Report

PSA Media & Entertainment: PSA's Rankings of Video Game Stocks After Another Tremendous Quarter

This CY25 Q2 has been another tremendous quarter for the Japanese video game sector, driven by the release of the Switch 2. Analyst Pelham Smithers reviews the performance and offerings of the video game stocks PSA covers and delivers his updated rankings.
Underlyings
Akatsuki Inc.

Akatsuki Inc. is a Japan-based company mainly engaged in the mobile game business and live experience (LX) business in the entertainment area. The Company has a single segment of the mobile game business. The Mobile Game business is engaged in the provision of mobile games in the platform operated by Japan social networking service (SNS) operator, as well as app market provided by Apple Inc., Google Inc. and other companies.

Capcom Co. Ltd.

Capcom is engaged in the development, manufacture and sales of video games, online games, mobile games and arcade games, as well as the operation of amusement arcades. Co.'s business segments are digital contents, amusement facility and amusement equipment. Co. is engaged in the planning, development, manufacture and sales of home video games, online games and mobile games including "Rockman," "Monster Hunter World" and "Dragons Dogma"; the operation of "Plaza Capcom" amusement facilities in Japan; and the development, production and distribution of arcade games for amusement facilities. Co. is also engaged in the licensing business of game characters and the real estate leasing business.

Electronic Arts Inc.

Electronic Arts develops, markets, publishes and distributes games, content and services that can be played and watched on a variety of platforms, including game consoles, personal computers, and mobile phones. The company markets and sells its games and services through digital distribution channels and through retail channels. Digitally, the company's console games and services can be purchased through third-party storefronts. In its games and services, the company utilizes brands that it either wholly own or license from others. The company develops and publishes games and services across genres. Within and alongside its games, the company provides live services, including in-game purchases, downloadable content, and esports.

Embracer Group

Embracer Group AB, formerly THQ Nordic AB is a Sweden-based company engaged in the computer games development. The Company focuses on acquiring, developing and publishing personal computer (PC) and console games for Xbox and PlayStation platforms. The Company's game portfolio consists of owned franchises intellectual property (IP) and published titles, including Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters, Satisfactory and Wreckfest, among others. It offers games through various distribution channels, including digital platforms, such as Steam, PlayStation Store and Xbox Live, as well as gaming conventions, and global retailers, such as Walmart, GameStop and Amazon. The Company has around 18 internal game development studios and operates in more than 40 countries.

Gungho Online Entertainment Inc.

GungHo Online Entertainment is mainly engaged in the planning, development, and operation of online games. Along with its subsidiaries and associated companies, Co. is engaged in the planning, development, operation and distribution of smart phone applications and online computer games, and the sale of console games. Co. is also engaged in the sale of game contents through download service as well as the licensing of self-developed games. Co.'s principal smart phone applications are "Puzzle & Dragons," "Summons Board," "Divine Gate," and "Princess Punt Sweets," and its principal online computer games are "Ragnarok Online" and "Emil Chronicle Online."

Kadokawa Corporation

KADOKAWA DWANGO is a holding company. Co., through its affiliates, operates in three business segments: web services, publication, and video and game. Co. is engaged in the operation of a video service called "niconico;" the planning and operation of various events; the leasing of event venues; the mobile contents distribution; the publication and sale of paper-based books, e-books, and magazines; the sale of Internet advertising and packaged software; the planning, production, and distribution of movies; the sale of the copyrights; the e-commerce sales of character merchandise and pop idol CDs; the sale of CDs featuring content created from anime and "niconico," and the education business.

NEXON Co. Ltd.

Nexon is engaged in the production, development and delivering on-line games. Along with its subsidiaries and affiliates, Co. provides PC online-games and mobile games in Japan, Korea, China, North America and Europe as well as Asian countries. Co.'s principal existing game titles include "MapleStory," "Sudden Attack," "Dungeon & Fighter," "Counter-Strike Online," and "EA SPORTS™ FIFA Online 3." Co. also offers services such as consulting related to PC online-game distribution, in-game advertising, and merchandising incidental to PC online business. As of Dec 31 2017, Co. has 26 consolidated subsidiaries and 14 affiliates.

Nintendo Co. Ltd.

Nintendo is mainly engaged in the development, manufacture, and sale of home-use game hardware/software and peripheral equipment as well as software under the name of "Nintendo DS," "Nintendo 3DS," "Game Boy," "Nintendo 64,"" Game Boy Advance," "Wii," "Nintendo GameCube," "Game Boy Color" and "e-Reader (trading card games)." Co.'s principal software trademarks include "Pokemon," "Super Mario Bros.," "The Legend of Zelda," "STARFOX64" and others. Co. also provides online games and repair services. In addition, Co. is involved in the manufacture and sale of Japanese playing cards called "Karuta," playing cards and board games, as well as the management of intellectual property rights.

NVIDIA Corporation

NVIDIA engages in graphics processing unit (GPU)-based visual computing and accelerated computing platforms. The company has two segments, GPU and Tegra Processor, which are based on a single underlying architecture. The company's GPU product brands are aimed at markets including GeForce for gamers; Quadro for designers; Tesla and DGX for artificial intelligence data scientists and big data researchers; and GRID for cloud-based visual computing users. The company's Tegra brand integrates an entire computer onto a single chip, and incorporates GPUs and multi-core CPUs to drive supercomputing for autonomous robots, drones, and cars, as well as for game consoles and mobile gaming and entertainment devices.

Sony Corporation

Sony is engaged in the development, design, production, manufacture, offer and sale of various kinds of electronic equipment, instruments and devices for consumer, professional and industrial markets such as network services, game hardware and software, televisions, audio and video recorders and players, still and video cameras, mobile phones, and semiconductors. Co. is engaged in the development, production, manufacture, and distribution of recorded music and the management and licensing of the words and music of songs as well as the production and distribution of animation titles. Co. is also engaged in the production, acquisition and distribution of motion pictures and television.

Square Enix Holdings Co. Ltd.

Square Enix Holdings is a holding company that is mainly engaged in the entertainment industry. Co., through its subsidiaries, operates in four business segments. The Digital Entertainment business is engaged in the design, development, sale, licensed sale and operation of digital entertainment contents focusing on computer games. The Amusement segment is engaged in the operation of amusement facilities, the design, development, manufacture, sale and rental of amusement equipment. The Publishing segment is involved in the publication of comic magazines, books and game related books. The Rights Property segment is involved design, production, sale and grant of secondary works.

Take-Two Interactive Software Inc.

Take-Two Interactive Software is a developer, publisher and marketer of interactive entertainment for consumers. The company develops and publishes products principally through its two wholly-owned labels Rockstar Games and 2K, as well as its Private Division label and Social Point, a developer of mobile games. The company's products are designed for console gaming systems such as the Sony Computer Entertainment, Inc. PlayStation?4, Microsoft Corporation Xbox One?, and Xbox 360?, the Nintendo Switch, and personal computers, including smartphones and tablets. The company delivers its products through physical retail, digital download, online platforms and cloud streaming services.

Tencent Holdings Ltd.

Tencent Holdings Limited is an investment holding company principally involved in the provision of value-added services (VAS) and online advertising services. The Company operates through three main segments. The VAS segment is mainly involved in provision of online/mobile games, community value-added services and applications across various Internet and mobile platforms. The Online Advertising segment is mainly engaged in display based and performance based advertisements. The Others segment is mainly involved in provision of payment related services, cloud services and other services.

Toho Co. Ltd.

Toho is mainly engaged in movie, theater and real estate businesses. Movie segment is engaged in the production and distribution of movies, the operation of movie theaters, as well as the production and sale of video software. Theater segment is engaged in the production and performance of theatrical plays. Real Estate segment is engaged in the leasing, maintenance and management of real estate properties, as well as the management, cleaning and repair of roads. Co. is also engaged in the operation of entertainment and sport facilities, concession stands at Co.'s theaters and restaurants and the provision of accounting consulting services.

WARNER BROS. DISCOVERY INC.

Provider
Pelham Smithers Associates Ltd
Pelham Smithers Associates Ltd

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries. 

The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012. 

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