Summary
Major Japanese video game companies like Konami, Sega, Capcom, andNintendoare ending the year with significant gains as investors shy away from more turbulent market sectors. The Nikkei 225 index was up 19% for the year, versus the 30 to 40% increases seen by a number of leading video game makers. In particular,Nintendois seeing an uptick in value as gamers await the announcement of the Switch successor.
In August, weak predictions for the U.S. economy sent global stock prices spiraling as investors sought to insulate positions against weakened hiring expectations. That shift in momentum derailed the upward trend in semiconductor stocks, which until that point had been outperforming many of the industries reliant on chip technology. Analysts have pointed to the impending Trump Administration tariffs on goods from China as a deterrent to near-term increases in semiconductor stocks.
In a variety of year-end analyses, the shares of major Japanese video game companies were found to have outperformed related sectors and the broader market. Riding high onthe success of the recentSilent Hill 2remake, Konami led the pack with a more than 90% increase over the start of the year. Moving investments away from China-based chip manufacturers and into markets unlikely to be directly affected by new tariffs, like video games and entertainment services, may be part of the recent upturn for game companies, many of which saw significant gains in late November 2024.
Japanese Game Companies See Success Compared to Other Sectors
Another key player, Sega, who is riding high onthe Sonic franchise’s latest film installment, also made a splash, with stock valuation surpassing a 40% yearly increase. While some video game stocks outperformed the broader Japanese market, the Nikkei still ended the year at record highs, with a 19% increase from the start of 2024. Japan’s domestic economic policy and strong trading against a stabilizing Yen have bolstered investors' long-term outlook on investments in the country.
The resiliency of gaming stocks comes at the end ofa bloodletting year for the industry, as companies have taken aggressive steps to ensure shareholder value by laying off tens of thousands of workers. After a slump in projected post-pandemic sales and a number of spectacular misfires in major releases, the industry is expected to regain its footing and experience persistent growth in 2025.
As stock prices are historically cyclical, the recent gains may level out as investors shift their attention between sectors. The new year also promises a high degree of uncertainty as global trade policies prepare for the notoriously erratic and aggressive Trump administration’s return to the fore. Hopefully, the increased valuation of these companies anda promising release schedule for 2025foreshadow reestablished stability for the video games industry as a whole.
Nintendo
Nintendo is a Japanese video game company headquartered in Kyoto, Japan. While producing highly popular hardware consoles like the Switch, the company is known for its many first party video game franchises like Super Mario, The Legend of Zelda, Fire Emblem, Pokemon, and many more.
