If you want to invest in video games there are, essentially, four ways to do it…

• Investing in video game publishers.
• Investing in video game retailers.
• Investing in companies that make video game consoles.
• Investing in companies that make video game accessories.

Game Publishers

These are the companies that make the games. And Electronic Arts Inc. (NASDAQ:ERTS) and Activision Blizzard (NASDAQ:ATVI) are the best bets right now.

Electronic Arts is the publisher of the popular Madden franchise, which gives it a consistent intake every year. Adding to its arsenal with a game like Spore will no doubt boost its bottom line even further.

Activision Blizzard is another strong contender. Guitar Hero has proven extremely popular, as has World of Warcraft. And while the new Call of Duty probably won’t sell as well as its hugely successful predecessor, Call of Duty 4, it will no doubt turn a respectable profit.

Avoid THQ Inc. (NASDAQ:THQI), which seems to have forgotten what games are and Take-Two Interactive (NASDAQ:TTWO), which is overly reliant on its controversial Grand Theft Auto series. Take-Two also had a good opportunity to be taken over by the much larger Elecrtonic Arts, but a deal never got done, which raises questions about the company’s management.

Accessories

As the unrivaled success of the Wii showed, innovation in video game accessories can pay off. For every console, as well as the PC, there are multiple games that can be enhanced by the use of a new input medium.

Games such as Guitar Hero, a game where you use a guitar shaped controller to play along with music, Flight Simulator X – the premiere flight simulator game is greatly enhanced by the use of a joystick, and the Dance Dance Revolution series, which features games that are best played with a dance pad, are always emerging on the market.

While, most of the accessories are made by the company of the game that requires them, there are external controllers that are always there competing for the market. Some companies that make these include MadCatz Interactive Inc. (AMEX:MCZ), a peripheral company specializing in mainly console accessories and Logitech International (NASDAQ:LOGI) a Swiss company that specializes in mostly in PC peripherals.

Retailers

While many electronics stores and retailers sell video games, there are some specifically designed to do so. The biggest of these in the world is GameStop Corp. (NYSE:GME). GameStop stocks new, used and old games, as well as multiple accessories and consoles. The largest video game retailer in Europe is GAME Group PLC (London:GMG). They operate similarly to GameStop.

Consoles

More than $9 billion was spent on video game consoles last year. Nintendo, Microsoft, and Sony all have new systems on the market, and they’ve all proved formidable.

[...] All of these companies are reasonably solid investments, but, in terms of gaming, Sony Corp. (NYSE:SNE) and Nintendo Co. (Pink Sheets:NTDOY) look like they are going to have some very good years.

Sony has got an amazing games division that is producing very high quality games for its console.  And Nintendo is always going to be in demand, though it needs to start making more games for the Wii and DS.

Microsoft Corp. (NASDAQ: MSFT), on the other hand, needs to acquire more exclusives, plus this report has nothing to do with the upcoming Windows 7, which is the biggest part of Microsoft’s business.

Hon Hai Precision Industry Co.

Hon Hai Precision Industry Co. (OTC: FXCNF) is a technology company based in Taiwan. It manufactures the Mac mini, the iPhone and the iPod for Apple Inc. (AAPL), cell phones for Nokia Corp. (NOK), and motherboards for Intel Corp. (INTC).

Of course, it also manufactures PS2, PS3, Xbox 360, and Wii – the four most popular gaming consoles – making it a tremendous play on the video game industry.

Emerging Markets: The Future of the Gaming Industry

The Middle East, China, India, Africa, and South America all have extreme pirating problems where video games are concerned. Thus, most companies have trouble expanding into these markets.

The Chinese market is a rapidly growing area for video games. However, the video games that the Chinese are enjoying are not what the West is enjoying. Chinese consumers love MMORPGs. While an average Western MMORPG, like Everquest for example, will reach 500,000 users. An AVERAGE Chinese MMORPG will attract well over 1,000,000 users very quickly.

Of World of Warcraft’s 10 million subscribers, 1.5 million live in China. Analysts estimate that the WoW Chinese market, alone, could eventually have 10 million users.

Most Chinese play MMORPGs in internet cafés (since most of them have limited Internet access). A large percentage of Chinese, however, do play free MMORPG’s. Free MMORPGs usually are completely free to play, but players can pay money to expand the gaming experience (bigger map to play on, more areas etc.) or improve their character (items, weapons character stats, etc.). While this doesn’t seem to like it would make a lot of money, it actually does, thanks to the addictive nature of most MMORPGs.

Some of the bigger names in the Chinese MMORPG market are Giant Interactive Group Inc. (NYSE:GA), Perfect World Co. Ltd. (Nasdaq:PWRD), Shanda Interactive Entertainment Ltd. (Nasdaq:SNDA), and The9 Ltd. (Nasdaq:NCTY).

Unfortunately, China is China. As such, the government always thinks of something ‘imaginative’ to do with the gaming market. The ‘Fatigue System’ is a means by which the government gets to control how long its citizens spend online playing games.

This system requests that games stop rewarding players after three hours of play in one day. Additionally, the system also requests an ID for players so as to be able to control their play more easily. While the system was originally meant for all gamers, it has been limited to gamers under the age of 18, due to the initial outcry it garnered.

China is also notorious for having the largest game sweatshop industry in the world. A game sweatshop is where a person is paid to play a game intensively and to make an extremely good character in it. That character is then sold to whomever wants it.

Chinese censorship is surprisingly low as the government only censors games that are anti-Chinese or portray Tibet and Taiwan as independent nations.

India’s market has yet to fully realize the potential of video games (putting the pirating aside). India is regularly compared to China in 2001. The online video games market is picking up but the overall market is still small. The few Indians who do game, do so like the Chinese: in Internet cafés. Unfortunately, there aren’t any enormous MMORPG makers (or equivalents) in India, yet.

The Middle East is generally also a pirating heaven though there are some legitimate shops usually selling games that haven’t been translated. Countries like Saudi Arabia also tend to ban certain games that are conceived as anti-Muslim.

If you wanted to invest in one of the Chinese MMORPG makers, the one that looks the best thanks to its pricing model and quality of games is Giant Interactive.

PS. This is an excerpt from a three-part guide to investing in the video game industry. For the complete version, please go to Money Morning’s archive pages.

Source: The Investor’s Guide to The Video Game Industry – Page 2

Jennifer Yousfi in Money Morning gives some background and examines strategies for recession proof investing:

U.S. Federal Reserve policymakers cut the benchmark interest rate by less-than-expected three-quarters of a percentage point at their last meeting, a move that was designed to energize a badly flagging economy without causing inflation to spike or exacerbating the greenback’s decline.

When central bank policymakers reduced the key Federal Funds rate from 3% to 2.25% on March 18, it was the sixth time in seven months the closely watched benchmark had been reduced. Many analysts had been expecting a reduction of a percentage point – or even more – as such recent events as the near-collapse and subsequent Fed-led bailout of U.S. investment bank The Bear Stearns Cos. Inc. (BSC) stoked fears that the U.S. financial system was ready to seize up.

The policymaking Federal Open Market Committee (FOMC) has now cut the Fed Funds rate six times and slashed the Discount Rate for direct loans to banks eight times since August, when the subprime mortgage market collapsed and created a global credit crisis.

While the FOMC made it clear that inflation has grown as a concern, it still says that economic worries remain the biggest problem and emphasized that it was ready to act again if need be.

“Today’s policy action, combined with those taken earlier, including measures to bolster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity,” the FOMC said in its March 18th statement. “However, downside risks to growth remain. The committee will act in a timely manner as need to promote sustainable economic growth and price stability.”

But while the Fed is definitely looking to do what it can to avoid a contraction in the U.S. economy, central bank Chairman Ben S. Bernanke faces a second – equally troubling – challenge. And no matter which route he chooses to take, the solution to one problem will exacerbate the second.

For that reason alone, the Fed has demonstrated some caution with regards to interest-rate reductions.

During the 1970s, the United States was afflicted with stagflation – crippling inflation coupled with stagnant economic growth and high unemployment. Until stagflation appeared, economists believed it to be an almost-impossible combination. Today, investors of a certain age remember the high fuel costs and long gas lines – along with the headlines about rising unemployment and a stalled U.S. economy that refused to be jump-started.

Read on here for Jennifer’s downturn strategy: the best investments in a recession.

US stocks plunged today, with the Dow Jones industrials shedding 300 points as record crude oil prices brought inflation fears to the fore.

And news that US jobless numbers saw their steepest rise last month since 1986 didn’t help matters.

There’s little doubt that the US economy is creeping ever closer to recession.

Laura Cadden in Today’s Financial News has this advice for investors who want to recession proof their portfolio…

With programs related to energy and climate change, health and human services, defense and homeland security, and environment and infrastructure, this consulting firm does it all – and does it very, very well.

Just listed as one of BusinessWeek’s “Top 50 ‘Hot Growth Companies’” for its innovation and versatility in a tough economic environment, my Hot Stock Pick for this week is a firm that provides consulting services and technology solutions.

Just a small sampling of its diverse client list includes: Yahoo!, the U.S. Department of Defense, Bank of America, the California Department of Fish and Game, BP, the U.S. Environmental Protection Agency, GlaxoSmithKline, the City of San Jose California, Nike, the United Nations Industrial Development Organization, San Jose, Costa Rica, the Australian Greenhouse Office, Google, the U.S. Joint Forces Command, and Rolls Royce.

This U.S. company assists in the analysis and implementation of programs related to four trends: energy and climate change, health and human services, defense and homeland security, and finally, environment and infrastructure.

These specialties brought them over 1,500 contracts in 2007 valued at around $560 million.

Close enough for government work

Headquartered in Fairfax, Virginia, this company has another five offices around and within Washington, D.C. The Washington Post was just named it as one of the largest companies in the D.C. metro area.

It was also named one of the “Top 100 Government IT Contractors” by Washington Technology this year.

Federal agencies accounted for roughly 27% of revenues in 2007. 65% came from state and local governments, with the other 8% made up of commercial and international clients.

What is this paragon of the pentagon?

ICF International, Inc. began in 1969 as the Inner City Fund – a venture capital firm dedicated to financing inner city business. In 1972, the company was reorganized into a consulting firm and became ICF Incorporated. In 2006, the company went public as ICF International, the new name emphasizing its global presence and increased scope.

Growth strategies that work

ICF does not hesitate to acquire companies that promise to boost its client base, geographic reach and service offerings. In 2007, they closed four acquisitions and have already completed another in 2008.

Recession? What recession?

Because of this focus on expansion, both geographic and operational, ICF has not awarded dividends — and does not intend to anytime soon.

It’s a good thing the stock price is so attractive and the company fundamentals so strong.

A recession-proof stock with great profit potential

For Q1 of 2008, ICF’s revenue came in at $175.1 million, as compared to $151.7 million the in the first quarter of the prior year.

Management is confident that ICF International can continue on this profitable path. They predict 2008 full year revenues, with the company’s existing portfolio of business, to be at least $690 million.

No shrinking violets, they.

And that’s something I like to see in these market doldrums.

Read on here for to for to learn how to profit from this stock that could easily jump 25% over the next 10 months.