Aniruddha Ganguly
5 min read
In This Article:
Sea Limited SE and Take-Two Interactive TTWO are well-known video game providers. While SE’s Garena Free Fire is hugely popular, TTWO rides on franchises including Grand Theft Auto (GTA) and Red Dead Redemption. Both stocks have been benefiting from rising consumer spending on mobile games, which, per SensorTower, reached approximately $6.85 billion in May, reflecting a 5.4% increase on a monthly basis.
Per Statista, video game revenues are expected to see a CAGR of 7.01% between 2025 and 2030, hitting $733.22 billion, with mobile game revenues witnessing a CAGR of 5.4% to hit $163.98 billion by 2030. This offers major growth opportunities for both Sea Limited and Take-Two Interactive.
So, SE or TTWO, which of these gaming stocks has the greater upside potential? Let’s find out.
Sea Limited is riding on strong Garena (Digital Entertainment) revenues, which increased 8.2% year over year to $495.6 million in the first quarter of 2025. Bookings soared 51.4% year over year to $775.4 million, driven by the success of SE’s flagship game, Free Fire. According to SensorTower, Garena Free Fire was the second most downloaded mobile game globally in May 2025, driven by the game’s growing popularity in markets like India, Brazil and Indonesia.
Garena’s collaboration with Naruto Shippuden contributed to increased user engagement. While quarterly active users increased 11.3% year over year to 661.8 million, quarterly paying users were 64.6 million, up 32.2% year over year. Paying user ratio was 9.8% compared with 8.2% for the first quarter of 2024.
Expanding gaming portfolio benefits Garena. In April, Sea published Delta Force Mobile, a first-person tactical shooting game, across markets in Southeast Asia, MENA, and Latin America that attracted more than 10 million downloads. The launch of Free City is also noteworthy. The company remains on track to achieve double-digit growth for Garena’s user base and bookings in 2025.
In fourth-quarter fiscal 2025, Take-Two Interactive’s NBA 2K25 posted a near-record performance and exceeded the company’s forecast. To date, the title has sold nearly 10 million units, a 7% increase compared to NBA 2K24 during the same timeframe. The Grand Theft Auto series exceeded the company’s expectations, and at the end of the fiscal fourth quarter, GTA V had sold in more than 215 million units. Red Dead Redemption 2 also outperformed, with net bookings growing 23% year over year.
However, Take-Two Interactive’s reliance on a few franchises is a headwind. The much-anticipated Grand Theft Auto VI, originally expected to drive fiscal 2026 performance, has been pushed to May 26, 2026, falling into fiscal 2027. This delay represents a critical blow to near-term revenue expectations and highlights the company’s inability to maintain consistent release schedules. TTWO’s fiscal 2026 guidance of $5.9-$6 billion in net bookings represents a modest 5% growth.
Take-Two Interactive’s decelerating growth trajectory, combined with increasing cost pressures, makes the stock risky for investors. The company’s guidance indicates that recurrent consumer spending will remain flat in fiscal 2026. Mobile revenues are expected to decline, along with Grand Theft Auto Online’s performance. Operating expenses have surged, with TTWO reporting a 3% year-over-year increase in fiscal 2026 expectations, primarily driven by higher marketing costs. TTWO’s development costs continue escalating, with capital expenditures of approximately $140 million planned for fiscal 2026.
