How AI is Powering the Next Era of Video Gaming

Key Takeaways:

• Gaming growth stays strong, driven by AI, monetization, and rising global engagement.
• Top publishers/platforms led performance via mobile gains, strong content, and margin growth.
• Gaming remains a scalable, recurring form of digital entertainment despite shifting leadership.

The Expanding World of Interactive Entertainment

Video gaming has evolved into one of the most influential forces in global entertainment, now engaging more than 3.4 billion players worldwide. Revenues are projected to rise another 3 to 4 percent in 2025, showing the continued strength of a sector that grows even as broader media habits shift. What drives this momentum is accessibility, digital connectivity, and cultural ubiquity. Gaming today spans generations, with nearly half of players identifying as female and a rising share of older adults now playing weekly. It is no longer just a pastime; it has become a primary channel for entertainment, creativity, and social interaction.

It’s Not Just Kids Playing Video Games

Source: theesa.com as of 02.2025.

At the same time, the gaming business model has matured. Mobile now accounts for about half of global industry revenues, and in-game spending has become the dominant source of monetization. The shift from one-time purchases to ongoing digital transactions has created more predictable revenue streams and stronger engagement cycles. As studios continue to extend the lifespan of popular titles through updates, expansions, and live events, gaming has become a recurring digital economy rather than a series of standalone releases.

In-App Purchases Are a Material Driver of Revenues

Source: Statista, as of 06.2025. For illustrative purposes only. Not a projection of future results. Past performance is no guarantee of future results.

Inside the ESPO Story: Who’s Driving Growth

The VanEck Video Gaming and eSports ETF (ESPO) reflects this evolution. Over the past year, strong results from Nintendo, Roblox, and NetEase show how publishers are finding new ways to expand engagement and monetize their audiences. AppLovin was a standout contributor, as its AI-driven ad platform helped developers optimize user acquisition and improve profitability. Tencent also added to returns through steady performance across its global gaming operations.

Some of these names, including AppLovin and AMD, are no longer part of the index due to ESPO’s strict requirement that at least half of company revenue comes from gaming and esports. This approach ensures exposure stays pure and aligns with the industry’s long-term growth drivers, not broader tech trends.

Key themes behind performance include:

• Expansion of mobile and in-game revenue models supporting recurring growth.
• Strong content pipelines from global publishers extending franchise longevity.
• Increased use of AI tools in development, marketing, and player engagement.

The AI Acceleration Moment

Artificial intelligence is emerging as the next major catalyst for gaming. In his recent appearance on the Thoughtful Money podcast, VanEck CEO Jan van Eck discussed how AI may be undervalued by markets when it comes to creative industries. He noted that the leveraged buyout of Electronic Arts highlights how investors may be missing the intersection between AI and gaming’s potential for innovation.

Gaming companies are poised to embrace AI faster than many other industries because experimentation and rapid iteration are already central to their culture. AI streamlines every layer of the value chain, from how games are made, to how they are played, to how they are marketed.

Developers are using AI to build and test new worlds in days instead of months. Gameplay is becoming more adaptive, with storylines and NPCs that respond to player behavior. Studios are marketing smarter, using data to target players and personalize content. Together, these advances are reshaping production cycles, improving engagement, and expanding profitability potential across the ecosystem.

AI Game Developers are Adopting AI Tools in All Aspects of Development

Source: Konvoy, as of 2025. For illustrative purposes only.

Gaming’s New Playbook

The intersection of gaming and AI represents one of the most compelling growth frontiers in digital media. As AI tools lower production costs, enhance storytelling, and deepen engagement, gaming is positioned to remain one of the most globally connected and innovative industries. Leadership within the space will evolve, but the underlying growth drivers, including scalable intellectual property, recurring digital revenues, and expanding player engagement, remain firmly intact.

The VanEck ESPO ETF captures this evolution through a focused portfolio of companies at the heart of the video gaming and esports ecosystem. By maintaining strict inclusion criteria and global diversification, it offers exposure to a sector that is not only growing but redefining how entertainment, technology, and digital identity intersect.

Approaching the Video Gaming and eSports Opportunity

For investors, gaining exposure to this fast-changing sector requires focus. The video gaming and esports industry spans publishers, hardware manufacturers, and software platforms that directly generate revenue from interactive entertainment.

The VanEck Video Gaming and eSports ETF (ESPO) tracks the MVIS Global Video Gaming and eSports Index, which includes companies deriving at least 50 percent of revenue from gaming and esports-related activities. This rule ensures that the portfolio remains centered on companies truly driving industry growth rather than broader tech conglomerates with peripheral exposure.

By combining exposure across publishers, developers, and hardware makers, the VanEck ESPO ETF provides a comprehensive view into one of the most creative, innovative, and high-growth corners of global media. As AI accelerates how games are developed and experienced, ESPO offers a way to access that transformation through a disciplined, research-driven lens.