3 Video Game Plays For This Holiday Season

Some childlike things are thrown aside as we get older, like naps, pacifiers, and or having friends over for sleepovers, but other things have only improved as time has progressed.  The metamorphosis of video games has created lifelong advocates along with influencing new gamers who are not even able to walk yet.  The impact of video games has permeated across all nations and has influenced people from every walk of life.  

In fact, according to the Entertainment Software Rating Board (ESRB), 67% of U.S. households play video games, with the average age of the US gamer being 34 years old.  It is estimated that there are over 120 million people in the U.S. that are gamers with 52% being males and 48% female.  While it might seem counterintuitive, the age group that has the most amount of gamers is the over 35 years of age group.  

Also, according to statista.com, U.S. computer and video game sales have grown from $5.5 billion in the year 2000, to $15.4 billion in 2014.  Further, in 2012 video games produced U.S. revenues of $78.87 billion, and that number is expected to jump to $111 billion by the end of 2015.  Lastly, these revenues are expected to only increase as the amount of time spent playing games has continued to rise over the past several years; In 2008 the average gamer spent 17.8 minutes a day playing games, then in 2013, it rose to 23.2 minutes a day, and is now expected to grow to 28.3 minutes a day by 2018.  

Now with the holiday season, and more importantly, Black Friday around the corner, one may look to the gaming industry to see who is poised to benefit from the insatiable appetite of the gaming community.  

Stocks To Consider

Activision Blizzard (ATVI – Snapshot Report) was added to the S&P 500 on August 28th this year, and has posted a positive Earnings surprise for the past 6 consecutive quarters.  Further, the company has posted a 4 quarter average positive earnings surprise of +151.5%.  

Activision is launching Call of Duty Black Ops III on November 6th, which saw pre-orders significantly up year to date.  This is an addition to their recent launches of Guitar Hero Live, Destiny: The Taken King, and Hearthstone: Heroes of Warcraft, which have all done very well.  

Also, Activision created a new division that will concentrate on eSports (competitive gaming), and hired former CEO of ESPN and NFL Networks Steve Bornstein who will act as Chairman.  Further, the board hired Mike Sepso who’s experience as the former co-founder of Major League Gaming, the number one eSports league is expected to increase its presence in the competitive gaming community.  This new division is designed to attract South Korean like stadium events for the growing eSports segment.  

As you can see in the graph below, Activision has a strong history of beating earnings.