Up 82.44% year-to-date, the VanEck Vectors Video Gaming and eSports ETF (NASDAQ: ESPO) is proving the validity of the video game and esports investment thesis.
For investors that missed out on ESPO’s 2020 run, the good news is that the esports industry and related investment thesis are still in the early innings.
ESPO seeks to track the performance of the MVIS Global Video Gaming and eSports Index (MVESPO). The index is a rules-based, modified capitalization-weighted, float-adjusted index intended to give investors a means of tracking the overall performance of companies involved in video gaming and eSports.
“It’s no wonder esports are worth roughly $1 billion in 2019 and being projected to grow 400% in the next seven years to $4.28 billion by 2027, according to Data Bridge Market Research,” writes AllStargg co-founder and CEO Nick Cuomo. “Some might say this is a conservative estimate with the global traditional sports market worth $388.3 billion in 2020 alone. With more than 2.7 billion gamers on earth, we’re barely scratching the surface of what’s possible for esports.”
Esports: Big Opportunities Ahead
There’s no denying the global outreach that Esports has had, especially now with the pandemic. Take the 2020 “League of Legends” World Championship gaming tournament for example:
“The 2020 “League of Legends” World Championship came to a close on Saturday, providing a triumphant if slightly muted exclamation point for the 10th season of one of the world’s most popular professional esports events,” an NBC News report said. “After starting with 22 professional teams from around the world, South Korea’s DAMWON Gaming defeated China’s Suning to take home the Summoner’s Cup and a share in the prize pool worth millions of dollars.”
Esports adds big revenue potential to the broader video game investment thesis.
“Sponsorships together with media rights are expected to generate 75% of the eSports sector’s total revenue. In 2020, this figure would be $822.4 million, increasing to $1.2 billion by the year 2023,” notes SafeBettingSites. “It is interesting to note, however, that digital revenues represent the industry’s fastest-growing revenue stream. Expected to generate $21.5 million in 2020, the digital revenue is growing at an astounding CAGR of 72.4%.”
Adding to the long-term case for ESPO is the fact that there are more than 2.7 billion gamers around the world and more than 10 million developers, confirming a robust long-term trajectory for the esports industry.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.