Up 8% this year, the ETFMG Video Game Tech ETF (NYSEARCA: GAMR) is building on its stellar performance in 2017 when it was one of the year’s best-performing non-leveraged exchange traded funds.
GAMR is the first video game tech ETF that sets out to capitalize on the global game market that’s expected to hit $116 billion in revenues in 2017, up from 10.7% year-over-year.
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.
Count the eSports boom among the exciting industry trends that could be tailwinds for GAMR and video game stocks.
“The growth in popularity of eSports will benefit some sectors at the expense of others,” according to Fitch Ratings. “Video game companies are best positioned to benefit from increased franchise popularity and growth and a favorable shift to less volatile advertising and sponsorship revenues.”
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.
“Fitch believes that the continued growth and awareness of eSports will benefit video game publishers through higher active user bases, increased sales of high-margin micro transactions and higher sustainability/longer revenue-generating lifespan of core franchises that are transitioned into eSports,” said Fitch. “The dollar potential of media rights will also be a long-term cash flow opportunity and potential credit positive, once user engagement is quantified on a more standardized level.”
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.
“Longer-term, Fitch believes the growth and popularity of eSports as a discretionary activity could detract from the participation and/or viewership of select traditional sports, particularly those with less appeal to the millennial demographic,” according to Fitch.
For more news on technology ETFs, visit our tech category.