Gaming was hailed as the future of entertainment over two decades ago. And the industry has lived up to this hype. It’s been evolving and growing rapidly into a huge media force, generating more revenue than music and film combined.
Factoring in eSports revenue and console sales, the gaming industry is valued at over $200 billion. And with the explosion of mobile gaming, the development of the metaverse paired with the emergence of in-game economics, the industry is now a thriving microcosm that has transformed interactive storytelling.
The US and China are leaders in this space. However, the UK is slowly growing into a European powerhouse, with several companies gaining exposure during the pandemic gaming boom. And when investing in gaming, the UK has an ever-growing list of stocks that have become big global players.
What are gaming stocks?
Gaming stocks are companies listed on an exchange that primarily design, distribute or market video games. This is a broad classification that includes a variety of:
- service providers,
- software developers,
- animators,
- and graphic consultants.
Combined, they predominantly deal with the creation, launch and post-release support of video games.
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Top gaming shares in the UK
Here are some of the top shares listed on the London Stock Exchange. These companies have the largest market caps and form the core of the UK gaming industry, giving you a detailed picture of what the top gaming stocks in the UK have to offer.
| Gaming Company | Description |
| Frontier Developments (LSE:FDEV) | British game developer with licensing rights to huge global franchises like Jurassic World and Formula One. |
| Devolver Digital (LSE:DEVO) | American video game developer and distributor focused on fast expansion through acquisition. |
| Team17 Group (LSE:TM17) | British gaming studio with a focus on team-based, party or squad games. Indie giant with a distinct style and huge catalogue. |
| Games Workshop Group (LSE:GAW) | A revolutionary board game manufacturer that has transitioned to creating popular video game franchises. |
Frontier Developments
Frontier Developments is the studio behind popular titles like RollerCoaster Tycoon, Elite Dangerous and Jurassic World Evolution. And it has been a British gaming mainstay for nearly three decades now. The company uses a multi-pronged strategy that involves licensing rights to popular franchises and also maximising post-release revenue through in-game purchases.
The company gained prominence during the pandemic gaming boom when its share price rocketed over 150% in just one year. But most of this growth came from players stuck at home during lockdown, snapping up some of its older releases. This shows the focus on quality as many of its titles have longevity, something that is rare in the gaming world.
Building on their strategy, Frontier Developments acquired the licensing rights to the first F1 simulator game. This is an exciting long-term opportunity for the company to expand its sports portfolio much like Electronic Arts did with the FIFA and NBA 2K series. In the gaming world, this is a huge step ahead because sports simulator games generate steady revenue long after the initial release.
Lukewarm reception of its latest titles have caused quite a bit of volatility in its share price, and the stock has since fallen from grace compared to its post-pandemic highs. But with the successful launch of Planet Coaster 2 and continued popularity of Jurassic World Evolution, the company seems to be slowly making a comeback.
Devolver Digital
This gaming stock listed in the UK is the only big studio with broad exposure to the thriving American gaming market. Based in Texas, Devolver Digital has a very focused business model of building indie games that shake up the market. The company identifies as a developer-friendly platform that gives creators the tools to compete with the big players.
After the success of its Serious Sam series, this studio has been involved with over 50 successful titles, including the sleeper hit Hotline Miami, Carrion, Shadow Warrior and also published the global phenomenon Fall Guys. Devolver Digital is also making a huge push towards metaverse gaming, which is largely considered to be where the industry is headed in the next decade.
This gaming stock was listed on the FTSE AIM index in 2021 and, with its market strategy and global exposure, the company is looking to maximise the potential of indie titles.
Team17 Group
Team17 Group has been belting out hits since the 1990s, getting a firm hold of the British indie games market. With popular titles like Overcooked, the Worms series, Hammerting and Blasphemous, the company’s focus on premium, squad-based, pay-to-play games is clear.
The company works with budding indie creators across the globe, and acts as a distributor as well. Over 100 games have been launched under the Team17 banner since the late 90s. And today Team17 continues to dominate the party game genre.
Since 2021, the company has also branched out to educational entertainment and gaming apps targeted at children under 13. This is a huge gaming niche and generates a lot of passive revenue. Team17 recently acquired StoryToys, a big name in the edutainment field to strengthen its position as UK’s top ‘edugaming’ company.
Games Workshop Group
The story of Games Workshop is very unique. After humble beginnings as a board game manufacturer in the mid-70s, the company gained global prominence after the success of its miniature wargame Warhammer 40,000. And in the 90s the company made the smart decision to digitise the Warhammer series and release playable computer games as well. Since then, the company has gone on to produce over 50 extremely successful video games playable across every console.
The franchise model is extremely popular in the video game world. And Games Workshop has perfected the art of creating successful sequels. Using its Warhammer series as the blueprint, the company has created multiple streams of revenue. It’s also gained licensing rights to other global franchises like The Lord of the Rings as well.
Given its long history, the dominance of a niche category, longevity and huge market cap make Games Workshop a top UK gaming stock.
Are gaming shares right for you?
Gaming stocks might not be for everyone. Traditionally, gaming shares are slightly volatile given the nature of the industry. The industry has become incredibly competitive, meaning even popular releases often get buried. CD Projekt Red’s Cyberpunk 2077 serves as a reminder of how even highly anticipated games can fail on initial release.
For investors looking at long-term gains from gaming shares, it is wise to look at the biggest shares, catalogue of games, future projects, takeovers and potential collaborations. All these factors cause price fluctuations. And it’s easy to get caught up in the hype. After all, video game stocks can quickly generate a lot of interest in short bursts.
But with that being said, the industry looks like it is about to take the next big leap in entertainment with virtual world-building and the metaverse. Gaming could become a rewarding avenue for investors who follow the Foolish investing philosophy of being smart and choosing companies with robust values and financials with long-term gains in mind.
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