The VanEck Vectors Video Gaming and eSports ETF (NASDAQ: ESPO) was one of the best-performing thematic exchange traded funds last year as video game equities and ETFs got a big assist from the coronavirus pandemic. Good news: That benefit could last well into the current quarter and beyond.
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.
“The coronavirus pandemic has been an undeniable boon for the game industry,” reports Dan Gallagher for the Wall Street Journal. “Restrictions that have kept many at home and shut down other forms of entertainment have resulted in a banner year for the sector. Six of the largest game publishers are expected to post combined total revenue of $24 billion for the calendar year, up 19% from last year, according to consensus estimates compiled by FactSet.”
Expect ESPO Ebullience
The explosive growth of esports could even power the space past traditional sports, where revenue generation is now heavily tilted towards enhancing a fan’s multimedia experience. Adding to the ESPO case is data confirming just how much gaming spending is soaring.
“This data backs up a report from The NPD Group last month, which says that gaming spending in the US has risen 22% to $44.5 billion during the first 11 months of 2020. Gaming hardware makes up roughly $4 billion of that amount, while over $38 billion comes from software. The most significant rise is the number of consumers playing games as it has risen to 79% of the US,” adds GameSpot.
The Covid-19 pandemic put gaming further into the spotlight as social distancing measures forced gamers to keep their consoles fired up to pass the time away. Video game engagement has broken records across a variety of metrics since the virus shutdown began.
“The speed of national reopening also will factor heavily into the industry’s performance for 2021,” according to the Journal. “Lockdowns and other restrictions seem likely to persist through the winter given the recent spike in Covid-19 cases, while the reopening of mass entertainment options such as movies, concerts, and theme parks that compete for spare time and discretionary income likely will occur much later.”
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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.