Nostalgia has always been a powerful source of revenue for Hollywood. Turns out, it’s equally lucrative for video games.

From its beginnings with the likes of Pong, a two-dimensional table tennis game, the video game industry has grown into a $120 billion business. Over the years, memorable games have garnered strong followings. Like Hollywood remakes or remasters old movies, video game publishers are overhauling and rereleasing games to tap into ready-made fan bases for popular franchises like The Legend of Zelda, Crash Bandicoot, Spyro the Dragon and World of Warcraft.

“I think nostalgia is the major driving force for the success of a remake,” said Doug Clinton, managing partner for the venture capitalist firm Loup Ventures, which focuses on emerging technology and gaming. “Any game that doesn’t have meaningful nostalgic value isn’t likely to be successful.”

In May, Activision Blizzard, the developer behind World of Warcraft, announced that two games from the Tony Hawk’s Pro Skater series, originally released in 1999, would be brought back later this year.

The remake trend isn’t extending only to the most highly rated games either. Children (and adults) who received SpongeBob SquarePants: Battle for Bikini Bottom in Christmas of 2003 can now buy a “rehydrated” remake, which hit stores in June. Though the game received decent reviews when it was first released, it was by no means a classic. But the remastering shows how nostalgia is driving publishers’ decision making.

“Because you can actually revisit those virtual spaces, it’s a more powerful type of nostalgia,” said Alyse Knorr, assistant professor of English at Regis University and author of the book “Super Mario Bros. 3.” “It’s the same when you go back to it; it’s the same as it was when you were 7.”

That sentimentality does not necessarily lead to instant sales. Some titles that have been rereleased or remastered in hopes of cashing in on cult status fall back into obscurity, like 2017’s Constructor HD or White Day: A Labyrinth Named School. Generally, games that have high review scores and strong followings tend to be safe financial bets for a second look.

“When you’re taking a game that you know has a Metacritic of 90-plus, the only thing you can do at that point is screw it up,” said Marco Thrush, president of Bluepoint Games, a studio known for developing high quality remasters and remakes.

Initially, publishers capitalized on the nostalgia trend by curating games from the 1990s on plug-and-play devices. Nintendo’s NES Classic, which offered 30 games like Super Mario Bros. and Donkey Kong packaged in a replica of the original Nintendo Entertainment System console, was a huge hit when it came out in 2016, selling out almost immediately. Other developers like Sega and Sony quickly followed suit.

But developers saw an opportunity to make even more money by investing in substantial upgrades. One of the biggest this year was the release of Final Fantasy VII Remake.

In 1997, Square Enix released the original Final Fantasy VII, a futuristic cyberpunk epic with multiple characters and twisting plotlines that became one of the most beloved titles in the Final Fantasy series.

Visually, however, the creators had to make do with the technology at the time. For example, the game had blocky-looking characters, no voice acting and no 3-D backgrounds.

After years of teasing, Square Enix remade the game to match a modern experience. Final Fantasy VII Remake used entire teams of voice actors, artists, animators, engineers and producers to create a game that could stand up to any contemporary release.

The strategy paid off: It became the best-selling game of April, according to data from the NPD Group, a research firm that covers the video game industry.

Fans have largely been receptive to the reimagined game, and its modern systems have made it accessible to new players, who found the original mechanics difficult.

“I tried the Final Fantasy VII remaster on Xbox; it was a little too far gone for me,” said Preston Bakies, 27, of Findlay, Ohio. “But when the remake came out — I’ve put a lot of time into it. It’s been a lot of fun.”

The original Final Fantasy VII cost $40 million to make, which was considered a high sum for a video game in the ‘90s. Given the technological demands of modern games, costs have grown considerably more expensive, experts say.

“I haven’t come across a single game which took more than $100 million in Japan” to get made, said Atul Goyal, a managing director at investment bank Jefferies & Company, who pegged the budget for Final Fantasy VII Remake at up to $140 million.

Others felt it was even higher. “If we assume the number of sales for Final Fantasy VII Remake is six million units, $144 million is the budget,” said Yuhsuke Koyama, a professor at Shibaura Institute of Technology in Tokyo and author of “A History of the Japanese Video Game Industry.”

In a twist, Square Enix has broken Final Fantasy VII Remake into multiple parts, although it would not say how many. There are risks associated with this strategy, including irking fans who have to shell out more money for the other parts of the game.

“We are writing in our reports that it will be a two-part series. Not three, not four, not 10,” Mr. Goyal said. “And the subsequent chapter will be coming out soon in the next fiscal year.”

Square Enix is not the only publisher capitalizing on this trend. Capcom, the publisher behind Street Fighter and Mega Man, has also been rummaging through its back catalog. Last year, it released Resident Evil 2, a remake of the 1998 PlayStation original. Not only was the remake loved by critics, it has sold 6.5 million units as of April.

The success prompted Capcom to greenlight a Resident Evil 3 remake, which was released in April.

Capcom declined to comment for this article, but it did reveal in a Japanese documentary that at least 800 developers worked on Resident Evil 2.

Mr. Goyal estimates that Resident Evil 2 likely did not cost more than $100 million to remake. And given that Resident Evil 3 reused some assets from its predecessor, and clocks in at a shorter run time, it likely cost Capcom even less.

The savings for Resident Evil 3 would have been significant, said Michael Pachter, an analyst at Wedbush Securities who follows the video game industry.

“The level design is the complicated part, art is relatively inexpensive, probably 30 percent of the cost of the game,” he said. “If they reused 20 percent of the art, it’s a 6 percent savings.”

Resident Evil 3 was not the same breakout success that Resident Evil 2 was in 2019, but it still landed at a respectable sixth place in April, according to NPD. Capcom did confirm that it shipped two million units, and it has already announced that Resident Evil 4 will be getting a remake.

Remastering and remaking have become so common that some studios are dedicated to bringing old games to modern hardware. Bluepoint Games in Austin, Texas, has a reputation for creating some of the highest quality updates in the industry. In 2018, it released a high-definition remake of Shadow of the Colossus, which originally came out in 2005 by Sony.

Bluepoint revamped the game in 2011, bringing the original up to 1080p standards, then substantially reworked it again in 2018 for 4K televisions. Mr. Thrush, Bluepoint’s president, declined to reveal the costs of remaking the game.

“We revitalize an older game, somebody’s baby,” said Mr. Thrush. “New gamers get to play games they otherwise wouldn’t.”