Video games and esports are transforming the way folks entertain themselves and game, a trend with wide-ranging implications, which are accessible via various ETFs, including the VanEck Vectors Video Gaming and eSports ETF (NASDAQ: ESPO).
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.
One of the disruptive factors in gaming is mobile gaming. There’s good news: ESPO offers exposure to that trend and mobile gaming is just starting to take off.
“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%,” said VanEck in a recent note.
Marvelous Mobility
It’s no secret anymore that gaming, or esports, is big business and that trend should continue in 2020. That said, investors should keep gaming-focused ETFs on their watch lists for the new year. Importantly, video game equities have a reputation for performing well after the past instances of virus situations comparable to COVID-19.
Of course, smartphones play a pivotal role in mobile gaming and that’s worth considering as the 5G iPhone nears its rollout later this year.
“Prior to the iPhone’s release in 2007, mobile did not exist as a category for gaming platforms. Rudimentary games like Snake and Tetris were available on early cell phones, but the invention of the iPhone created a new category of games out of thin air,” according to VanEck. “Mobile apps have become synonymous with the mobile phone experience, and mobile games are some of the most popular and widely downloaded apps available to consumers.”
Data confirm emerging markets, particularly Asian economies, will power mobile gaming growth in the years ahead.
“Let’s use China’s mobile market as an example. According to some estimates, mobile game revenues in China were $15.6B in 2018,” notes VanEck. “All of the top 10 most popular mobile game titles were published by the same two Chinese companies: Tencent and NetEase. China is unique in that the government has to approve any new games that are released, which creates a bias towards domestic Chinese publishing companies. However, other companies are also tapping into domestic consumer demand in these markets.”
For more on tactical strategies, please visit our Tactical Investing Channel.
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.
