Make Some Money From That Gaming Habit!

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Growing up I loved to play video games. The love of the companies that made the games and knowing that I could essentially own them through the stock market is what got me into investing. I have since sold out of my very first position in Activision Blizzard (NASDAQ: ATVI) but I’ll always wonder if there is money to be made in the gaming market.

Old Money

Activision Blizzard, Electronic Arts (NASDAQ: EA) and THQ have been around for as long as I can remember. These three companies have developed and released some incredible games over their histories. For THQ it is looking increasingly likely that their 20-plus-years in the business will be coming to an end while Activision and EA continue their journey as video game juggernauts.

Fun fact: the entire publically traded portion of THQ can be had for less than $10 million at the time of writing. That seems too little for a company that we see putting out new games every month or two. It actually isn’t though, THQ has more liabilities than assets. Tack on their long term debt and you’re looking at a potential bankruptcy right around the corner.

EA is actually doing quite nicely, for a gaming company at least. Revenues at the company continue to grow year after year, but net income bounces around from negative to positive and back again. Despite the bouncing, EA actually looks pretty good as a long term investment. They have lots of great franchises, especially in the sporting world, and there are lots of great titles in the pipeline at this company.

Activision Blizzard remains my favorite, even if I did sell it some time ago. Like EA, they have been growing their revenues year after year, but they also have managed to avoid the yo-yoing of profits. Activision has seen one loss on their books in the last decade, fiscal year 2008. There is no long term debt at this company and they are trading pretty close to book value. In terms of titles I don’t think I really need to list too many, Call of Duty and World of Warcraft should pique your interest enough to consider this stock for the long term.

New Money

Old money is in on the consoles and they are having to adapt their strategies to make sure the likes of Zynga (NASDAQ: ZNGA) and Glu Mobile (NASDAQ: GLUU) don’t come in and eat their breakfast.

Zynga is the company behind the many “*-Ville” games that you’ll find on the internet. The company has a lot of players in their online worlds, pushing some 240 million every single month. The thing with Zynga is that these games are free-to-play. Zynga makes money by showing advertisements and selling in game items to players. It’s a business that has seen Zynga lose close to 75% of their value since their IPO last year. Revenue at Zynga is growing, but this company is not one that I would recommend to anyone, there is nothing special about their games that can’t be replicated by a few programmers over a week.

Glu Mobile focuses on mobile platforms. They license most of the titles that they create and then get to work on creating a game. They have yet to turn a profit in their ventures which keeps me away from an investment in them. If you enjoy your mobile games and you’d like to invest in the company that makes quite a few of the bigger names out there then Glu is your best bet. Be warned though, it’s a risky venture.

Ash1402 has no positions in the stocks mentioned above. The Motley Fool owns shares of Activision Blizzard. Motley Fool newsletter services recommend Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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