Game on: Video Game, eSports ETFs Rally in Trying Coronavirus Times

With so many people all over the world forced to stay at home because of the coronavirus pandemic, digital entertainment, be it streaming or video games and eSports is getting a big boost. Just look at the Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSEArca: NERD), which is up more than 8% over the past month.

NERD seeks to track the total return performance of the Roundhill BITKRAFT Esports Index, which tracks the performance of the common stock of exchange-listed companies across the globe that earn revenue from electronic sports, or esports related business activities. Data continue confirming the robust growth expectations associated with esports.

Specific to the upstart NERD, its highly levered to the esports boom, a favorable factor for investors with longer time horizons.

“Esports is the fastest-growing theme in the gaming sector,” said GlobalData in a recent note. “These organized multiplayer video game competitions have enjoyed spectacular growth over the last decade, with thousands of fans filling stadiums to watch live events and millions following them on streaming platforms. Although esports currently caters to a niche audience – almost 10% of the global online population of around 4.5 billion – its reach is expanding rapidly.”

Now for NERD

NERD’s underlying index consists of a modified equal-weighted portfolio of globally-listed companies who are actively involved in the competitive video gaming industry. This classification includes, but is not limited to video game publishers, streaming network operators, video game tournament and league operators/owners, competitive team owners, and hardware developers.

With American athletic leagues and competitions shutdown and citizens sheltering in place esports and video games are becoming prime avenues for gamblers and those seeking entertainment alike. Moreover, esports competitions are giving networks some form of sports to air.

“Brands from a wide range of industries are investing in esports to reach a young demographic that is typically resistant to traditional advertising channels,” said GlobalData analyst Rupantar Guha. “The increasing involvement of non-endemic brands such as Coca-Cola and BMW is helping to legitimize esports, as well as bringing in significant revenue.”

Data bode well for the growth of the esports industry beyond the coronavirus situation.

Esports “has proved largely immune to the COVID-19 pandemic due to its prompt transition into online formats and sudden spike in interest from traditional sports organizations, which pushed esports further into the mainstream and brought it to the attention of a wider audience,” according to GlobalData.

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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.