Millennials & Gen Z to Drive Gaming Industry: 5 Stocks to Watch

Zacks Equity Research

Millennials and Generation Z use mobile phones not just to make calls or check mails but for diverse purposes.

Per Coherent Market Insights’ (CMI) analysis, in 2018, nearly 70% of consumers in the world were smartphone users. In fact, the majority use high-end mobile devices that offer high picture, sound and graphics quality for entertainment, especially gaming.

What’s more? Now that everything is on the cloud, online gaming platforms are trying to integrate blockchain technology to ensure transparency and enhance user experience. In short, a revolution in the gaming industry is not far away.

Millennials & Gen Z to Drive Growth

Rise in demand for new forms of digital gaming, boosted by millennials and Gen Z is expected to push the industry’s worth to more than $94 billion by 2024. Additionally, both the generations are highly inclined toward digital gaming than conventional forms like slots, video poker and classic table games.

In fact, a study stated that “millennials spent the least amount of time on gambling and exhibited the lowest scores on the number of days for slot gambling, trip length and trip frequency among all generations” compared to Silent Generation, Baby Boomers and Gen X.

Another fact that supports the argument is that new generation parents, especially millennial parents are way more technology savvy than their predecessors. Per Fullscreen’s survey, gaming is the preferred at-home activity of most millennial parents. They also allow their kids to play video games. In fact, the survey claims that parents spend 8.5 hours a week playing video games, on average.

Mobile Versions of Games, GPS and Blockchain

Advancement in technology, availability of high-speed Internet connectivity and mobile versions of popular PC games bode well for the future of the gaming industry.

In fact, game developers like EA Sports, TiMi Studios have introduced mobile-based versions of popular games such as FIFA, Call of Duty, GTA, Max Payne to keep the mobile-inclined generation hooked on to their favorite PC games, anywhere and anytime.

Many developers have designed mobile games integrating Global Positioning System (GPS) to enhance user experience. For examples, games like Pokemon Go and Ludia Inc.’s Jurassic Park Builder have gained popularity due to their interactive features. In fact, from 2016 to 2019 Niantic, Inc generated around $3 billion in revenues, thanks to Pokemon Go.

Augmented reality (AR) and virtual reality (VR) that offer improved user experience are leading game developers and publishers to create new gaming content.

Generation Z users demand responsive, easy-to-use interfaces and minimal friction, which primarily keeps them away from gambling and slot games. Blockchain and cryptocurrency offer alternative payment methods such as e-wallets and gaming coins.

One of the leading providers of cloud-blockchain deliverables is Dapps Inc. The company keeps adding new online casino games to lure players.

5 Stocks in Focus

The global online gaming market size is poised to reach $79 billion by 2025, supported by its growing popularity among millennials and Gen Zers globally.

Real-time gaming experience for gamers located at different locations, thanks to advanced software and hardware solutions, and increased penetration of Internet of Things (IoT) will remain prime drivers of online gaming.

In fact, the market size of the video games industry is expected to increase 7.1% in 2020. In the United States, the industry is expected to grow 15.2% per year on average between 2015 and 2020. Given the positive forecasts and advancements in the gaming world, we have shortlisted five stocks that are poised to grow.

Microsoft Corporation’s MSFT Xbox has been extremely popular over the years. The company recently entered into a partnership with blockchain gaming project, Enjin. The aim of the partnership is to allow participants to make a meaningful impact on the technology community to collect crypto-collectible rewards in form of money.

This Zacks Rank #1 (Strong Buy) company’s expected earnings growth rate for the current year is 18.7% compared with the Zacks Computer - Software industry’s projected earnings growth of 6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Electronic Arts Inc. EA develops and publishes games and services across various genres, such as sports, first-person shooter, action, role-playing, and simulation primarily. A few gamer favorites are Battlefield, The Sims, Apex Legends, Anthem, Need for Speed, and Plants v. Zombies. The company is widely known for its licensed games, FIFA, Madden NFL, and Star Wars.

This Zacks Rank #3 (Hold) company’s expected earnings growth rate for the current year is 0.9% against the Zacks Toys - Games - Hobbies industry’s projected earnings decline of 5.1%.

Activision Blizzard, Inc. ATVI develops and distributes content and services on video game consoles, personal computers, and mobile devices. The company’s Call of Duty series has been a hit globally. This Zacks Rank #3 company’s expected earnings growth rate for the current year is 10.2% against the Zacks Toys - Games - Hobbies industry’s projected earnings decline of 5.1%.

Take-Two Interactive Software, Inc. TTWO offers its products under the Rockstar Games, 2K, Private Division and Social Point labels. The company’s Grand Theft Auto, Max Payne, Midnight Club, and Red Dead Redemption are few of the bestsellers. This Zacks Rank #3 company’s expected earnings growth rate for the current quarter is 3.5% against the Zacks Toys - Games - Hobbies industry’s projected earnings decline of 23.3%.

Nintendo Co., Ltd. NTDOY provides video game platforms, playing cards, Karuta, and other products; and handheld and home console hardware systems and related software. The company’s most hyped product is the Nintendo Switch, a video game console that can be used as a home console and portable device. The console comes with six games, The Legend of Zelda: Breath of the Wild, Super Smash Bros. Ultimate, Super Mario Odyssey, Mario Kart 8 Deluxe, Pokémon: Let's Go and Pokémon Sword and Shield.

This Zacks Rank #3 company’s expected earnings growth rate for the current year is 5.9% against the Zacks Toys - Games - Hobbies industry’s projected earnings decline of 5.1%.

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Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report
 
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Electronic Arts Inc. (EA) : Free Stock Analysis Report
 
Nintendo Co. (NTDOY) : Free Stock Analysis Report
 
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