The video game industry — including sales of machines like Microsoft‘s (NASDAQ:MSFT) Xbox 360, games sold at retail like Call of Duty, and digital games like Rovio’s ubiquitous Angry Birds — pulled in $66 billion in 2010. Market research group DFC Intelligence sees significant growth coming over the next five years, according to a Wednesday report in Venture Beat. By 2016, the game industry will rake in $81 billion in sales.
As the report notes, however, the slow changes that have marked the business between 2008 and today — namely the growing importance of purely digital sales through online storefronts and services — will become standardized by 2016. Physical retail will be the minority and digital distribution will be the norm.
Even now, companies like GameStop (NYSE:GME) are doing everything they can to transform themselves into predominantly digital businesses. The question now is: Which publicly traded companies are well positioned to still be players in the all-digital world of 2016? Here are five.
Naturally. Apple‘s (NASDAQ:AAPL) iPhone, iPad and iPod Touch, as well as the App Store, didn’t start the digital business revolution. But their role in realigning consumer expectations of game pricing (99 cents instead of $50) and availability (a flick of the button instead of a purchase at the mall) cannot be overstated.
Apple’s devices have created the template for video game retail in 2016, and with analysts projecting even greater sales of the company’s iPad and iPhone over the next few years, there’s a good chance Apple will remain a player in five years.
While Electronic Arts (NASDAQ:ERTS) certainly isn’t worth what it was a few years back, its stock is no slouch. As of July, EA was trading at prices not seen since October 2008, and its outlook — thanks to anticipated products like Star Wars: The Old Republic — is promising. Beyond the short term, though, EA has done a great deal to future-proof itself, investing heavily in digital distribution initiatives.
The company has worked hard to bring its potent sports brands, like Madden NFL, to social networks like Facebook. It also has made key acquisitions like mobile and social game superstars PopCap. The company also opened Origin, an iTunes-style digital storefront and online community for its games, earlier this year in an attempt to control the digital distribution of its strongest brands.