Summer may seem a strange time to get into video game stocks.
The release schedule is stacked towards the edges of the year, and the warmer weather means people spend more time outdoors (and less time smashing pixelated zombies in their attics).
That’s the theory anyway. But perhaps it’s worth reevaluating, given the performance of two UK-listed gaming stocks.
- Frontier Developments (LON:FDEV) posted a major ‘ahead of expectations’ update for FY26 on May 12, taking its 12-month gain to 96%.
- Just last week, TruFin (LON:TRU) posted a 20% increase in 2025 gross revenue, pushing its one-year return to 85% .
Both companies are running at P/E well under 15. Both are spitting off cashflow. And both have launched sweeping share buyback schemes, great for holders.
This piece isn’t here to analyse these companies. That’s what my colleagues’ stock pitches and Daily Stock Market Report features for (click to read their latest takes on Frontier and Trufin).
Instead we’re going to make the wider case for video game stocks, exploring 1) the adoption of more headwind-resilient business models and 2) the wider market sentiment.
Part 1: The business model
The gaming industry is huge. We all know that. In 2024 alone, it made $195 billion in content sales.
However the industry has faced significant challenges in recent years.
- The boom of the pandemic led to a profound slump as social restrictions were lifted.
- The democratisation of game development and the rise of indie studios has led to chronic over-supply.
- Rising consumer expectations and so-called ‘gamer fatigue’ has forced developers to spend ever more money to keep their audience interested.
- Demand for ‘ultra-realism,’ visuals and mechanics that are practically indistinguishable from reality, has squeezed budgets still further.
And conventional wisdom would have it that industry revenue is something of a bell-curve. A big push of lower-value games at the start of the year, before a sun-drenched summer valley and finally a barrage of blockbusters in the Black Friday-to-Christmas surge.
This remains true, if you look purely at game releases: GameSpot data from May shows that only 20 major games are slated for release in Q3 2026, compared to over 130 in Q2.
But this is a last-century way to view the video game business.
The inexorable rise of digital distribution (which accounts for more than 90% of…
