This year is turning into one that movie studios would rather forget. With theaters closed, openings are being been delayed and schedules shuffled. Some movies have been pushed into early home digital release. That was the fate of Disney’s (NYSE:DIS) Onward. The Pixar animated feature only had two weeks in theaters before the novel coronavirus shut things down. Studios may be a bad investment bet right now, but video game stocks could come out winners.
That’s because during the lockdown, gaming has surged in popularity. In addition, the prospect of a year without professional sports is building demand for licensed sport games. The icing on the cake? In the fall, Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE) are expected to launch all-new game consoles — and buyers are going to be lining up for games.
Here are three video game stocks that are positioned to see gains in 2020:
2020 is shaping up to be the year when “blockbuster” means video games — not the latest big budget Hollywood release.
Video Game Stocks: Nintendo (NTDOY)
There are few companies that have benefited from the coronavirus lockdown the way Nintendo has.
Its Switch mobile game console has become the must-have gadget for people who are stuck at home. It’s been sold out practically everywhere for weeks, with new stock immediately snapped up by online shoppers.
The company’s Ring Fit Adventure fitness game was an early hit for those looking for ways to exercise while self-isolating. Then on March 20, Nintendo released Animal Crossing: New Horizons. The slow-paced game that allows players to visit each other’s virtual islands became a genuine blockbuster, and was described as “the game for the coronavirus moment” by The New York Times.
On the strength of Switch demand and video game sales, NTDOY stock has rocketed 42% since its low point during the March market selloff. It’s even managed to post 8% growth to this point for 2020.
Electronic Arts (EA)
Electronic Arts has some of the world’s most popular pro sports video game franchises under its umbrella. These include Madden NFL (football), the NHL series (hockey) and FIFA (soccer). FIFA is the best-selling sports video game franchise of all time — selling over 24 million copies yearly — and the others are also extremely popular.
The coronavirus pandemic has resulted in the cancellation or postponement of professional sports seasons worldwide. That has left sports fans itching for a fix. Watching re-runs of old games on ESPN is one thing, but many are eager for something less passive.
EA stock has recovered from its initial coronavirus hit in March, and could see continued growth as gamers snap up its pro sports franchise titles. In addition, there are new versions due out in 2020, with Madden 21, NHL 21 and FIFA 21 all set for 2020 releases.
In addition, EA has the opportunity to move a lot of games through the holiday sales quarter. Microsoft’s Xbox Series X and Sony’s Playstation 5 video game consoles should launch in the fall. Buyers will be desperately looking for games to take advantage of the new consoles’ capabilities. Parents who buy one as a Christmas gift also tend to buy a game to go with it.
Activision Blizzard (ATVI)
Activision Blizzard may not have the pro sports franchises that EA does, but the company made a big move earlier this year to boost its esports presence. The company signed deals to have its eSports leagues streaming on YouTube and Twitch.
ATVI stock should also see a boost from some of Activision Blizzard’s most successful gaming franchises. This includes Diablo 4. The new entry in the Diablo franchise was confirmed last November, and ATVI is expected to release the game this year with a big, simultaneous launch for game consoles and PCs.
When Activision Blizzard released the previous Diablo installment, it set a one-day sales record for PC games. Fans have been clamoring for a follow-up for years. That sets the stage for a big payday when the new version finally hits shelves.
Like EA, ATVI should also see significant uptick in game sales this fall when the new Xbox Series X and Playstation 5 launch.
Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015. As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
