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Capturing the Transformative Growth of eSports


ED LOPEZ: The video games market today is undergoing a period of transformative growth, as a confluence of factors creates new potential opportunities for companies involved in the industry. Better technology, mobile apps, and online gaming, as well as change in consumer preferences are helping to disrupt the media and entertainment industry. eSports are a form of competitive video gaming that are often organized as multiplayer events, often streamed online, and even held as live, in person, spectator events. The viewership for competitive video gaming is global and it’s expected to reach 380 million people by the end of 2018. In fact, eSports viewership even rivals that of some traditional sports. For instance, the League of Legends World Championship finals in 2017 garnered more viewers than the NBA finals, the World Series, and even the Stanley Cup.


Investors should be paying attention to eSports. You have a young demographic looking for more customized interactive content. With more people cutting the cord and consuming content online; games are online, they’re social, and they’re even available on mobile applications. Businesses have tapped into an opportunity to disrupt the media and entertainment industry: from large tech companies like Google and Amazon, to traditional sports teams. For instance, the Philadelphia 76ers have created an eSports team, which actually trains in the same facility as the traditional sports team. But really the reason why investors should be paying attention to eSports is because it’s created new revenue opportunities for those involved in the video game ecosystem. What all this means for video game makers is the potential for new revenue sources, from advertising, sponsorship, media rights, even franchise fees. In fact some video publishers have created professional franchise leagues in which they sell team slots for upwards of $20 million. What this means for investors is the opportunity to access a long-term growth opportunity.


With a young demographic, where the average age is under 30, and the ecosystem and awareness for eSports is growing and becoming more mainstream, the stage is set for a sustainable long-term growth opportunity. VanEck believes the best way to provide access to thematic opportunities is through a pure-play approach. That means investing in companies that generate more than 50% of their revenue from that target theme, otherwise your returns are influenced by other factors not specific to the theme. And as may be the case in some themes, there may be very large companies with a small revenue exposure to that theme. And if those companies are included in your portfolio, that portfolio might be affected by external factors. In fact, if the company is very large, you may already have access to them in your core equity exposure. The VanEck Vectors® Video Gaming and eSports ETF, ticker symbol, ESPO, seeks to track an index which is a pure-play and targeted index and one that provides exposure to the companies most influenced by the theme.


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IMPORTANT DISCLOSURE


The views and opinions expressed are those of the speaker and are current as of the video’s posting date. Video commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions. All performance information is historical and is not a guarantee of future results. For more information about VanEck Funds, VanEck Vectors ETFs or fund performance, visit vaneck.com. Any discussion of specific securities mentioned in the video commentaries is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.


An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Index returns do not represent fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.


Please note that Van Eck Securities Corporation offers investment products that invest in the asset class(es) included in this video. An investment in the VanEck Vectors® Video Gaming and eSports ETF (ESPO) may be subject to risks which include, among others, investing in the video gaming and eSports industry, information technology, equity securities, foreign securities, foreign currency, special risk considerations of investing in Asian, Japanese and emerging markets issuers, depositary receipts, small- and medium-capitalization companies, cash transactions, market, operational, index tracking, authorized participant concentration, absence of prior active market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, all of which may adversely affect the Fund. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund's returns. Small and medium-capitalization companies may be subject to elevated risks. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.


Fund shares are not individually redeemable and will be issued and redeemed at their Net Asset Value (NAV) only through certain authorized broker-dealers in large, specified blocks of shares called "creation units" and otherwise can be bought and sold only through exchange trading. Shares may trade at a premium or discount to their NAV in the secondary market. You will incur brokerage expenses when trading fund shares in the secondary market. Past performance is no guarantee of future results. Returns for actual fund investments may differ from what is shown because of differences in timing, the amount invested, and fees and expenses.


Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.


No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Van Eck Securities Corporation. © Van Eck Securities Corporation.


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