With the holidays fast approaching, let the video game console wars begin. With Microsoft and Sony ready to debut their new video game consoles, the best play should be reserved for the VanEck Vectors Gaming ETF (BJK).
BJK seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS® Global Gaming Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.
To be initially eligible for the index, companies must generate at least 50% of their revenues from gaming. Gaming includes casinos and casino hotels, sports betting (including internet gambling and racetracks), and lottery services, as well as gaming services, gaming technology, and gaming equipment.
BJK gives investors access to:
- The Nation’s First ETF Focused on Global Gaming: An industry driven by a growing worldwide middle class with increased disposable income
- Pure Play with Global Scope: To be initially eligible, index constituents must be principally engaged in the global gaming industry, deriving greater than 50% of revenues from it
Console Revenues on the Rise
As noted in the fund description, BJK gives investors access to all gaming types. However, with the COVID-19 pandemic still a factor in the economy, social distancing currently favors video games.
That said, the timing couldn’t be more auspicious for the new XBox and Playstation consoles. Combined with the pandemic, the forthcoming holidays should provide enough tailwinds for either game console to boost their sales.
A Visual Capitalist article noted the rising revenues of game consoles previous years as well as projections for the coming years:
The pandemic has certainly kept declines in revenue at bay for video game consoles. With holiday shoppers ready with credit cards in hand, video game consoles should be a hit to close out 2020.
“Gaming revenues have gone unscathed despite a pandemic, a retraction in economic activity, and the tightening of budgets for households in 2020. This trend could well be a result of video games growing as a form of stay-home entertainment,” the article said. “On an annualized basis, global video game console revenues are to hit $51 billion in 2020 and reach past $60 billion in the next two years.”
BJK could also be used as a play for 2021 if brick-and-mortar gaming such as casinos are able to reopen successfully following the launch of a COVID-19 vaccine.
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