After a huge surge in sales and great growth prospects, the video game industry lost some of its momentum in the wake of the pandemic. Nevertheless, it remains an area with great growth potential for the future.
Game developers continue to innovate, attracting users and retaining the old ones on a daily basis. They increase engagement for existing players by periodically providing new titles, levels, arenas, or environments required for the games.
A recent report by the NPD Group highlights that consumer spending on video game hardware and content fell 5% in 2022 compared to 2021. Still, spending totaled $56.6 billion. PlayStation 5 led in console sales while Nintendo Switch led in hardware unit sales. Call of Duty Modern Warfare 2 stood out as the best-selling video game of 2022.
ESports, short for Electronic Sports, captures the experience of watching a professional sporting event, but viewers watch as video gamers compete against each other. It has gained a lot of popularity lately as many games are watched in an organized arena with EA Sports’ Madden NFL being one of the most popular games of 2022.
According to a report published on Yahoo Finance, the global esports market size is expected to grow by $3.5 billion by 2027 at a CAGR of 21.81%. With the eSports market currently valued at $1.4 billion, the segment is seeing an increasing trend in advertising revenue generation, with companies like Red Bull and Monster Energy increasing their presence.
However, the growing consumer demand for quality improvement and a better gaming experience has increased the cost of game development and slowed down the growth of the market.
Metaverse to power gaming craze
Major players in the video game space are investing in innovative gaming content creation and disruptive new technologies as cloud-based gaming systems, increasing mobile offerings and a solid social media presence expand and bring gaming communities closer. In fact, among the various Metaverse applications, gaming stands out as being very popular.
According to a report by GlobeNewswire, the global gaming market metaverse will surpass projected estimates of $663.8 billion by 2030 at a CAGR of 37.85%. Increasing adoption of virtual reality and augment reality continues to increase the market growth prospects and revenue by enhancing the gaming experience for the users.
Video game ETFs to track
Given the bright prospects and opportunities for innovation, it seems like the video game market will continue to grow. According to the Entertainment Software Association (ESA), consumer spending in the gaming industry market will reach $56.6 billion in 2022.
With that in mind, investors can take a look at the following video game ETFs:
Roundhill BITKRAFT Esports & Digital Entertainment ETF (Nerd)
The Roundhill Video Games ETF provides investors with exposure to the video games sector by providing investment results which reflect the performance of the Nasdaq CTA Global Video Games Software Index before fees and expenses. The fund is up 3.75% year-to-date. NERD holds 38 securities in its basket, with Nintendo Co Ltd NTDOY being the leading company, weighting 15.75% of assets.
The fund raised $25 million in its asset base and charges 50 basis points in annual fees. It trades an average monthly volume of around 6,500 shares.
VanEck Video Gaming and eSports ETF (ESPO)
The VanEck Video Gaming and eSports ETF seeks to track as closely as possible the price and return performance of the MVIS Global Video Gaming and eSports Index, before fees and expenses, which is designed to track the overall performance of companies involved in the development of video games , esports and related hardware and software. The fund has 26 stocks in its holdings, with NVIDIA Corp NVDA and Tencent TCEHY being the top two holdings.
The VanEck Video Gaming and eSports ETF raised $260.9 million in assets. It charges 56 basis points as an annual fee and has an average monthly trading volume of around 32,000 shares. The fund is up 10.26% year to date.
Global X Video Games & Esports ETF (HERO)
The Global X Video Games & Esports ETF seeks investment results that are generally in line with the price and yield performance, gross of fees and expenses, of the Solactive Video Games & Esports Index. The basket contains 54 stocks, with top companies such as Activision Blizzard and Nintendo Co Ltd having spots in the top 10 holdings. HERO has earned 5.38% year to date.
The fund was able to manage $155.3 million in its asset base and charge 50 basis points in annual fees. It has an average monthly trading volume of about 64,000 shares.
Wedbush ETFMG Video Game Tech ETF (GAMR)
The Wedbush ETFMG Video Game Tech ETF seeks investment results that generally track the price and yield performance of the EEF and Video Game Tech Index. The Index is designed to reflect the performance of companies involved in the video game technology industry, including game developers, console and chip manufacturers, and game retailers. It contains a basket of 88 stocks.
The fund has raised $51.9 million in its asset base and charges 75 basis points in annual fees. It has an average monthly trading volume of about 5,700 shares. GAMR is up 5.99% year-to-date.
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NVIDIA Corporation (NVDA): Free Stock Research Report
Tencent Holding Ltd. (TCEHY): Free Stock Analysis Report
Global X Video Games & Esports ETF (HERO): ETF Research Reports
Nintendo Co. (NTDOY): Free Stock Analysis Report
Wedbush ETFMG Video Game Tech ETF (GAMR): ETF Research Reports
VanEck Video Gaming and eSports ETF (ESPO): ETF Research Reports
Roundhill Video Games ETF (NERD): ETF Research Reports
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