The VanEck Vectors Video Gaming and eSports ETF (ESPO ) has recently been setting a torrid pace, surging nearly 7% this month on its way to a series of record highs and a year-to-date gain of almost 16%.
ESPO seeks to track the performance of the MVIS® Global Video Gaming and eSports Index (MVESPO). The index is a rules-based, modified capitalization weighted, float adjusted index intended to give investors a means of tracking the overall performance of companies involved in video gaming and eSports.
A new survey confirms some of the bullishness surrounding the eSports investment thesis.
“Online gamers aren’t just logging marathon playing sessions. They’re spending more time watching professional gamers play, and considering careers in gaming,” reports Jon Swartz for Barron’s. “A survey of 4,500 adults in the U.S., France, Germany, India, Italy, Japan, Singapore, South Korea, and the United Kingdom who play videogames at least once a week could bode well for the growth of esports and professional gaming leagues.”
What this Means for ESPO ETF
ESPO components may include developing video games and related software, streaming services, and/or those involved in eSports events. To be included in the index, companies must generate at least 50% of their revenues from video gaming or eSports, which allows ESPO to have the highest concentration, among U.S.-listed ETFs, of pure play names participating in this fast-growing space.
One of the main points that bodes well for eSports is the genre’s increasing ability to rival the television viewership of traditional sports leagues. By 2022, eSports viewership is expected to match the current levels of NFL television viewership.
“Younger gamers in particular are moving away from watching broadcast sports, with those 18-25 years old spending 77% more time watching online gaming than traditional sports on television. Gamers in the 26-35 age bracket spend nearly the same amount of time watching online gaming as broadcast sports,” according to Barron’s.
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The eSports theme is seen as a major disruptive force in the technology and sports arenas, indicating ESPO could be on the cusp of some impressive long-term growth.
“Advertisers seem to agree. They are expected to spend over $200 million on digital spots for esports in the U.S. by 2020, according to an eMarketer report,” notes Barron’s.
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