Ever since the Covid lockdowns, the video games industry has seen a huge surge in popularity. According to the Interactive Software Federation of Europe, average playtime increased by 1.5 hours in Q2 of 2020 compared to the previous year.
So, after an impressive couple of years for the industry, could this be the perfect time to invest in gaming stocks? Here, I’ll show you how to invest in videogames UK, and some of the companies you may want to think about investing in.
Also consider: Best Stocks and Shares to Buy Now
How you can invest in videogames today
- Open an account with a broker – there are many different brokers available, each with their own benefits.
- Deposit money to your brokerage account – you can usually do this online using a credit or debit card.
- Decide how to invest in video game stocks – you have a wide variety of videogame companies to invest in.
- Input the number of shares you desire, then make the trade – when you’ve figured out which companies to invest in, you’re ready to buy your shares and become a videogame investor.
4 simple steps to investing in the video game industry
Investing in video games is easy enough – the process is the same as buying shares in any other company.
Whether you wish to support your favourite video game developer, or you simply want to invest in what has become a lucrative sector, here are four simple steps you can follow to join thousands of video game investors.
1. Open an account with a broker
First things first, you need to decide which broker you wish to use.
There are countless brokers that allow you to buy and sell gaming stocks, so before choosing one, you ideally want to compare the different features each one brings.
For example, if you’re planning on trading large volumes of gaming stocks, you may want to consider using a broker that has low trading fees or no commission. This way, you can avoid excessive charges eating into your potential profits.
Or, if you’re still an investing beginner, you may want to think about using a platform that offers lots of educational and research materials for you to use on their site. When you use such a platform, you can refine your investing skills while you trade by making use of these resources.
Additionally, if you’re a beginner, you may want to choose a broker that has low inactivity fees and minimum deposit requirements. By doing so, you can avoid feeling too committed to an account if you were just wanting to try your hand at investing.
As you can see, there are many different aspects to choosing a broker that’s right for you. Read my comprehensive guide about the different brokers on offer if you would like to find out more.
Also consider: Compare UK Investment Platforms
2. Deposit money to your brokerage account
Now that you’ve decided which broker best suits your needs, the next step is depositing money into your new account.
This should be simple enough – just find the deposit feature on your chosen broker account, input the value you wish to deposit, and make the transfer.
One thing that you may want to keep in mind is how much you deposit in the first place. If your money is sitting uninvested in your brokerage account, it’s unlikely to earn any interest.
3. Decide which video game stocks you wish to invest in
When your money is deposited into your broker account, you’re finally ready to become a video game investor. Though, before you can do so, you must first decide which video game company you wish to invest in.
You may want to invest in a company that develops your favourite computer games. For example, if your favourite video game is Minecraft, you could think about investing in Microsoft.
Or, of course, you could simply invest in video game companies that have the largest market capitalisation. These include:
- Microsoft, the world’s largest computer software vendor
- Tencent, the huge multimedia Chinese company
- Sony, the Japanese A/V giant.
You can find out more about some of the best video gaming stocks you can invest in later in my guide.
4. Input the number of shares you desire, then make the trade
Now that you know which company you wish to invest in, you’re finally ready to purchase your gaming stocks.
To do so, simply search the name or ticker symbol of the business you wish to invest in on your broker’s site, input the number of shares you want to purchase and make the trade.
The hard work doesn’t stop here though – you should ideally monitor any stock price movements closely. By doing so, you can potentially turn a profit if prices increase, or cut your losses if the price drops.
What are video game stocks?
Video gaming stocks are simply shares you have purchased in a particular company that produces video games or is involved in the videogame industry.
This doesn’t mean you’re investing in one game – you’re instead investing in the whole business that develops games, or perhaps the software and infrastructure used to power and run them.
It’s worth keeping in mind that some video game developers are private companies, meaning you can’t invest in them.
For example, the company Harmonix which developed Guitar Hero, or Mediatonic which developed Fall Guys, are both owned by Epic Games, which is in turn a private company.
How do I invest in video game companies?
As well as a number of different companies to invest in, you also have several different ways you can invest in these companies in the first place.
As mentioned, stocks are one such way you can invest in the gaming industry. This involves purchasing shares directly on the stock market in a business that develops games.
When you invest in companies this way, you can either hold onto your shares until the price of your gaming stocks increases and then sell them for a profit, or you can hold onto them for longer periods of time and rely on dividend payments.
Though, it’s worth keeping in mind that not all companies offer dividends, so you should check this before you invest in the company.
Another popular way to invest in the gaming industry is through funds. These are a type of pooled investment that take your money and then invest in a number of gaming stocks themselves.
They are typically overseen by a fund manager, who makes informed decisions about how to spend investors’ money. You are then paid a dividend depending on the performance of the fund, or you can sell your units in the fund for a profit if the price increases.
Some of the best video game companies listed
Now that you know how to invest in the gaming industry, you’re most likely wondering what some of the best video game companies you can invest in are.
Well, keep reading my guide to discover some of the favourites of investors – you may even spot your best-loved developer on my list.
Frontier Developments is a large, British video game developer with a number of hits under its belt. These include:
- Elite Dangerous
- Jurassic World Evolution
- Rollercoaster Tycoon.
The company owns a proprietary game engine called Cobra, which is essentially a core framework software the business can use to develop its games.
As for its share price, Frontier Developments opened at £12.86 on the morning of 29 September 2022.
One of the strange things about many companies in the gaming industry is how their prices were impacted by Covid.
Indeed, Frontier saw an increase from £10.86 on 9 March 2020, to £28.25 on 2 November 2020. This was, in part, a result of people around the world being stuck inside with little to do but play games.
Though the company did see a significant spike after Covid lockdowns, its price has since dropped back down to the levels we’re seeing today.
Source: Yahoo Finance
You may have heard of Blizzard Entertainment thanks to their world-famous game, World of Warcraft, which took the planet by storm in the early 2000s.
Since then, though, Blizzard Entertainment has merged with Activision after its acquisition by Microsoft. This has ultimately formed one of the largest video game companies in the world: Activision Blizzard.
Since its takeover, the quality of its games hasn’t declined – it produced titles in some hugely popular franchises, such as Call of Duty: Warzone, Hearthstone, and even some mobile games, such as Call of Duty: Mobile.
As for its share price, Activision Blizzard opened at $75.19 when American markets opened on 29 September 2022.
Activision Blizzard is another company that saw its share prices skyrocket following Covid lockdowns. Though, unlike Frontier, Activision Blizzard has maintained its higher prices.
Indeed, after climbing from $52.05 on 20 March 2020 to $100.80 on 19 February 2021, the company has managed to retain some of its upward progress, only dropping to around its current levels rather than all the way back down.
Read more: Learn how to buy shares in Activision.
Source: Google Finance
Keywords Studios is a Dublin-based company that is unlike the others mentioned on my list.
The company provides localisation services to other businesses in the gaming industry. Simply put, these services are translations that adapt a game to a local culture.
For example, while English-developed video games may have English voice actors, localisation services would translate the script, and find suitable new voice actors, for a game developed for French audiences.
As well as translation, Keywords Studios also conducts marketing services, quality assurance and player support, which ranges from basic customer services to audience interaction on social media.
Even though it typically doesn’t develop games itself, Keyword Studios is still a favourite among companies in the gaming industry; it works with 23 of the top 25 game companies by revenue.
Keywords Studios’ share price has been relatively stable compared to some other companies in the gaming industry. It opened at £22.34 on the morning of 29 September 2022.
And, although it saw a gradual increase from £12.32 on 31 January 2020 to £33.02 on 3 September 2021, Keywords Studios’ share price has since been hovering around the levels we’re seeing today.
You should keep in mind that Keywords Studios is an AIM-listed company, which may result in prices being more volatile than video game companies listed on traditional markets.
Source: Google Finance
Take-Two Interactive is another video game development giant. You may never have heard of Take-Two but you may have heard of one of the companies it owns, Rockstar Games, which has produced world-renowned games such as Grand Theft Auto V.
In fact, Grand Theft Auto V took several years to create, and was, at the time, the most expensive game ever produced. It cost a staggering $265 million for the development and marketing of the game.
Take-Two Interactive’s share price has been turbulent in recent years. While it did open at $112.63 when trading commenced on US markets on 29 September 2022, this is after a significant drop.
In fact, while the business did see a rise from $107.73 on 28 February 2020 to $208.62, it has since fallen gradually back to its current levels.
This drop in price could be attributed to the fact that Take-Two recently acquired the mobile gaming company, Zynga.
With inflation high and fears of a recession looming, consumers will likely be looking to spend less. And since mobile games rely more on microtransactions, they will potentially be hit hard by tougher economic conditions. As a result, this acquisition may have spooked investors for the time being.
Source: Google Finance
Games Workshop is unlike any other video game company mentioned on my list.
This is because the company originally started by making minifigures for its tabletop games, Warhammer 40,000 and Warhammer Fantasy.
The company has since started producing computer games using its Warhammer world settings and has become very popular for its variety of digital media.
Games Workshop has also acquired the rights to many other popular franchises, such as the Lord of the Rings.
Even though Games Workshop’s share price has dipped in recent months, it is still performing relatively well, opening at £62.30 on the morning of 26 September 2022.
Much like the other companies on this list, Covid was actually a boon for Games Workshop; even though its prices did initially dip from £69 on 14 February 2020 to £41.68 on 3 April 2020, they quickly rose to £119.40 by 28 May 2021.
Source: Google Finance
Which videogame company is best to invest in?
The best videogame company to invest in wholly depends on your reasons for investing in the first place.
For example, you could just invest in your favourite company to show support. If you were a fan of indie games and your favourite development company was Devolver Digital, you could purchase shares from them.
Or, if you have a low tolerance for risk, you may want to consider investing and buying shares in a more secure company that has a large market capitalisation, such as Activision Blizzard.
Alternatively, if you are happy with slightly more risk, but wish to invest in a video game developer that offers potentially more profits, you could invest in a company with high revenue growth, such as Capcom.
Also consider: The Best UK Tech Stocks to Buy Now
Are video game companies a good investment?
Ever since the first lockdown, many video game companies have seen a significant surge in their share prices. As mentioned, this is because people were forced to stay at home, and video games were considered a great way to pass the time.
In fact, Investopedia states that, in 2020, the video game industry generated $155 billion in revenue.
Nowadays, with inflation climbing and talk of a recession on the way, this could potentially be a great time to buy shares in a video game company.
This is because, as people try and spend less, they could potentially choose to stay indoors and play video games rather than go out and spend money.
Additionally, the video game industry is still growing, and as new technology is released over the next decade, more innovative games could attract new players and investors alike.
How to Invest in Videogames UK
Can you invest in videogames?
How do I invest in the metaverse?
To invest in the metaverse, you can either do so by investing in the companies that are helping develop it, such as Meta Platforms or Nvidia. You could also invest in a fund that tracks these companies, or purchase virtual real estate on the platform.
If you would like to find out more about investing in the metaverse, please read my comprehensive guide or seek independent advice.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.