Three video game shares to watch in 2023


Published on

A new video game season is upon us and for many video game companies, the 6-8 week window after Christmas is the ideal time to launch long-awaited games - appealing to 'kidults' seeking a new thrill to keep them entertained into the new year.

But difficulties in hardware production due to component supply issues, as well as some surprisingly modest forecasts from big players in the industry, means that many game companies are coming into 2023 with a different perspective to previous years.

Let's take a quick look at current performances and outlooks for some of the most recognisable names in the interactive entertainment industry.

video game shares for 2023

New year Blizzard

Wirth Q4 results yet to be released, Activision Blizzard (ATVI) posted fairly impressive Q3 earnings in contrast to modest estimates, largely in part to the October launch of both Call of Duty: Modern Warfare 2 and Overwatch 2, two of the most anticipated multiplayer-focused games of 2022.

Net bookings were down for the company compared to the same period last year. However, an ever-increasing focus on home console multiplayer experiences and mobile apps that use real-world currency for purchases mean the company's in-game sales have increased by 13%.

This is despite a not-insignificant reduction in its active online user base overall, but can be attributed to the company's 2022 release of Diablo Immortal, a free-to-play mobile game that relies heavily on in-game purchases from users.

Prior to the company's earnings call, expectations were set at around USD$0.42 per share with the actual earnings per share recording at a relatively impressive USD$0.55. Activision Blizzard's EPS in Q3 of 2021 was USD$0.82.

Interestingly, this doesn't seem to have had a significant impact on investors' views of the company, with most likely focused on the company's pending USD$69 billion acquisition by Microsoft, which was first announced in January 2022 and is predicted to close by June.

With the highly anticipated AAA game Diablo IV set to also release in June, all eyes should be on Blizzard during this month. Since Diablo III made approximately USD $200 million in the first 24 hours and broke the one-day PC sales record by selling over 3.5 million copies, earnings per share are likely to increase for Activision Blizzard leading up to Diablo IV's release.

Nintendo switches up expectations

Prior to 2022, Nintendo (NTDOY) enjoyed year-on-year revenue growth since 2018 - recording its most profitable year on record in 2020/2021.

However, having recently recorded an AUD$1.3 million operating profit for Q3, this represents an 18% increase in revenue compared to the same period in 2021.

The company's success in this regard appears to be centered primarily in software sales, as sales of its comparably affordable home console, the Nintendo Switch, dropped globally in 2022 year-on-year.

With Q4 results set to be released in May it is predicted that Nintendo's success will be cemented with an even larger increase in revenue, as the November 2022 launch of the Pokémon franchise's newest games, Scarlet and Violet, became the Switch's fastest seller on record, reportedly selling 10 million units in just three days.

However, the studio behind this latest release has received a lot of criticism from fans of the Pokémon franchise for the game's overall lack of quality compared to previous releases.

While this is unlikely to have a large impact on sales for Nintendo, it may hinder the release and sales of future Pokémon titles - although none have yet been confirmed for 2023.

As Nintendo is set to release multiple large titles later this year, including The Legend of Zelda: Tears of the Kingdom and Fire Emblem Engage, the company is set to continue year-on-year revenue growth.

With no plans to increase the price of its hardware, most speculators would still expect to see plenty of Nintendo hardware products still fly off the shelves in 2023- especially while competitors like Sony seem to be facing a more significant struggle with current semiconductor supply issues, resulting in a significant, ongoing lack of Playstation 5 consoles on store shelves.

'Free-to-play' does okay

Roblox (RBLX), which has long been a playground darling - (67% of users are under the age of 16) thanks in part to its free-to-play model, has managed to maintain strong growth across key metrics and has enjoyed the headwinds that multiplayer mobile game publishers often gain when purse strings start to tighten.

However, revenue for the company increased by only 1.6% compared to Q3 2021, now sitting at USD$517,707, resulting in a continual drop in stock value due to falling short of investor expectations. The stock is currently trading at USD$28.88.

The company is also managing to continue growing its user base, recording a 16% increase in users year-on-year as of September, and 58.8 million daily active users as of Q3 2022.

However, the game company is grappling with an increase in fees and costs across a range of the company's operations, which has naturally impacted the final revenue figure.

Roblox's willingness to trial new concepts within the game's framework may maintain investor optimism, however, as their focus on fostering a very active in-game marketplace, a successful series of 'live' artist performances and most recently, entertaining a foray into metaverse and blockchain integration, means there is likely still quite a bit of longevity in the Roblox IP.

The company is also trialling marketplace NFTs which include playable characters and accessories. If successful and integrated into the core user experience, this could stand to become one of the strongest use cases for NFT technology yet, outside of the art world.

Certainly, the team at Meta's Horizon Worlds should be watching very closely to see what lessons can be gleaned from this long-term experiment.

Get stories like this in our newsletters.

Related Stories

Josh Gilbert is a market analyst at global multi-asset investment platform eToro, where he specialises in portfolio diversification, global equities and crypto assets. Josh studied business and finance at Truro and Penwith College in Cornwall in the UK.