Investors considering ETFs focusing on video games and esports, including the Global X Video Games & Esports ETF (NASDAQ: HERO), should evaluate the impact of live-streaming, a crucial pillar of the future of gaming.
HERO, which launched last October, “seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality,” according to Global X.
Fortunately for investors looking into live-streaming, data support the notion that this venue is experiencing exponential growth.
“The amount of hours people spend watching video games on live-streaming sites continues to grow. In January, that number reached 499 million over Twitch, YouTube Gaming, Facebook Gaming, and Mixer,” reports VentureBeat. “That’s up 17% from 342 million during January 2019, according to industry-tracking groups Arsenal and StreamElements.”
HERO’s underlying index features 38 stocks from nine countries. The bulk of the new ETF’s top 10 holdings are video game publishers, but the fund has exposure to hardware makers and semiconductor manufacturers, among other industries, as well. The allocations to software names could be a significant catalyst for HERO as 2020 moves along.
Looking at Live-Streaming
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.
“In January, all of the live-streaming platforms grew year-over-year in January. Mixer, however, is growing slowly. Facebook Gaming, meanwhile, is up 340%,” according to VentureBeat.
While e-sports is garnering plenty of headlines and cloud gaming is a growth arena in its own right, investors should also consider a fund’s exposure to software makers, particularly those with robust brand recognition and product pipelines that feature franchises popular with gamers.
As is the case in the broader gaming and esports arenas, including the ETF business, competition is increasing on the live-streaming front.
“But even as everyone in this market is up year-over-year, the competition is getting hot. As more people spend more time watching live gaming content, the platform services are making moves to win them over,” notes VentureBeat.
For more thematic investing ideas, visit our Thematic 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.