, providing leading game publishers with many opportunities to reach new players and expand sales in both developed and emerging markets.

While not all video game companies will continue to produce popular franchises, those leading the development and growth of video games are likely to benefit the most from the ongoing rise of gaming.