Video Games Uber Alles

Why are stocks like GameStop and Nintendo and Activision among the best performing stocks over the past few years [see stock chart]? Because video gaming has become pervasive. People who were raised on Space Invaders, Tetris and Pong are now the movers and shakers of our society. The video gaming market has swelled from the 16 year old boy locked in his room to practically anyone with a cell phone. I have two children ages 12 and 9 and I can honestly say that some of our best family time has been tethered to a controller in front of our TV. This is one reason why I am a longterm bull on these stocks and a reason why I think sometime soon, one of the big studios is going to make a play for these largely independent creative content companies. Now that Nintendo is something like the third largest company in Japan as measured by market cap (surpassing Sony), it may be too late and too difficult for them to be acquired. However I look at Activision and Electronic Arts as possibilities. And GameStop may be in the best position of all as a well run retailer with a diversified stake in the business.


Check out this recent article in Wired by Rex Sorgatz entitled "When Reality Feels Like Playing a Game, a New Era Has Begun". The author does a really nice job explaining the paradigm shift.