With more people stuck at home, many have turned to video gaming to pass the time, potentially bolstering the outlook for a video game-themed exchange traded fund strategy.
“Working from home and shelter in place clearly provides more time for entertainment (no time spent commuting, at a minimum) and engagement in gaming is up double digits,” Wedbush Securities’ analyst Michael Pachter in a note.
Investors can capitalize on this new shift in habits with a targeted ETF strategy like the Wedbush ETFMG Video Game Tech ETF (NYSEARCA: GAMR), the first exchange traded fund dedicated to the video gaming theme.
Something like the Wedbush ETFMG Video Game Tech ETF can help investors capture the $127 billion global gaming industry, which is expected to grow 49% by 2025, according to Wedbush.
GAMR follows the EEFund Video Game Tech Index, which tracks the performance of companies across the video gaming space. The ETF contains holdings from across the globe but with a focus on companies in the United States and Asian countries. The ETF invests in console software, PC software, in-game spend PC/console, mobile in-game spend, dedicated hardware & peripherals, esports, subscriptions, virtual/augmented reality, and streaming.
“Greater engagement benefits free-to-play companies the most since more hours spent translates to more opportunities to spend,” Pachter said.
Pachter pointed out that the publishers in the GAMR ETF generate some portion of revenue from free-to-play platforms, with mobile companies like GLUU, ZNGA, Netmarble, SciPlay, and Nexon producing all of their revenue through free-to-play games. Furthermore, other conventional publishers also benefit from this growing trend, with Tencent, EA, Activision, and Take-Two generating around half of the revenue from free-to-play games as players purchase in-game cosmetics or other add-ons to enhance their gaming experience.
“GAMR provides investors a global, diversified portfolio of gaming names, and is extraordinarily well-positioned to benefit from social distancing. The hashtag #PlayApartTogether is trending, and gamers are practicing social distancing while playing with one another through their phones, consoles or PCs,” Pachter added.
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