A Complete Guide to Video Game ETFs

JThe video game industry has been on investors’ radar since experiencing sales growth due to the pandemic. Although the space is experiencing some downturn, it is expected to pick up and thrive well in the post-pandemic era. The epidemic has also changed the way of life and preferences of Americans to a large extent.

According to an article by FinancialNewsMedia.com, the video game industry can be considered “recession-proof” as a large portion of the population might prefer to stay indoors during an economic downturn. Considering the current market scenario where market participants are worried about the global economic downturn and fear a recession, the sector may gain momentum.

Does the video game industry have potential?

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

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

Mergers and acquisitions continue to bolster the gaming space. Microsoft MSFT agreeing to buy gaming giant Activision Blizzard ATVI for $68.7 billion may change the gaming landscape. Under the terms of the deal, Microsoft will acquire Activision Blizzard for $95.00 per share in an all-cash transaction. If the deal goes through, it will be Microsoft’s biggest ever acquisition, surpassing its $26.2 billion purchase of LinkedIn in December 2016.

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

While the market outlook is driving optimism among pundits, they remain excited about the space’s performance over the holiday season, which could boost sales for giveaways. Worsening pandemic conditions with the emergence of some new variants (if any) may give new impetus to the video game space as already a large number of people of all ages have started enjoying video games in the comfort of their home.

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

Metaverse to push the craze for the game

Major players in the video game space are spending on the creation of innovative gaming content and revolutionary new technologies as cloud-based gaming systems, increased mobile offerings and a strong social media presence broaden gaming communities and bring them together. In fact, among various metaverse apps, the game stands out as very popular.

Microsoft Chairman and CEO Satya Nadella also reportedly mentioned at the time of the Activision Blizzard deal announcement that “gaming is the fastest growing and most exciting entertainment category on any platform today. and will play a key role in the development of metaverse platforms. We are investing deeply in world-class content, community and 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 follow

It looks like the video game market will continue to grow, given the bright prospects and opportunities for innovation. According to a report by ResearhAndMarkets, the video game market is expected to be worth $48.2 billion by 2027. According to the same report, revenue is expected to show a CAGR of 7.9% between 2021 and 2027.

In this context, investors can take a look at the following video game ETFs:

The Roundhill BITKRAFT Esports and Digital Entertainment ETF NERD

The Roundhill BITKRAFT Esports & Digital Entertainment ETFi is designed to provide investors with exposure to esports and digital entertainment by providing investment results that closely match, before fees and expenses, the performance of the Roundhill BITKRAFT Index. Esports. NERD has 33 shares in its basket. Top gaming companies like Activision Blizzard and Tencent TCEHY have spots in the top 10 holdings. With an AUM of $35.2 million, NERD charges 50 basis points as an expense ratio. It trades three-month average volumes of around 11,000 shares.

VanEck Gaming and eSports ETFs ESPO

The 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 overall business performance involved in the development of video games, esports, and related hardware and software. ESPO has 25 shares in its basket. Top gaming companies like Tencent, NVIDIA Corporation NVDA, and Activision Blizzard have spots in the top 10 holdings. With an AUM of $337.7 million, ESPO charges 55 basis points as an expense ratio. ESPO is trading three-month average volumes of around 58,000 shares (read: Follow Warren Buffett with these ETFs).

Global X Gaming & Esports ETF HERO

VanEck Vectors Video Gaming and eSports ETF seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video game or esports content, own and operate within competitive esports leagues or produce hardware used in video games and esports, including augmented video games. and virtual reality. HERO has 46 shares in its basket. Major game companies like Activision Blizzard and Nintendo NTDOY are in the top 10 holdings. With an AUM of $250.9 million, HERO charges 50 basis points as an expense ratio. It trades three-month average volumes of around 107,000 shares.

Wedbush ETFMG Video Game Tech ETF GAMR

Wedbush ETFMG Video Game Tech ETF provides pure and diverse exposure to a dynamic intersection of technology and entertainment. GAMR also generally matches 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. He has 93 shares in his basket. With an AUM of $61.4 million, GAMR charges 75 basis points as an expense ratio. The fund trades three-month average volumes of approximately 4,000 shares.

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Microsoft Corporation (MSFT): Free Stock Analysis Report

Activision Blizzard, Inc (ATVI): Free Stock Analysis Report

NVIDIA Corporation (NVDA): Free Stock Analysis Report

Tencent Holding Ltd. (TCEHY): Free Stock Analysis Report

ETF Global X Video Games & Esports (HERO): ETF Research Reports

Nintendo Co. (NTDOY): Free Stock Analysis Report

Wedbush ETFMG Video Game Tech ETF (GAMR): ETF Research Reports

VanEck Video Gaming and eSports ETF (ESPO): ETF Research Reports

Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.