Best Gaming Console Stocks To Buy: The global video game market is a behemoth, growing to over $65 billion in revenue this year. While the industry expands further, the home console wars are among the most hotly debated in gaming communities.
We’re fast approaching the 10th generation of video game consoles. Companies like Atari and Sega lost their lead as the industry evolves. Today three major contenders dominate the industry in spite of technological hurdles attempting to disintermediate them.
Cloud-based gaming is ever more widely available, and the launch of virtual reality has spawned a whole new immersive gaming experience. Dedicated gaming consoles seem obvious today, but they could one day become as unnecessary as physical media.
Microsoft
Microsoft Corporation (NASDAQ:MSFT) entered the console market in November 2001 as part of the sixth generation with its original Xbox console. The latest-generation Xbox (Series S and Series X) still stands as the sole traditional home console made by an American company.
It reported $14.2 billion in gaming revenue in the 2021 fiscal year, which was largely driven by the release of the new generation of consoles. However, all console companies suffered from supply chain constraints due to the semiconductor shortage.
That didn’t slow the company down because of its gaming-as-a-service (GaaS) model. Microsoft’s Xbox Network has multiple subscription options, including Xbox Live Gold, Ultimate Game Pass, and more. And the ability to play on PC bridges the Xbox to its Windows-based brethren.
Which is a reminder that gaming represents only a small portion of its $168.09 billion revenue and $61.27 billion in earnings for the year. Its cloud, productivity, OS, device, and other businesses are profitable too. That makes Microsoft a multi-trillion-dollar company and one of the largest in the world.
Check out how Microsoft got started >
Nintendo
Nintendo (OTC:NTDOY) is the longest-standing video game console company, and it’s a dominant force too. The company is fast approaching 100 million units sold of its Nintendo Switch and Switch Lite consoles, and the release of the OLED Switch is sure to fuel further sales.
It’s reflected on Wall Street too – Nintendo stock more than doubled in the five years since the initial release of the Switch. But it was a rocky road for investors in 2021 as the market cap struggles to maintain its 13x price-to-earnings ratio.
Still, the company has a tried-and-true methodology that relies on its first-party software franchises, like Mario, Animal Crossing, and Pokémon (which it co-owns with two partners) over the beefed-up hardware of rivals PlayStation and Xbox.
On the plus side, Nintendo has plenty of cash, with $8.4 billion in its coffers at the end of the 2021 fiscal year. It also returns plenty of cash to investors through stock buybacks and dividends that could make it an attractive stock for its fervent fanbase to consider.
Find the best video game stocks under $10.
Sony
Sony Group Corp (NYSE:SONY) is the undisputed leader in video game console sales. Its PlayStation 1, 2, and 4 are the top 3 highest-selling home consoles of all time. And the PlayStation 5 outsold its rival Xbox Series X/S, crossing 10 million units sold – faster than any console in history and earning $2 billion more in revenue than MIcrosoft.
Like Microsoft, Sony has a plethora of devices and content offerings that extend beyond its video game division. The company generated $81.38 billion in revenue during the 2021 fiscal year and earned over $10 billion.
Of course, gaming is still a large part of the company’s strategy, and it’s the only current-generation console with virtual reality compatibility through its PlayStation VR headset. While VR hasn’t captivated the industry yet, it’s only a matter of time before the development pace changes that.
Look for Sony to continue its growth trajectory over the next year as demand for its content and devices remains steadily growing.
What are the best virtual reality stocks?
Facebook, Inc. (NASDAQ:FB) isn’t a name that typically comes up in video game console discussions, but it should. That’s because its Oculus VR subsidiary has a fully functional gaming platform that’s growing in popularity. By the end of the first quarter of 2021, the company sold nearly 5 million Oculus Quest 2 headsets.
That makes Quest 2 the best-selling VR headset of all time, and it’s selling at a rate of about three times its rival PSVR. Its standalone headset requires no phone, computer, nor video game console permitting users to fully immerse in the virtual world.
And it’s not stopping at gaming – the release of Horizon Workrooms shows Zuckerberg and company’s dedication to the metaverse. It envisions a world where people can meet and collaborate in VR.
Still, there’s no indication companies are lining up to spend $300 on headsets to force employees to immerse themselves in a staff meeting.
Yet, few could deny the impact Facebook has, even as its stock price dropped by over 12 percent while it faces regulatory heat from Capitol Hill. The social advertising giant generated $86 billion in revenue last year and is on track to beat that this year with double-digit growth in every quarter.
See how Facebook stock compares to Microsoft
Alphabet (Google)
Alphabet Inc (NASDAQ:GOOGL) is another company not traditionally included in the console discussion. But the company has been focused on disrupting the console industry since the launch of Google Stadia in November 2019.
This cloud-based gaming platform eschews consoles entirely and lets users access games on any device (including Android phones and Chromecast smart TV dongles) via a subscription-based cloud. Despite drawing huge games like Cyberpunk 2077 and Red Dead Redemption 2, the project failed to gain the userbase it hoped, and Google shut down its in-house game development.
Despite that, Google is pushing for third-party development on its platform. It implemented a revenue sharing program in July 2021 that extends through 2023 and gives the platform legs. In fact, the Cyberpunk 2077 launch was one of its biggest wins, as the game lagged and crashed on consoles but worked well on Stadia.
Although a rocky start, Alphabet is a trillion-dollar company that earned over $182 billion in revenue last year. It has the resources to stay in the game as long as it wants. There’s no telling how it could change the console industry over the next decade.
How high can Google go? Learn here.
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