Global video games revenues are expected to soar by 20% to $179.7 billion in 2020, eclipsing both the global movie and North American sports industries as the coronavirus pandemic shifts consumer entertainment choices, according to IDC research.
According to MatchWatch, the global film industry reached $100 billion in revenues for the first time back in 2019, and North American sports revenue are expected to rake in more than $75 million in 2020. Both industries have suffered from the coronavirus pandemic, with movie studios delaying film releases and box office sales plummeting amid weak demand, while sports seasons across multiple leagues were modified to account for team outbreaks.
The video game industry has grown exponentially in the past few years due to the variety of ways consumers can access games outside of consoles. The rise in digital-copy games sales for both PCs and consoles, mobile games, and cross-platform games, as well as digital subscription streaming game services like Google's Stadia
Due to pandemic-related restrictions and stay-at-home orders, more consumers have turned to video games as a source of entertainment, boosting forecasted sales growth to double-digits for 2020. Surprisingly, video games sales usually do quite well during economic downturns as video games offer hours of entertainment at a relatively low cost. Additionally, the video game industry saw the launch of two next-generation consoles from Microsoft
"I do think there will be a deceleration as soon as effective, cheap, globally available vaccines get out there over the course of 2021, but I'm quite sure at the end of 2021 there will still be billions of potential people that will need vaccines," Lewis Ward, gaming research director at IDC, told MarketWatch in an interview.
Like many market trends, there are exchange-traded funds that make investing into an industry more convenient and less risky than picking and choosing potential winners. Below are a few ETFs that will benefit from gaming industry growth:
Wedbush ETFMG Video Game Tech ETF
Being the first dedicated video game ETF to list in the U.S. market, GAMR tracks an equity index of global holdings that create, support or use video games. The fund has roughly $150 million assets under management with exposure to 80 companies based in 14 countries. GAMR charges a somewhat high expense ratio of 0.75%, which is typical of narrowly themed ETFs. The ETF's largest geographic weights into the U.S., Japan, South Korea and China, which is unsurprising due to the large size of these country's gaming industries. GAMR grew over 75% in 2020.
VanEck Vectors Video Gaming and eSports ETF
ESPO is not just a video game focused ETF, but also provides exposure to the booming eSports market. This fund follows an index that aims to catch all parts of the video game industry, from developers to console makers to semiconductors. Being one of the larger video game ETFs, ESPO has about $705 million assets under management, with its portfolio holding 26 global companies. The fund carries an expense ratio of 0.55%. EPSO soared over 80% in 2020.
Global X Video Games and eSports ETF
Like ESPO, HERO provides global exposure to companies that operate in the video game and esports market. Where they differ is that HERO has about twice the amount of holdings at a cheaper expense ratio of 0.50%. However, HERO is smaller, with about $570 million assets under management. HERO gained over 86% in 2020.
