Back to top

Image: Bigstock

A Comprehensive Guide to Video-Gaming ETFs

Read MoreHide Full Article

The video-gaming industry has been on investors’ radar ever since it witnessed pandemic-driven sales growth. Although, the space is witnessing some slowdown, it is expected to pick up and thrive well in the post-pandemic era. The outbreak also changed the lifestyle and preferences of Americans to a large extent.

Per a article, the video-games industry can be counted as "recession-proof" as a large chunk of the population might prefer to stay indoors during an economic downturn. Considering the current market scenario where the market participants are worried about the global economic downslide and have recession fears, the sector can gain momentum.

Does Video-Gaming Industry Hold Potential?

Game developers continue to innovate and attract users daily, and retain the old ones. They are increasing engagement for existing players by providing new titles, levels, arenas or environments as the games require at regular intervals.

A recently-released report showing May figures from The NPD Group highlights that the Nintendo Switch has stood out as the best-selling console of 2022 so far (per an article on TheGamer). However, the Xbox Series X surpassed it in terms of dollar units. The best-selling accessory of 2022 to date is the Xbox Elite Series 2 controller. The Elden Ring stood out as the best-selling video game of 2022.

Mergers and acquisitions continue to support the gaming space. Microsoft (MSFT - Free Report) agreeing to buy the gaming giant Activision Blizzard for $68.7 billion can change the gaming landscape. Per the terms of the deal, Microsoft will acquire Activision Blizzard for $95.00 per share in an all-cash transaction. If the deal closes, it will be Microsoft's largest acquisition ever, topping its purchase of LinkedIn for $26.2 billion in December 2016.

The deal will accelerate growth in Microsoft’s gaming business across mobile, PC, console and cloud, and will play a key role in developing metaverse platforms. It will provide the software giant with access to iconic franchises like Warcraft, Diablo, Overwatch, Call of Duty and Candy Crush. Microsoft will add many of Activision’s games to Xbox Game Pass and PC Game Pass. The acquisition, expected to be complete in fiscal 2023, will be accretive to non-GAAP earnings per share after the deal closes.

As market prospects buoy optimism among the experts, they remain excited about the performance of the space in the holiday season, which may boost sales for gifting purposes. The aggravating pandemic conditions with the emergence of some new variants (if any) can add further momentum to the video-gaming space as already a large number of people across all age groups started enjoying video games from the comforts of their homes.

The advent of new-revenue models, including subscription, free-to-play and ad-driven models are also accelerating growth in the video-gaming space. A surge in gamer average revenue per unit and a share of wallets are also supporting the market boom, per a ResearchAndMarkets report.

Metaverse to Push Gaming Craze

The major players in the video-gaming space are spending on innovative gaming-content creation and revolutionary new technologies as cloud-based gaming systems, increasing mobile offerings and a solid social media presence are expanding player communities and bringing them closer. In fact, among various metaverse applications, gaming stands out to be very popular.

Microsoft chairman and CEO Satya Nadella also reportedly mentioned at the time of the Activision Blizzard deal announcement that “Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms. We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all”.

Video Game ETFs to Track

It seems as if the video-gaming market will continue growing, given the bright prospects and innovation possibilities. Going by a ResearhAndMarkets report, the Video Games market is expected to be worth $48.2 billion by 2027. According to the same report, revenues are expected to see a CAGR of 7.9% between 2021 and 2027.

Against this backdrop, investors can take a look at the following video-gaming ETFs:

The Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD - Free Report)

The Roundhill BITKRAFT Esports & Digital Entertainment ETFis designed to offer investors exposure to esports & digital entertainment by providing investment results that closely correspond, before fees and expenses, to the performance of the Roundhill BITKRAFT Esports Index. NERD holds 33 stocks in its basket. Top gaming companies like Activision Blizzard and Tencent (TCEHY - Free Report) have spots in the first 10 holdings. With an AUM of $35.2 million, NERD charges 50 basis points as expense ratio. It trades in three-month average volumes of about 11,000 shares.

VanEck Video Gaming and eSports ETF (ESPO - Free Report)

VanEck Video Gaming and eSports ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Video Gaming and eSports Index, which is intended to track the overall performance of companies involved in video game development, esports, and related hardware and software. ESPO holds 25 stocks in its basket. Top-gaming companies like Tencent, NVIDIA Corporation (NVDA - Free Report) and Activision Blizzard have spots in the first 10 holdings. With an AUM of $337.7 million, ESPO charges 55 basis points as expense ratio. ESPO trades in three-month average volumes of about 58,000 shares (read: Follow Warren Buffett With These ETFs).

Global X Video Games & Esports ETF (HERO - Free Report)

VanEck Vectors Video Gaming and eSports ETFseeks 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. HERO holds 46 stocks in its basket. Big gaming companies like Activision Blizzard and Nintendo (NTDOY - Free Report) are in the top 10 holdings. With an AUM of $250.9 million, HERO charges 50 basis points as expense ratio. It trades in three-month average volumes of about 107,000 shares.

Wedbush ETFMG Video Game Tech ETF (GAMR - Free Report)

Wedbush ETFMG Video Game Tech ETFprovides a pure-play and diversified exposure to a dynamic intersection of technology and entertainment. GAMR also corresponds generally to the price and yield performance of the EEFund Video Game Tech Index. The index is designed to reflect the performance of companies involved in the video game technology industry, including game developers, console and chip manufacturers, and game retailers. It holds 93 stocks in its basket. With an AUM of $61.4 million, GAMR charges 75 basis points as expense ratio. The fund trades in three-month average volumes of about 4,000 shares.




Published in