The ETFMG Video Game Tech ETF (NYSEARCA: GAMR) enjoyed some periods of prosperity earlier this year, but after getting drubbed through the late second quarter and through the first two months of the current quarter, GAMR is sporting a year-to-date loss.
Some data points suggest video game stocks can bounce back. Exciting industry trends include the shift to digital distribution of software, proliferation of HD and 4K displays, cloud content and streaming, virtual/augmented reality, motion tracking, episodic content, and diversified monetization models, are stimulating innovation and offer expanded opportunities for entertainment, education, simulation, and other game tech applications.
“We continue to see tailwinds to growth from 1) a secular shift from physical to digital distribution, which carries a significant margin benefit; 2) extension of core game titles to mobile; 3) expansion in the gaming audience driven by a larger installed console base and eventually cloud-based offerings; 4) continued gains in share of attention and engagement from other forms of entertainment; and 5) further monetization through live services,” according to an excerpt of a JPMorgan note posted by David Marino-Nachison of Barron’s.
Looking For Momentum
GAMR follows the EEFund Video Game Tech Index, which tracks the performance of companies across the video gaming space. The ETF contains holdings from across the globe but with a focus on companies in the United States and in Asian countries.
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New technologies, such as virtual and augmented reality, have enhanced gaming experiences and contributed to this recent growth. In addition, the video gaming world has seen the rise in a modern video gaming sport called eSports, where thousands of people gather across the world to watch professional video gamers battle it out.
“This rising tide should be able to support growth for multiple publishers, even if in the short-term crowded periods such as [this year’s fourth quarter]create some relative winners and losers,” according to the JPMorgan note cited by Barron’s.
GAMR is down more than 13% in the current quarter.
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