The global video game market size was valued at approximately $217.06 billion in 2022 and is anticipated to grow at a compound annual growth rate of 13.4% from 2023 to 2030. This growth is largely driven by advancements in online gaming.
Online gaming dominates the market, attributed to increased internet penetration and the popularity of massively multiplayer online and free-to-play games.
Moreover, the industry is seeing a shift towards subscription-based models, with platforms like Xbox Game Pass by Microsoft (NASDAQ:MSFT) and Apple’s (NASDAQ:AAPL) Apple Arcade.
This means that the gaming industry is becoming more lucrative due to some of these firms being evaluated the same as tech stocks are, due to their monthly recurring revenue streams.
We might be at an inflection point soon when these companies take off. So here are three gaming stocks for investors to consider.
Roblox (RBLX)
Roblox (NYSE:RBLX) has proven to be a resilient name in the gaming industry, and it has only just begun to mark its dominance in the industry.
Unlike traditional gaming platforms that rely on a set catalog of games, Roblox allows users to create and monetize their own gaming experiences.
Starting out as a gaming platform for kids, it has since considerably broadened its demographic and expanded its monetization features. This includes the expansion of its developer subscription services and advertising programs, which saw substantial brand engagements with 69 major brands in Q4 2023.
Additionally, the company is enhancing its platform with new AI-driven features, such as real-time AI chat translation and AI-powered tools for 3D content creation.
Given how many dedicated communities on Roblox there are and its expanding monthly recurring revenue, Roblox will be in a great position to scale its userbase in the future and reach higher levels of profitability. This then makes it one of those gaming stocks to buy.
Unity Software Inc (U)
Unity Software Inc (NYSE:U) dominates the game engine market, especially for mobile games, and also has significant shares in PC and VR and AR markets.
It should also be noted that Unity is a popular game engine of indie developers. So, even if one has a less bullish forecast on AAA publishers’ ability to outperform, Unity covers one-man bands, as well as small teams. Mobile gaming is its obvious strength, and VR and AR are strong potential growth areas.
For 2024, Unity is concentrating on expanding its core business areas, including enhancing AI integration within its development tools and launching new multiplayer projects.
Unity 6, a major update, is set to launch in fall 2024, promising improved performance and expanded features for developers. Additionally, Unity Muse, an AI-powered development platform, will be integrated directly into the Unity Editor.
Finally, the consensus price target among analysts is $37.03 for Unity to be reached within the next twelve months, which represents a potential upside of 61.64% from its current price.
Electronic Arts (EA)
Electronic Arts (NASDAQ:EA) is a major player in video game development and publishing, known for popular titles across various genres like sports, such as FIFA and Madden NFL, first-person shooters and simulation games.
Although some committed gamers point out EA’s reputation for rehashing the same games every year, as in the case for its blockbuster sports franchises, combined with the morally debatable practice of loot boxes and pay-to-win dynamics, EA has managed to stand the test of time as a business.
EA also recently adjusted its workforce, reducing it by 6% and implementing restructuring charges expected to range from $170 million to $200 million. This move aligns with broader industry trends €” a smaller team in the future is why you should be bullish on EA.
EA forecasts net revenue to range between $7.3 billion and $7.7 billion this year, and net income is projected between $947 million and $1.087 billion. Diluted earnings per share are expected to lie between $3.42 and $3.92. This puts it around the results of last year, but the efficiencies of having a smaller workforce could unlock greater value in the long run.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.