Video Gaming and Esports: Taking Media and Entertainment to the Next LevelJohn Patrick Lee, CFA, Product ManagerNicolas Fonseca, CFA, Associate PMSeptember 14, 2020
The video game industry is projected to reach $159B in revenues in 2020, and gaming is more popular than ever.1 More people around the world are turning to interactive games as a form of entertainment. Digital game sales are continuously breaking records, and industry revenues have continued to hit all-time highs for the last few years.2 Esports, a form of competitive video gaming, has taken hold around the world, with ballooning cash prizes and front-page news coverage. In-game concerts and events are drawing millions of people into their favorite game’s universe, blurring the line between the game and live events.The growing popularity of gaming, along with the revenue potential across the industry, help make this industry a compelling investment opportunity, in our view. In the whitepaper, Video Gaming and Esports: Taking Media and Entertainment to the Next Level, we provide an in-depth breakdown of the industry to help investors better understand what’s driving the long-term potential of this space as well as how to incorporate it into a portfolio. Key trends currently shaping this investment opportunity include:
- The video game industry is earning hundreds of billions in annual revenues, and reaching billions of consumers around the world.
- Trends like demographic shifts and changing consumer demands provide long-term structural support for this growth industry.
- Mobile gaming now represents the largest and fastest-growing platform by revenues.
- Publishers are using new businesses models to accelerate growth through recurrent in-game spending.
- Esports represents a segment of the broader video gaming industry, and video game publishers are steadily gaining control over revenue streams in this space.
- Risk factors affecting companies both individually and collectively as a group.
2The NPD Group
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This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.
Esports: Competitive gaming at a professional level and in an organized format (a tournament or league) with a specific goal (i.e., winning a championship title or prize money) and a clear distinction between players and teams that are competing against each other.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
Authored byJohn Patrick Lee, CFA
Nicolas Fonseca, CFA