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Esports & Gaming Industry on a Tear: ETFs to Bet On

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The esports industry is on a tear as very few ways of entertainment are as popular as video games.“The video game industry is disrupting traditional media and entertainment,” according to VanEck. The world’s 2.7 billion gamers will shell out $159.3 billion on games in 2020, if we go by a forecast by market researcher Newzoo. This marks about 9% year-over-year growth.

Newzoo also expects gaming revenues of $200.8 billion by 2023 at a compound annual growth rate of 8.3%. The coronavirus pandemic and the resultant stay-at-home trend made it more lucrative for the video gaming industry. The pandemic has caused the cancellation of all sporting events and consumers are indulging in video games or online watching of esports.

Notably,esports refers to competitive video gaming that is watched by spectators like sporting events. Approximately 400-500 million people watch esports globally (read: Will Esports and Video Gaming Benefit from Coronavirus Shutdown?).

Despite no breakout new releases, the month of May saw U.S. spending on hardware, full game sales and accessories touching $977 million, according to industry-tracking firm NPD Group.  The figure was 52% higher when compared to a year ago. This was the highest tracked outlays for a May month since the $1.2 billion achieved in May 2008.

Total video game sales so far this year are up about 18% year over year to $5.48 billion. Revenues from video game hardware gained 34% year over year while software sales rose 13% year over year. Video game accessories and game cards added 12% year over year.

Apart from this, there is a big market for sports betting. As of 2018, sports betting made up approximately 18% of the $449 billion global gaming market, as measured by gross gaming revenues, or “GGR.” Goldman Sachs expects the online sports betting market to increase 7.1% per annum from 2018 to 2022.

Regulated sports betting is currently legal in several European countries, Australia and Mexico. In the United States, legalization is enacted at the state level. On a country level, Brazil and India are moving toward likely regulation.

Naturally, to tap this burgeoning potential, investors can play the below-mentioned ETFs (read: Videogame ETFs Surge Amid Coronavirus Crisis).

Roundhill Sports Betting & iGaming ETF (BETZ - Free Report)

Making an entry in this market on Jun 4, 2020, the fund managed to amass about $84.5 million in assets in about two weeks. This shows how hot the theme is. The 35-stock fund charges 75 bps in fees. GAN Ltd, Draftkings and Flutter entertainment are the top three holdings of the fund.

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

The underlying Roundhill BITKRAFT Esports Index consists of a modified equal-weighted portfolio of globally listed companies that are actively involved in the competitive video gaming industry. The 30-stock fund holds Huya, Douyu International and Activision Blizzard as top three holdings. It charges 25 bps in fees.

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

The underlying MVIS Global Video Gaming and eSports Index intends to track the overall performance of companies involved in video game development, esports, and related hardware and software. The fund charges 55 bps in fees. Nvidia, Tencent Holdings and Advanced Micro Devices are the top three holdings.

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

The underlying Solactive Video Games & Esports Index seeks to provide exposure to companies positioned to benefit from increased consumption related to video games and esports. The fund charges 50 bps in fees. The fund puts major weights in SEA LTD-ADR, Nvidia and Bilibili Inc-ADR.

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