The video game industry seems to be in strong shape despite the thinking that console games and PC games would gradually fall out of favor as smartphones and watches gained popularity, observes Glenn Rogers, contributing editor of Internet Wealth Builder.

This happened to some extent in that for the last three years games on smartphones have risen steadily in popularity. But although sales of some PC games and consoles are slightly down this year, overall they still very strong.

The top five players in this group are Nintendo (NTDOY), Ubisoft (UBSFY), Electronic Arts (EA), Sony (SNE), and Microsoft (MSFT).

This year, $35 billion will be spent on video games software and those sales are often spurred when there is a new console released by Sony, Microsoft, or Nintendo.

Microsoft has released its new Xbox One X console, which offers increased power and 4K resolution. Nintendo has upgraded its consoles while Sony released new hardware last year.

The gaming industry and the movie industry have a lot in common. They are largely driven by new title releases and with the holidays coming up you can bet there will be lots of them on the way.

We’ve already had announcements of new installments of the Activision (ATVI) Call of Duty and Ubisoft’s Assassin’s Creed. Electronic Arts is releasing Star Wars Battlefront II. Nintendo has already released Super Mario Odyssey.

Additionally, clever publishers have found ways to facilitate in-game purchases and that is driving revenues in ways never before thought possible. These in-game purchases are coming in at much higher margins and in Activision’s case they are now getting 80% of their sales from in-game services.

Additionally, they have created multi-player gaming platforms, which in EA’s case brought in $800 million in revenue. Then you have to add in mobile revenue, which in EA’s case was $650 million last year.

All in all, the game publishers have been creative in expanding their offerings and therefore dragging in more revenue out of their major titles.

The other opportunity out there for both hardware and software is virtual reality. Still, in its early stages, virtual reality promises an immersive experience that apparently greatly enhances the gamers’ experience.

Obviously, there are great opportunities for hardware manufacturers including chipmakers like Nvidia (NVDA), which I recommended earlier this year at $103.86. It has been a bases-loaded home run, up 103% since I picked it in May.

All the handset folks are piling in and Facebook (FB) made a big investment early on so they will likely be bringing content as well. All the software folks will have to step up so it will be a dynamic situation in this industry for the next few years.

Unlike content creators like newspapers, magazines, broadcast TV, etc., gaming has benefited from the online explosion. It is one entertainment segment that seems protected to some degree from the meltdown that other media companies have faced.

It has helped that these companies have also created live gaming contests, held in large, well-attended arenas where thousands of fans gather to watch pro players compete for big money.

So what should you do to take a stake now in this stable but still growing business? The ETFMG Video Game Tech ETF (GAMR) — which is up 53% year to date — is a good place to start. Its portfolio includes many of the names I have mentioned.

However, the fund has limited exposure to Microsoft, Nvidia, and the major Chinese players like Tencent Holdings (TCEHY) that dominate the Chinese gaming market. The Chinese are crazy for gaming so you may want more exposure there.

Action now: Buy GAMR for broad exposure to the gaming sector. If you want to enhance your position with individual stocks, consider adding Microsoft, Nvidia, and Tencent to your portfolio.

Glenn Rogers is contributing editor to Internet Wealth Builder.

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