Investing in gaming and esports is undoubtedly teeming with potential, but investors should consider diverse approaches to these high growth arenas. The VanEck Vectors Video Gaming and eSports ETF (NASDAQ: ESPO) belongs on that list.
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.
Traditionally, the gaming investment thesis has revolved around hardware (consoles) and software, or game franchises and titles, but the industry is rapidly evolving and many of the most popular titles and the games played at esports tournaments are PC games, underscoring opportunities with investments tied to the hardware side of computer gaming.
“n 2015, the global gaming PC market hit $24.6bn in revenue, revealed the Jon Peddie Research data. High-end PC sales accounted for 45% of that value, followed by mid-range and entry-level gaming PCs with 30% and 25% market share, respectively,” according to SafeBettingSites.com. “During the next twelve months, the global gaming PC sales revenue jumped almost 23% to $30.2bn and continued growing ever since.”
ESPO in Focus
The $512.4 million ESPO is relevant in the gaming PC conversation because the ETF allocates over 14% of its combined weight to Nvidia and Advanced Micro Devices, two of the biggest makers of chips for gaming PCs.
“High-end gaming computers still represent the largest revenue stream of the global gaming PC market, expected to generate $18.5bn profit or 47% of total revenue in 2020. Mid-range gaming PC sales is forecast to reach 34% market share this year, a 4% increase since 2015, and generate $13.4bn in revenue. The revenue of the entry-level gaming computer segment is expected to jump 21.7% year-on-year to $7.3bn in 2020,” notes SafeBettingSites.
Esport is making audiences aware of the increased amount of video game engagement across various gaming platforms, streaming services, and now eSports. Esports is particularly notable given how traditional sports have all been canceled. As a result, many athletes, as well as consumers, have transferred over to eSports. International markets are also important to the ESPO story.
“In the second quarter of 2020, the EMEA countries hit 2 million units sold, a 33% jump year-on-year. The increasing trend is set to continue in the third and fourth quarter of the year, resulting in 16.4% YoY growth and 8.2 million sold units for the full year 2020,” notes Safe Betting Sites.
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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.