Gaming is now the world's favorite form of entertainment, as the gaming industry generated more revenue last year than TV, movies and music did.
While other forms of entertainment are experiencing declines — TV revenue fell by 8 percent last year — the gaming sector's sales are increasing at an annual rate of 10.7 percent. Some of the greatest growth is coming from relatively new markets, like China, where game sales are climbing 14 percent per year.
For investors, the rise in the popularity of gaming is creating opportunities on a number of fronts.
Game developers
One promising game developer is Frontier Developments. The UK-based firm has had considerable success with two major gaming franchises — Elite Dangerous, a multiplayer space epic, and Planet Coaster, an amusement park simulation game. A new release planned for this summer, Jurassic World Evolution, will coincide with another Jurassic World film hitting theaters, and that game could power the firm's next leg of growth. (Disclosure: NBCUniversal is parent of CNBC.)
The developer is also the publisher for its games, which are available on every major gaming platform. It also plans to launch one new major product per year over the next several years. Tencent, the Chinese internet services and products company, has a 9 percent stake in the company, and that relationship could help Frontier penetrate the booming gaming market in Asia.
Perhaps one of the most popular games among teenagers today is Fortnite, a multiplayer shooter game. Its publisher, Epic Games, makes Fortnite available free online as a digital download, and it can be played on a PC, console or mobile device. While the game is free, there are add-ons you can buy, like clothing items for your game avatar, that cost real money.
The popularity of the game has many parents whose teens are obsessed with it wondering how they can invest in it. Epic is a private company, but here again, Tencent is an important player. The Chinese internet giant has a 40 percent stake in Epic. Investing in Tencent could provide an opportunity to benefit from the promising potential of Fortnite.
Grand Theft Auto V, developed by Rockstar Games and published by Take 2 Interactive, recently became the highest-grossing entertainment release of all time. It has now sold more than 90 million units since it was brought to market in 2013, and this year it surpassed the $6 billion mark in revenue, making it the highest-selling title in any category of entertainment. That includes books, films and albums.
The dominance of gaming in our culture is evident in the reversal of the past relationships between the gaming industry and Hollywood and publishers. It used to be that games were developed from popular movies and books. Now it is often the other way around. In 2017, both Angry Birds and Assassin's Creed were released as movies, years after they were launched as successful games.
Gaming has even evolved beyond a participant activity and become a spectator sport. Watching other people play games has become big business, with Activision Blizzard's StarCraft franchise a key catalyst of the growth of the industry in the late 1990s and early 2000s. Activision Blizzard has continued to develop eSports-friendly games, including Overwatch and StarCraft II. Today, eSports is a global phenomenon. There are professional tournaments broadcast on ESPN and TBS. Top players can earn well above $1 million in prize money. The popularity of eSports has even trickled down to many high schools, which have formed teams.