Investing in Video Game Stocks

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The video game industry is not for the faint of heart. Investing in video game companies has a great reward to risk, but you need to be keen on which ones are ready to go up. Many companies do very well with a popular hit for the year. Even if they have a bunch of games that don’t do well, one good hit is all they need to be profitable for a whole year.

The problem is many video game companies go up-and-down on their success cycle. A game that is normally a great hit will eventually lose it’s profit margin and people will move onto better games. Also, as the industry improves, games take longer to produce. Designers, writers, programmers need to be taking a full-time part in the development. If one of them doesn’t do their job, the game will go belly up.

Take-two (TTWO) made a game called Grand Theft Auto. It was the only unique game of its kind – a smash ’em up, action game that took real-life realism to the streets of Los Angeles, Las Vegas, and other cities that we can relate too. Millions of fans bought the game. As more people liked it, they told their friends. Word-of-mouth spread and it become a big hit. Since those days, Take-Two has not been doing well. They have lost their profit margins and have not had a success hit since.

Another company, Activision, makes a game called World of Warcraft. This is a multi-player massive role-playing game for the PC. They have a subscription model to which players pay a low monthly fee. When you get a bunch of players over 1000s subscribing, the revenue easily comes into the company. As they expanded globally, the amount of money brought in even increased.

So what do you have to look for? Read the news. Look for demos of the game and research the reviews that writers put out. The game should be highly rated and graded on scales of 80% and above. The game should be massively being followed by gamers and pre-orders should be very high.

Also, make sure the video game company is doing well. Look for companies that continue to increase earnings per share. They should be on a positive track for the last 5 years. These means they have the amount of money needed to succeed and put out successful games in case others don’t work out for them.



Source by Jeffrey Bouch

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