Video games and electronic sports may be designed with entertainment in mind, but they have also proven themselves to be big business as well. Video game sales increased by 18% in 2018, even as similar industries saw declines; there appears to be ample room for investors to invest in the entertainment of others in one form or another. It's no surprise, then, that there have already been several exchange-traded funds (ETFs) which have launched with a specific focus on the video gaming industry. Although the first video game ETF launched in just 2016, this segment of the ETF space has proved tremendously popular among investors.
Now, popular ETF provider VanEck has launched a fund which focuses on the electronic sports (eSports) industry. The VanEck Vectors Video Gaming and eSports ETF (ESPO) is designed to track an index of 25 securities in the esports and video game areas.
- ETFs are increasingly responding to investor demand for more targeted or niche offerings.
- eSports refers to new competitive computer games that attract large audiences and fan bases.
- ETFs like ESPO and NERD offer investors a way to access the industry.
The "Future of Sports"
According to VanEck director of ETF product marketing Michal Cohick, the new ETF represents "an opportunity to invest in the future of sports." He claims that the audience for eSports tends to be young, well-to-do and highly engaged with the various competitors in the eSports realms, per a report by ETF.com.
The NERD ETF, from Roundhill Investments, tracks an index of at least 25 global esports and digital entertainment companies. It's top holdings include hardware companies like Turtle Beach (HEAR) and gaming publishers like Activision (ATVI).
To get a sense for just how large the eSports industry is, an event called the Midseason Invitational for 2018 managed to draw a larger pool of viewers than traditional televised sporting events like the World Series of baseball, the Stanley Cup, and the NBA playoffs. Indeed, 443 million people watched eSports in 2019.
What has caused the dramatic rise in interest in eSports in recent years? It may be a perfect storm involving the increased popularity of video games, the increase in connections made possible by the internet and social media, and eSports' broad range of revenue streams. These may include the development and sale of video games as well as licensing for streaming rights, ticket sales, membership fees for leagues, and much more.