The VanEck Vectors Video Gaming and eSports ETF (NASDAQ: ESPO) and other esports/video game exchange traded funds are delivering the goods in a big way for investors this year. Further still, 2020 could be the start of something more substantive for ESPO components.
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.
Data confirm the growth trajectory of the esports/gaming realm is compelling for investors.
“In 2020, the total video game industry is projected to reach $159B in revenues, which makes it a bigger industry than both cyber-security and robotics,” according to VanEck research. “By 2023, over 3 billion people around the world are expected to play video games in some form.”
Video Games Beyond the Pandemic
With gaming benefiting on multiple fronts, including the stay-at-home theme forced by the Coronavirus pandemic as well as a slew of new titles from popular franchises, ESPO, and its components are delivering for investors in 2020. However, demographics, among other factors, indicate ESPO has a long runway for upside ahead of it beyond the pandemic.
“Underpinning these seismic shifts in how people play, consume entertainment and interact with others, lies the natural aging of the population,” notes VanEck. “Younger consumers (30 and below) have grown up online and on their parent’s phones and iPads. As millennials have grown into adults, they have continued to spend time and money on playing video games. According to the Entertainment Software Association, 65% of American adults play video games.”
In addition to the expected ongoing boom of esports, including among participants, bettors, and advertisers’ and networks’ desire to get a piece of the action, there are other longer-ranging catalysts for ESPO. Those include gamers’ diverse tastes for software, which allows the industry to appeal to a diverse cross-section of consumers.
Then there’s mobile gaming, which will be another epic growth frontier for many ESPO holdings.
“Mobile gaming represents both the largest platform by revenues and the fastest growing one. Since 2015, mobile revenues have grown at an annualized rate of 22%, outpacing the total gaming revenues growth rate of 15%,” according to VanEck.
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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.