The Global X Video Games & Esports ETF (NASDAQ: HERO) is on a torrid pace this year, proving there’s something to the notion that a global pandemic can have positive implications for game sales and esports revenue.
HERO, which is nearly a year old, “seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality,” according to Global X.
Electronic Arts Inc., the publisher behind Apex Legends and Madden NFL, recently revealed record sales after tens of millions of new player sign-ups. Activision Blizzard Inc. and Take-Two Interactive Inc. also announced strong showings during the Covid-19 shift in consumer habits.
Furthermore, these strong growth trends for the video gaming industry have all come in before pre-holiday releases of new consoles from Sony Corp. and Microsoft Corp., which are expected to add new distractions and entertainment choices for consumers in the months ahead.
Plenty of Support
“Stuck at home and without their accustomed entertainment mediums, individuals across the world and generations turned to gaming to fill the void. Sales of video games and consoles reflect how the environment served as a tailwind for the space,” according to Global X research.
Online games are increasingly dynamic and offer ways for gamers to supplement or replace other forms of social media. That bodes well for the post-pandemic outlook for HERO.
“We expect these pandemic-trends to continue through and after reopening, even as reopening expands which leisure activities are permissible and as increasing employment means more time spent at work, individuals still indicate that they are spending more time playing video games and watching esports than before the pandemic,” according to Global X. “This likely reflects increased interest among casual/new audiences that re-engaged with gaming during stay-at-home orders and is illustrative of how the space has become an environment for socialization.”
Vital to the HERO thesis is the fund’s exposure to the hardware (console) side of the gaming business, which is often overshadowed by game publishers (software). A prime reason why HERO could prove durable beyond the coronavirus situation is a looming hardware upgrade cycle coming later this year.
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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.