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The State Of Video Game Stocks In 2016

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March 20, 2016 – Comments (0) | RELATED TICKERS: NTDOY , ATVI , EA

With the start of 2016 we are entering a new age of digital emersion as game consoles seemingly become more and more popular with each passing year. In 2015 we saw strong growth numbers from the interactive entertainment and multimedia & graphic software industries with companies continuing to progress into untapped markets. As we continue to stretch into the first quarter of the year, here are three video game stocks to keep an eye on in 2016.

Nintendo

The legendary Japanese interactive entertainment company that has created such influential franchises as Mario and The Legend of Zelda has unfortunately, seen a drop in sales for the better part of the past five years. Now, whether this is due to the failure of the Wii U system(12.6 million units sold; 25 million projected) or their recent lack of innovation(HD remake releases), the bottom line is, the household name has not seen tremendous success since the release of the Wii. In fact, since the release of the Wii system in 2007, Nintendo's ($NTDOY) share price has seen a steady drop from $77, at its peak, to around $17 a share, where it remains today. However, as investors, we still may have reason to trust Tatsumi Kimishima and the team based out of Kyoto. Even with the relative disappointment that the Wii U was, the stock price did not suffer as it should have; this could give us insight into the market's allegiance to the company's future success. So what is there to look forward to? How about a new system. Though we only have limited details at the moment, Nintendo is expected to unveil the Nintendo NX sometime in the near future; the system is rumored to be a step away from both versions of the Wii. Don't doubt the innovative ability of Nintendo, but consider a sense of urgency as the company races to keep pace with the likes of Microsoft and Sony.

Activision Blizzard

Activision Blizzard($ATVI) is and has been a leading player in the quickly growing interactive entertainment software industry. This company's portfolio includes some of the biggest names in gaming: Call of Duty, Guitar Hero, and World of Warcraft just to name a few. With the Call of Duty franchise, for example, growing in sales with each edition, Activision Blizzard has managed to post an average net profit margin of 19% over the past three years. And, just last month, the company managed to complete an acquisition of King Digital Entertainment, making Activision Blizzard the largest game network in the world with a cool 500 million users. With their recent acquisitions, alongside a continued urge to push into emerging markets, there should be no doubt in this group's desire to push the technology sector even further in 2016.

Electronic Arts

Alongside Activision Blizzard, EA’s($EA) video game portfolio is certainly no slouch. With FIFA and Madden among their sports titles and Battlefield and Sims among their non-sports titles, this company stacks right up against their fellow industry giants. However, in the past few years or so, the company has suffered at the hand of controversy. In 2013, Electronic Arts was named "Worst Company in America" for the second year in a row by Consumerist readers, a feat since matched by the internet's notorious super-villain, Comcast. Releasing unfinished games(Battlefield 4) riddled with bugs and glitches is one way to tick of consumers, but does the title hold true to the company's performance? Well, considering EA posted record earnings(4.5 billion from 3.5 billion in 2014) this past fiscal year, I would think not. If they can sustain this type of growth while avoiding the controversy they've experienced in the past, I see no problem with this company growing their brand to new heights this year, much like they have done previously.

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