The video game industry is experiencing a monumental stock market rally, captivating investors from Wall Street to Japan's Kabutochō. This surge is propelled by major industry events, including the record-breaking privatization of Electronic Arts Inc. and the explosive launch of new hardware and software.
Record-Breaking Deals and Market Performance
The sector's bullish run faced a pivotal moment with the announcement of Electronic Arts Inc.'s US$55 billion acquisition in September 2025. This leveraged buyout, the largest in history, sent ripples through the investment community. For analysts like Douglas Creutz of TD Cowen, it meant losing a key publicly-traded company that offered transparency into the US$400 billion video game industry.
The deal, backed by influential investors like Saudi Arabia's Public Investment Fund and Jared Kushner's Affinity Partners, included a 25% premium for shareholders. Goldman Sachs is set to earn a historic US$110 million fee for its advisory role, while JPMorgan Chase & Co. provided a record US$20 billion in financing.
ETF and Key Players Outperform the Market
Despite the loss of EA from the public markets, the sector's performance has been staggering. The Roundhill Video Games Exchange Traded Fund (ETF) has risen more than twice as much as the S&P 500 index this year, through mid-November. Its growth has even eclipsed the combined performance of the so-called "Magnificent Seven" tech giants—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—despite the frenzy around their artificial intelligence projects.
Other major players have also hit new peaks. Sony Group Corp., the maker of the PlayStation, and Square Enix Holdings Co., developer of the Final Fantasy series, have seen their stocks reach all-time highs.
Drivers of the Sustained Rally
The video game boom isn't a flash in the pan. The demand supercharged by COVID-19 lockdowns has proven durable. In 2024, 71% of U.S. consumers played video games, according to data from market researcher Circana.
Two major product launches are fueling the current excitement. The Nintendo Switch 2 is already the fastest-selling game console in U.S. history, just months after its release. Meanwhile, Take-Two Interactive Software Inc.'s highly anticipated Grand Theft Auto VI is projected to be the most expensive game ever made, with analysts forecasting a development budget exceeding US$1 billion.
Potential Headwinds and Future Outlook
While the mood is overwhelmingly positive, some clouds loom on the horizon. The EA buyout, while a sign of confidence, also comes as the company and others have faced challenges like layoffs and faltering sales. Furthermore, new tariffs imposed by U.S. President Donald Trump are causing jitters.
Sony and Microsoft have already raised console prices in the U.S. in response, and Bloomberg Intelligence estimates that Nintendo may need to increase the U.S. retail price of its Switch 2 by as much as seven per cent to offset the duties. This could potentially dampen consumer demand once the initial hype for the new console subsides.
Dave Mazza, CEO of Roundhill Financial Inc., which manages the video games ETF, views the EA deal as a bullish signal. "If a large publisher goes private, it signals that strategic and financial buyers see upside the public markets aren't fully pricing in," he says, noting it shows how valuable these gaming franchises have become. However, the industry now navigates a landscape where immense opportunity is balanced against significant economic and political pressures.
