Don't just play the games, play the video game industry

Q: I'd like to invest in the video game industry. What are the companies, and stock symbols, of the leading players?

A: Blockbuster games like Grand Theft Auto and Halo are a big reminder of just how popular video games have become.

Rather than being just for teenagers, games have broadened their appeal to include other people. Some consumers would just as much play a video game than watch TV or see movies. Nintendo's popular Wii console, which is controlled with an easy-to-use wand rather than a controller, has made gaming more popular in unlikely spots including nursing homes and with physical therapy.

The broadening appeal of video games makes the video game industry attractive from an investment perspective. Rather than being a cutthroat battle for market share, as is the case in most media including TV, print publications and Internet, the video game industry is still big enough for there to be plenty of business for most of the players.

Also interestingly, despite the advances made in the current generation of technology, the investment options haven't changed all that much from the previous generation. Below is a quick summary of the different plays that are available to investors looking to invest in various aspects of the video-game industry:

1. The hardware makers. These companies develop the hardware that games are played on. This includes the big three console makers, Microsoft, Sony and Nintendo. But I've also included several publicly traded makers of personal computers and graphics cards, which have divisions and products dedicated to gaming.

• Microsoft msft. The company best known for Windows and Office has made great inroads in the industry with its Xbox 360. By arriving on the market well before Sony's PlayStation 3, it grabbed early market share. Developers like its friendly interface for building games and its online Live service is considered to be the industry's gold standard. Consumers also like how the Xbox 360 doubles as a entertainment system, allowing them to stream music and movies from the PC in the office to the Xbox in the living room. Microsoft also has a video-game development studio, which created hits like Halo and Gears of War.

There are downsides. For one, the gaming division at Microsoft is pretty tiny relative to the other parts of its business. The company also got a big black eye when it was found that early versions of the Xbox 360 had a design fault that may cause it to overheat and require repairs, which Microsoft is paying for.

• Nintendo ntdoy. Nintendo is everyone's favorite in the current console cycle. Outgunned in making a high-powered console, the company went low-tech in graphics and focused on creating a unique experience with the Wii. Grandmothers and housewives have lined up to for these devices to play offbeat games. The company's DS portable has also proven popular. Nintendo has also always dominated its platforms with its own software, making it both a hardware and software leader.

• Sony sne. The incredibly popular PlayStation 2 had many assuming Sony would be the company to beat in the current generation. And the company developed a tremendously powerful PlayStation 3 console that comes packed with a high-definition Blu-Ray disk player. The company seems to be hitting its stride by bringing down PS3 prices and getting more games on the market. It's also planning to take the wraps off its interesting online offering.

• Nvidia nvida. Makes high-powered graphics chips used in many gaming computers. The downside, though, is the company is under pressure over the software it provides to make its products work, called drivers. Problems with Nvidia drivers have been pinpointed as causing issues with Windows PCs.

• Advanced Micro Devices amd. Nvidia's big rival in the graphics business. While traditionally seen as an also-ran, AMD is gaining steam with consumers hoping its drivers work better than those provided by other companies.

• Hewlett-Packard hpq. This PC maker has been a big player in the gaming market. Its Voodoo division is dedicated to creating high-powered gaming rigs. HP has been taking share from Dell, as Dell restructures.

• Dell dell. Dell got into gaming in a big way with its acquisition of Alienware. But since then, facing challenges in its core mainstream PC business, Dell has focused on getting its primary business in order.

2. Software makers. Microsoft, Nintendo and Sony all make games for their consoles. But much of the industry's success relies on third-party developers, who make just games. Some of the leaders include:

• Electronic Arts erts. The oldest remaining third-party game developer is best known for its blockbuster titles, including sports games like Madden NFL and other popular games like The Sims. It made a bet a few years ago to pay up for rights to movies, like Harry Potter and Lord of the Rings, and produce games connected with those. But since then, the company seems to be retooling a bit to focus on more original content. This holiday season will be a test to see how the efforts are panning out.

• Activision atvi has shown how management expertise can be critical in this tricky industry. Every console cycle, the company seems to morph in order to be at the right place. Currently, the company is betting on several huge titles, such as Guitar Hero and Call of Duty, and focusing its efforts there rather than trying to release many titles. And the company has long been a big PC developer, which helps to smooth out any disruptions between the releases of new consoles. It's currently assimilating with Vivendi, which controls the popular War of Warcraft online game.

• THQ thqi. THQ has concentrated on the portable consoles from Nintendo and has been a leader in licensing movie franchises, including from Pixar. Like Electronic Arts, THQ, too, has been developing original content.

• Take Two ttwo. If you know Grand Theft Auto, you know Take Two. Take Two has made itself the HBO of video game makers, by spending the effort to craft high-quality mature titles. The challenge, though, is that the company has not be successful in branching out from Grand Theft Auto. Electronic Arts is trying to buy the company.

3. Peripherals and accessories. There are many companies that make add-ons and other pieces and parts for video games. Among some of the publicly traded leaders:

• Mad Catz Interactive mcz. This company creates a variety of controllers for games and protective cases and car adapters.

• Logitech logi. Has a division that focuses on video game peripherals. It's primarily a maker of PC accessories, though, including mice, keyboards and webcams.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at To submit a question, e-mail Matt at Click here to see previous Ask Matt columns.