Avengers: Endgame, the highest-grossing movie of all time, made $2.8 billion. Grand Theft Auto V, the highest-grossing video game of all time, made _$6 billion. In fact, it’s the most financially successful media title ever. What’s more, GTA V cost a lot less to produce: $265 million versus Avengers’ $365 million budget. Video games, despite being perennially under-discussed in mainstream finance circles, is a stunningly good business.

But as with every other media branch, it’s also undergoing rapid change. The business is shifting away from its one-time-purchase model in favor of free-to-play and subscription options. Fortnite, a pioneer of the former, made $2.4 billion in 2018 and $1.8 billion in 2019 – mostly from in-game cosmetic upgrades. So-called “microtransactions” have been a boon for the entire industry: GTA V continues to make money selling digital goods online. That could be about to peak, however, with countries like China cracking down on addictive games that seek to exploit players.

This might only drive more people towards games’ other new business model: subscriptions. Apple’s Arcade offering, which gives access to a bunch of iPhone games for one price, is one smartphone example, while Xbox Game Pass and PlayStation Now are similar products for big-budget console titles – both vying to be the “Netflix for games”. And with the imminent rollout of “cloud gaming”, which streams video games from powerful servers, players will soon be able to use such services even without an expensive games console. In theory, you’ll be able to play any game from any device – meaning your smartphone will have the power of a PlayStation.

That poses both opportunities and threats to different parts of the industry. The big console manufacturers – Sony, Nintendo, and Microsoft – currently make $19 billion a year from selling hardware, plus another $9 billion in publisher fees from studios who want to release their titles on their platforms. The hardware revenue could evaporate, while increased competition from tech giants like Google – muscling in with its Stadia – could drive down publisher fees too. Still, subscription revenue could make up for that: $10 every month adds up to a lot more than $399 once every six years. And platform owners are willing to buddy up with Big Tech in order to make sure they bank that money: Sony’s already agreed to host its cloud services on Microsoft’s Azure platform.

Game publishers, meanwhile, may not mind whether traditional console makers or new tech firms end up capturing the nascent market. Investment bank Morgan Stanley estimates that cloud will increase the number of gamers by 10% – meaning publishers’ profits could be $11 billion higher by 2025.

New business models offer more stability, too. Right now game profits are quite “lumpy” – spiking on a new console or hit title. Recurring revenue, whether it be from regular microtransactions or subscriptions, is much more appealing to investors who are then less reliant on any one success.

That might also be why investors are increasingly keen on esports. Bringing in around $1 billion in 2019, the accompanying media rights, ticket sales, and advertising offer a persistent revenue stream. Leading esport team Cloud9 is currently valued at $400 million, with venture capitalists betting that future growth in the market will further boost the team’s $29 million annual revenue. If viewership increases, then league owners – often the game publishers – will win out too: in January 2020, Activision Blizzard’s Overwatch league and Call of Duty league agreed a multi-year streaming deal with Google’s YouTube.

Investing in the games industry is, fortunately, quite easy. Major publishers like EA, Activision, and Take-Two, and console manufacturer Nintendo** *are all publicly listed. The companies are less complex than TV networks and telecoms firms, so investors simply look at their stocks’ price-to-earnings multiples to compare them. At the time of writing, Activision trades at 24.5x its forecast earnings, compared to Take-Two’s 26.7x and EA’s 23x – perhaps suggesting that investors are less confident about EA’s growth potential, and excited for Take-Two’s GTA VI* .

You could also invest in a company where gaming is just part of the equation. Console manufacturers Sony and Microsoft obviously make money from more than just games. That’s also true of a potential esports bet: Amazon, which captures over 800 million hours of viewing a month via game streaming service Twitch.

The most dominant force in modern gaming, China’s Tencent, has huge stakes in many big publishers (including Fortnite developer Epic Games) alongside its massive social media business. But the problem with buying any of these stocks is that you’re not just betting on the gaming business’s growth, and it can be hard to tell how much gaming matters to their overall success. That’s true of all media conglomerates, in fact. So finally, we’ll break down just how to go about analyzing the big beasts.

The takeaway: Video gaming is a gigantic, lucrative industry that’s shifting to microtransactions, subscriptions and the cloud – and esports is attracting investors’ money too.