It is football season. One derivative of the return of the most popular American sport is gamers’ renewed focus on popular video game franchises. That’s just one reason why select video game equities may be worth examining over the near-term.
On the other hand, investors can eschew video game stock-picking and opt for an exchange traded fund such as the VanEck Video Gaming and eSports ETF (ESPO ) . Its strategy worked in 2024. In arguably quiet fashion, ESPO is higher by 20.59% since the start of the year. This is an impressive showing considering the little fanfare.
ESPO, which turns six years old next month and follows the MVIS Global Video Gaming and eSports Index (MVESPOTR), fits the bill as a thematic ETF, but that doesn’t imply excessive levels of risk. The fund’s roster is comprised entirely of large- and mid-cap stocks, mostly the former. The weighted average market value of its holdings is $70.1 billion.
ESPO Has Global Video Game Reach
Experienced investors know that gaming is not a distinctly American phenomenon. Not even close. In fact, it’s a popular hobby and big business all over the world, particularly in the Asia-Pacific region. That indicates ESPO holdings have global reach and top and bottom line diversification.
“Global macro conditions are ideal for synergistic growth within the gaming/eSports industry; long-term sentiment is positive and attracts attention. Emerging markets continue producing an organic growth rate of new players joining PC and consoles,” according to VanEck research.
Interestingly, North America isn’t the biggest gaming region. It’s not even second. Data cited by VanEck indicate that by 2027, there will be 3.32 billion gamers around the world with 1.48 billion residing in Asia and another 715 million hailing from Europe.
Increased internet penetration in some parts of Asia and the Middle East North Africa (MENA) region, in part, drives that west-to-east shift. By 2028, those areas could be homes to two billion gamers. Additionally, those statistics highlight a robust global growth opportunity set that could benefit a variety of ESPO member firms, potentially making the ETF a compelling long-term idea for tactical investors.
“The global video games market is projected to grow from $187B in 2024 to $213B by 20272. To put this into perspective, in 2022, the gaming industry raked in an estimated $184B, far surpassing music ($26.4B) and movie ($26.2B) industry revenues,” concluded VanEck.
For more news, information, and analysis, visit the Beyond Basic Beta Channel.
