Top 5 des actions de jeux vidéo à méga‑capitalisation

L’essor des géants du jeu vidéo

Videogames are now a well-established pass time, rapportant plus d’argent que les industries de la musique et du cinéma ensemble (182,9 Mds en 2022). Du passion des quelques « geeks » des débuts, ce succès commercial immense a incité les géants technologiques à vouloir une part du gâteau de l’industrie du jeu.

Ainsi, bien qu’il existe encore de nombreuses actions de jeux vidéo pure‑play très performantes (comme nous l’avons couvert dans notre article “Top 10 Pure-Play Gaming Stock To Invest In”), il est également possible d’investir dans le jeu vidéo en investissant dans certaines des actions technologiques à méga‑capitalisation.

Pour certains, c’est le cœur du business dès le premier jour, et de nouvelles activités viennent s’ajouter au jeu. Pour d’autres, le jeu est une division croissante et rentable parmi d’autres. Dans tous les cas, le soutien financier d’autres divisions commerciales est une force, tout comme la disponibilité interne de composants électroniques de haut niveau, de services cloud, etc.

Dans tous les cas, ils sont de plus en plus puissants dans une industrie du jeu de plus en plus centrée sur les titres AAA, nécessitant des normes très élevées pour la qualité graphique, le doublage complet, des cinématiques dignes du cinéma, et une exécution parfaite, souvent requérant des équipes de centaines voire de milliers de personnes.

Top 5 des actions de jeux vidéo à méga‑capitalisation

1. Microsoft Corporation

(MSFT )

Microsoft is an old and established actor in the video gaming industry. It started with its initial lead in PC gaming, which was much more established on Windows than on competing Apple operating systems. In that period, it also published landmark games and e-sport successes. One example is the Age of Empire series.

But it is really with its entry into the console market that Microsoft fully committed to the videogame industry. Taking by surprise a market dominated by Nintendo, Sony, and Sega, the launch of the Xbox was a massive success, carried by exclusive titles like the Halo games.

Source: Microsoft

The Xbox is now on its 4^th iteration with the Xbox Series X, which sold more than 21 million units.

Microsoft is working on changing the way gamers buy games, with the system of Game Passes offering unlimited access to a large catalog for a monthly subscription, a sort of “Netflix for games”. It is also active in VR through its Holosense VR headset.

While initially, Microsoft has mostly relied on third-party developers, including for its exclusive games; it has in recent years acquired development studios, one after the other. No less than 24 studios so far, including truly massive ones like Bethesda (Skyrim, Fallout, Starfield), 343 Industries (Halo), ID Software (Doom), Machine Game (Wolfenstein), Mojang (Minecraft), and Obsidian (Pillars of Eternity).

This acquisition streak might reach new levels with the targeted acquisition of Activision Blizzard. This would strengthen Microsoft’s position so much that multiple authorities, including the US, UK, and EU, have questioned the legality of the acquisition for a potential monopoly risk.

(We will discuss this further below in the Activision Blizzard section.)

Even without this acquisition, Microsoft is one of the largest console producers and controls several dozens of the most acclaimed and successful video game studios. Windows is also still the prime platform for PC gaming several decades later.

This makes the tech giant an impressive gaming stock, even if it is also active in software (Office, Outlook), cloud service, cybersecurity, social media (LinkedIn), etc., with gaming the smallest of the 3 segments ($13.9B in revenues for Personal Computing in  Q4 FY 2023), behind Business ($18.3B) and Cloud ($24B).

2. Tencent Holdings Limited (TCEHY)

Tencent is the leader in gaming in China, itself one of the largest gaming markets on Earth. It is mostly present in mobile games, like Honor of Kings, with massive successes in China and Asia.

The influence of Tencent goes far beyond the games it developed, as the company used its cash flow from other ventures to go on an acquisition spree worldwide.

It notably owns 100% of Riot Game, the studio behind e-sport leader League of Legends and the acclaimed Netflix series Arcane.

It also participates in many other gaming companies:

• 3 % de SuperCell: le développeur finlandais du super‑hit mobile Clash of Clans.
• 40 % d’Epic Games: le créateur du logiciel de développement de jeux Unreal Engine, de Fortnite, et concurrent de Steam sur le marché des lanceurs/places de marché de jeux.
• 6 % de SEA Limited, derrière Garena, est un acteur majeur du jeu en Asie du Sud‑Est.
• 5 % de Bluehole: le créateur du concurrent de Fortnite, PUBG.
• 5 % d’Ubisoft: créateur de la série Assassin’s Creed.
• 5 % d’Activision Blizzard: le créateur de Warcraft, détaillé plus bas.
• Tencent possède également des parts non divulguées dans Roblox et la plateforme sociale de jeux vidéo Discord.

Besides gaming, Tencent is also behind the popular Chinese email service QQ.com and the super app WeChat, as well as investing in many non-gaming tech startups and companies in China and the Asian region.

Source: AgileTech

Gaming is now a core business of Tencent, with RMB44.58B from gaming in Q2 2023, for a total revenue of RMB149.2B.

Like many other Chinese tech companies, the company has come into the Chinese government’s crosshairs, wary of too strong influence of its tech giants. This has durably depressed its stock prices. New policies limiting the gaming time of young Chinese to just 1 hour daily did not help either, even if some claim that this policy proved inefficient.

Tencent has almost as many studios owned as Microsoft but trading at a deep discount. This is due to the Chinese government’s recent crackdown on tech conglomerates and an overall disaffection of international investors for Chinese stocks. This is a risk, but it can also be seen as an opportunity to buy at a discount, a quickly growing mega-cap in gaming.

3. Sony Group Corporation

(SONY )

The Japanese electronic conglomerate is a relative late-comer to the console wars, initially dominated by Sega versus Nintendo. With the launch of the PlayStation in 1994, it immediately became a major player in the console market.

To this day, the PlayStation 2 is the most sold console in history, with a record of 155 million units. The PlayStation 1 and PlayStation 4 take respectively the 6^th and 5^th place for the most sold units as well. The latest iteration, the PlayStation 5, has also been a success since its launch in 2020, with repeated shortages due to semiconductor shortages amid the pandemic.

Source: Reddit

The console market has now firmly been in the hands of Microsoft, Xbox, and Nintendo for over a decade. And with Nintendo focusing on lower prices and family-friendly games, most console gamers really have only to choose between a PlayStation or an Xbox.

Sony also offers a subscription service, with hundreds of PS5 and PS4 games available in its PlayStation Plus membership program, which includes a deal with Ubisoft for access to all the developer classic titles.

Games make up a significant part of the Sony Group revenues, with 771 billion yens in Q1 2023, for a group’s total revenue of 2.9 trillion yens. Other major segments are financial services (681 billion yen in revenues), electronics (571 billion yen in revenue), and music, pictures, and sensors.

4. Activision Blizzard, Inc.

Born of the merger of 2 videogame giants, the company brings together the IPs and players from both together, as well as a third mobile game segment acquired in 2016:

Blizzard: the creator of the first true e-sport game, Starcraft, and the famous license Warcraft, a series of strategy games, but also the most successful MMORPG ever made, World of Warcraft. And that would be forgetting the extremely successful Diablo series, collecting card game Hearthstone, and shooter Overwatch.

Source: Blizzard

Activision: The Call of Duty series, with no less than 37 opus since inception in 2003, for a total of 400+ million copies sold in total. It also holds some less active but still beloved licenses like Crash Bandicoot, Spiro, Tony Hawk’s, or Sekiro.

Most famous for its Candy Crush mobile game, the company is less popular than at its peak in 2014 but can still claim a stable 230-250 million monthly users for the last decade.

Source: Statista

Activision Blizzard is in itself a large videogame conglomerate, bringing together under one house very different gaming sectors, from hardcore MMO and RPG players to more console-focused shooters or casual mobile gaming.

Maybe this breadth of genre has caught the attention of an even larger conglomerate, Microsoft. Microsoft’s acquisition of Activision Blizzard has been an ongoing process since janvier 2022. This would create a giant, considering that Activision Blizzard alone records 400+ million monthly users.

If the regulators let it happen, the deal should close for $95/share. On September 25^th, the UK competition authority provisionally approved the deal. The merger has already been approved in the EU, China, Japan, and South Korea.

The biggest hurdle left is the US FTC (Federal Trade Commission), which only “paused” its lawsuit against the deal in juillet 2023.

So investors in Activision Blizzard might get forced to sell their shares to Microsoft or risk a temporary price decline if the deal falls through.

Still, this can provide plenty of arbitration or trading opportunities for investors willing to take a chance. And with a firm foot in almost every major gaming segment, Activision Blizzard would still be an exceptional large-cap company in the gaming sector.

5. Nintendo Co., Ltd.

One of the oldest video game companies, the Japanese console maker, has been an industry leader since the early era of arcade games. It has often been a trailblazer of new trends, from technical innovation to game design.

The company is also notorious for keeping very tight control over its products, with most of the games on Nintendo consoles either developed by Nintendo itself or by a third party with strict quality control from Japan.

Nintendo consoles occupy a niche of their own, usually priced a lot cheaper than its XBox and Playstation competitors, focusing on affordability, family-friendly games, and innovative gameplay. It is also the dominant actor in handheld consoles since the time of the GameBoy, and with the current best-selling Switch, it is blurring the line between traditional and handheld consoles.

Nintendo also owns many valuable IPs, many going back decades with tens of games, including Mario, Pokemon, and Zelda.

The family-friendly focus is also a great asset in making Nintendo IPs trans-generational, with parents who grew up playing on the GameBoy, NES of Nintendo 64 are now happy to make new memories with their kids on the Switch.

Source: Nintendo

These IPs have historically been under-monetized, with Nintendo notoriously reluctant to try non-game IP usage after the disastrous Mario movie in 1993.

But this is changing recently, with the opening of Nintendo theme parks in partnership with Universal and the recent blockbuster Mario Bros animated movie. With an estimated budget of $100M, it paid back its production budget in the first opening weekend and ended with a total gross revenue of $1.3B.

Investors have been encouraged by this box office success to re-rate Nintendo IPs, with some people putting them on par with Marvel or Star Wars. This would transform Nintendo from “just” a video game company into a mega entertainment giant on par with Disney or Warner Bros.

Other investors are more cautious, considering the long history of Nintendo failing its next console release after a very successful one, causing some worries over the successor of the Switch.