The video game business has changed sharply in recent years, and its outlook remains strong. Here are the investments with the most promise.
Few industries have changed as sharply as video games over the past 15 years. Technology has advanced at speed, while gaming culture and player habits have spread far beyond their earlier boundaries. "The behaviours and culture have grown and expanded exponentially, and there has been a constant stream of changes that has made the industry exciting," says Greg Weller, head of gaming partnerships at Generation Media. Much of that change has been positive. Gaming now stands as "an established, mainstream constituent of the entertainment industry"; an estimated 3.6 billion people worldwide play games in some form, according to Gavin Smith, a senior commercial banker at Arbuthnot Latham.
However, Smith warns that higher development costs, tighter regulation, and players' focus on a small group of major franchises may curb that growth. Artificial intelligence has "significant transformative power" as well, but it is still too soon to know whether its effect on the sector will be positive.
The industry's reputation as "recession-resistant" has taken a hit. Since 2022, companies have cut around 45,000 jobs, according to Adam Smart, AppsFlyer's global director of gaming products. Even so, the potential still outweighs the risks, and the timing remains attractive for investors. BCG expects the market to grow by roughly 6% annually, reaching £350 billion by 2030; some forecasts are even more optimistic.
Meanwhile, app stores no longer hold quite the same leverage over mobile companies. Developers once had little choice but to accept that Google Play or Apple's App Store would take 30% or more of their revenue, says Stein Janssen, chief operating officer of the browser-based games site Poki. That arrangement is now under growing legal and legislative pressure. Apple has faced both European Commission scrutiny and lawsuits, and Janssen expects the challenge to reduce the share Google and Apple can collect from mobile game sales.
Many mobile-game companies now sidestep Google and Apple altogether, opening their own storefronts where players can download games or purchase in-game items. Some are also abandoning paid models - whether an upfront price or in-app purchases - in favor of free games supported by advertising. Janssen believes browser games are next: players can start them immediately instead of waiting for a download.
How big-budget games are changing
Mobile and browser games may be expanding faster, yet big-budget titles - often called AAA games - remain in good shape. BCG expects revenue in this part of the market to rise by 4.7% annually over the next four to five years. "Whenever there are truly engaging games on the market, new people start playing, and every year we see new generations of gamers log on," says Andrew Bowell, CEO of immersive entertainment studio Iconic Interactive. Older players are still there, too, which means the industry "should continue to grow."
Outside fast-growing regions such as Asia, the industry's expansion often depends less on finding new players than on increasing revenue from the people already playing, says Noam Korbl, CFO at PropFirms. Publishers have shifted away from one-time boxed sales toward ongoing charges for access, cosmetic items, season passes, and subscriptions. That recurring income is "far more predictable than hoping a single release performs well in its launch quarter," Korbl says, and investors generally value that predictability more than creative risk.
Smart identifies another major force in AAA gaming: "platform convergence." The boundaries separating consoles, PCs, and mobile devices are fading as cross-platform play and cloud gaming allow one title to reach players across all three. For studios and publishers, that creates "diversified revenue streams." A failed game can still cause serious financial damage, but trouble in one market, system, or region "doesn't necessarily sink the whole industry."
Video games dominate film and television
HBO Max series The Last of Us FYC event
Modern games are no longer confined to one product. They have become franchises built around a broad mix of intellectual property - recognizable characters, music, and other elements - that can reach well beyond computer games, says Aminder Khatkar, a partner at Brandsmiths. Companies have already used this IP for experiential events and other purposes, though film and television remain the clearest extensions. Khatkar sees a "definite convergence" between gaming, TV, and movies.
Turning game characters and franchises into films and television has become "one of the biggest opportunities across the media industry," Smith says. Recent successes, including the drama series The Last of Us and Fallout, suggest that "gaming IP can attract substantial audiences beyond gaming itself." Popular game properties already bring loyal fans, worldwide recognition, and detailed fictional worlds that can hold attention across different formats. Some are now worth more than established film or television businesses. Nintendo, for instance, is taking franchises such as Pokmon, Zelda and Super Mario into movies, merchandise and theme parks.
Stefan Seidel, an information systems professor at the University of Cologne, says more games are now being turned into television series and films. Market research firm Ampere Analysis counts well over 200 adaptations commissioned since 2019. A successful screen version can revive the games behind it: after the Fallout series aired, the years-old Fallout 4 returned to the US sales chart's top five, while daily player numbers for older Fallout games remained far above their pre-series levels for months.
Ampere's research points to a much stronger loop for TV adaptations than for films: the average TV show increases the number of people playing a title by more than 200%, while films produce a 48% rise. Film adaptations still make a serious difference, and their effect is far larger than the bump usually created by updates or new downloadable content. Heather Delaney of Gallium Ventures says games are becoming a larger, more profitable version of the toy industry, where television shows have boosted toy sales for years.
Will virtual reality last?
Delaney is less convinced by virtual reality (VR), once widely billed as the next big thing. Facebook renamed itself Meta in October 2021 because it believed the future would center on a "Metaverse," where people communicated and played through VR headsets. Even Meta has since backed away from that plan and from VR more broadly. It closed three VR studios and cut 10% of its staff in that area, shifting its attention to "adaptive reality" glasses that place digital content within the physical world. Gaming exposed VR's limits, especially the isolation players often feel while wearing a headset.
Virtual reality (VR) glasses during a launch event at the corporate offices of Meta
Smart says Meta's "gradual retreat" from VR may reveal where the wider subsector is headed. Interest surged during the Covid pandemic, when people "were stuck at home" and wanted an escape. VR probably will not vanish, though: it has built a "passionate core audience" and, at its best, offers "one of the most exciting experiences in gaming". New hardware, including Valve's Steam Frame, could bring more people in.
Some observers remain hopeful. Meta has reduced its VR spending, Khatkar says, but the company has not walked away; it is still promoting the technology, just with far less publicity. Matt Celia of Light Sail VR sees that pullback as a sign of growing maturity. The industry, he argues, no longer needs big tech companies to "artificially prop it up." Independent software makers can now build products for an established audience. More than 20 million Meta Quest headsets have been sold, and one in four US teenagers owns a VR headset. Another hardware upgrade could arrive soon. Each day, more than a million people use the devices - "which is relatively high for an emerging technology." Several independent studios and apps are already earning money from VR games.
AI won't destroy the video game industry
AI's effect on the industry remains a major concern, and some of that concern is justified. The extra demand for chips and computing power has already "pushed up the cost of consoles and computer equipment", says Sean Kealy, VP of equity research at Panmure Liberum. The bigger fear - that AI will let anyone make a game instantly and for nothing, leaving game companies with no reason to exist - goes too far, at least for now. As Kealy puts it, AI "is not capable of producing a video game in and of itself, by itself, straight away".
When Google released footage made with Project Genie, its advanced world-building AI, shares in several game developers fell in February. The footage also exposed what current AI still cannot do. Kealy says video generators lose consistency after only a few minutes: the world behind you may no longer match the one you passed through moments earlier. Copyright raises another set of unresolved questions - both the use of protected material to train AI and whether AI-made work can receive copyright protection.
Seidel agrees that games are still a long way from being made without people. More likely, AI will follow the path set by procedural generation, which the industry has used for decades to create game elements such as monsters and treasure through random systems. Experience showed that these tools worked best with designers checking and refining their output, while handcrafting the parts of the game world that mattered most.
At the same time, AI may help the industry in two important respects. The first is cost. The typical price of producing a game has "risen over time from £50 million to £500 million," so anything that lets studios "take a leaner approach to game development" could ease the pressure on developers, Bowell says. Much of the time saved may come from producing characters, environments, and textures. Large language models could also change how players interact with computer-controlled characters (NPCs), making those exchanges more "non-scripted and dynamic, which in turn will make games more interesting and replayable," says Massimiliano Calamai, games director at Smallthing Studios.
As the AI revolution unfolds, distinctive intellectual property and strong distribution will become even more valuable, says Marc Fernandez, chief strategy officer at Neurologyca, a company working to make AI more aware of context. Studios that already own valuable IP, have engaged communities, and can turn adaptive, personalised worlds into lasting player involvement are likely to come out ahead.
Below are several promising investments that could benefit from these trends.
The best gaming investments to buy now
Rockstar Games' Grand Theft Auto 6 trailer
Take-Two Interactive (Nasdaq: TTWO) owns Rockstar Studios, creator of the hit Grand Theft Auto series. Gamers are waiting eagerly for GTA VI, the franchise's next release. Greg Weller of Generation Media calls it "an example of exceptional intellectual property that can help sell software, move hardware and command the culture." Take-Two also owns 2K, whose games include several successful franchises, and mobile developer Zygna, giving the company exposure to the expanding mobile-gaming market. Its revenue nearly doubled between 2001 and 2006, and the stock trades at a reasonable 21 times expected 2028 earnings.
Take-Two is being valued for growth; Ubisoft (Paris: UBI) is a value play. Sales have been weak, profitability has suffered, and the company has dealt with several other problems, according to Morningstar's Matthew Dolgin. Still, Electronic Arts is now privately held, leaving Ubisoft as the clearest choice for investors seeking an established game maker with major franchises such as Assassin's Creed and Far Cry. Its shares also look inexpensive by several measures, trading at less than half the estimated value of the company's net assets.
CD Projekt Red (Warsaw: CDR) shows how quickly a games company's fortunes can turn. After a much-anticipated release drew mixed reviews, the company fell into a difficult stretch. Sales and its share price remain well below their pandemic highs, while development delays have added to the pressure. Even so, licensing revenue from the hit Witcher series continues to bring in money. Several major releases are planned over the next few years, including Witcher 4 and Cyberpunk 2077 II, and they could lift revenue substantially. The stock trades at 25 times estimated 2027 earnings.
Sony (Tokyo: 6758) is not a pure gaming company: games and related services generate only about a third of its sales, while music and entertainment systems contribute much of the rest. Gaming should account for more of the business after Sony's decision to partly spin off its financial services unit. The company sells PlayStation hardware, including a VR headset, along with games developed in-house. Several franchises have reached television audiences too; The Last of Us, a post-apocalyptic drama, became a successful TV series. The stock trades at 16 times expected 2028 earnings.
Mario promotes Nintendo Co.'s Amiibo collectible characters featuring NFC technology
Nintendo (Tokyo: 7974) has been making games for decades, and it continues to release new software and hardware, including the recently launched Switch 2. Gaming remains its core business, but the company is also finding ways to earn more from its best-known franchises beyond consoles. The Super Mario Galaxy Movie has already passed £1 billion in box-office revenue, while a major film based on The Legend of Zelda is scheduled for release next spring. Nintendo shares trade at 21.5 times projected 2028 earnings.
Everplay (Aim: EVPL) is one smaller UK-listed company worth a closer look. Its three businesses include German developer Astragon and Storytoys, which makes educational apps for children aged two to eight around licensed IP. Most of the group's business comes from Team 17, publisher of independent titles such as Worms and Wardogs. Wardogs sold one million copies on its first day. Sean Kealy of Panmure Liberum says Everplay has proved particularly good at making money from the IP created by the developers it works with. Revenue more than doubled between 2020 and 2025, while the shares trade at just 10.3 times forecast 2027 earnings.
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