COVID-19 has forced all of us into our homes without face-to-face social interaction with the outside world for much of 2020. With new reports coming out every day regarding more COVID-19 cases being found around the world, the collective question is when (or if) life will finally get back to normal.
This lack of face-to-face social interaction has forced many of us to find alternative ways of communicating with friends and family, as well as resorting to unconventional sources of entertainment. Some of the industries that have stood out in these confusing and unorthodox times have been electronic gaming and electronic sports (“e-gaming” and “esports”). As a result of this pandemic, console and video game revenue has sky-rocketed as a result of the record-setting number of people watching video game streamers, as well as their favourite athletes/celebrities on streaming platforms like Twitch and YouTube.
Understanding opportunities in video game companies, esports and online games
Video Game Companies
Video game companies like Nintendo, Activision Blizzard and Electronic Arts (EA) have all seen significant increases in revenue and engagement since March. Nintendo’s video game “Animal Crossing,” which was recently released for the Nintendo Switch console, sold 11.8 million units through March. This made Animal Crossing the best performing Nintendo Switch video game launch since the console’s inauguration in 2017. With regards to EA, the company saw the highest engagement with their video game “Madden NFL 20” since the Madden football video game series was created by EA back in in the late 1980s. Activision released a video game titled “Warzone,” which is an extension of the company’s popular “Call of Duty” video game series, back in mid-March. Activision’s shares have already risen 22% increase this year, and the company had a very successful quarter in response to the rising popularity of this game release, as well as the growing popularity of the company’s other games. This all points to the rising need for in-home entertainment during this pandemic, and the positive impact this is all having on major video game companies.
With major North American sports leagues such as the National Basketball Association, the National Hockey League, Major League Baseball, and NASCAR on hold as a result of this pandemic, there has been a massive emphasis on moving these games online for fans’ entertainment. Leagues have been getting certain high-profile players to play against fellow high-profile athletes. These competitions take place on streaming platforms for many fans to enjoy, with athletes playing with the video game versions of their real-life teams.
Portland Trail Blazers star Myles Leonard streaming on Twitch for his fans during quarantine.
(Image Source: The Washington Post illustration; Twitch)
Online games such as “League of Legends” and “Counter-Strike” have consistently been popular with video game players. Even before this pandemic, viewers were captivated by professional leagues made up of professional League of Legends and Counter-Strike players who would regularly compete in live tournaments that attracted a lot of fans, similar to real-life sports. These leagues have continued to attract many new viewers as a result of COVID-19, which has resulted in rising viewership for streaming platforms.
Get in the game!
A great way to access the e-gaming and esports sector is through an exchange-traded fund (ETF), which provides investors with a wide range of leading video game and esports companies from around the world. Gaming companies across the globe create a multitude of games in different genres for various gaming consoles and platforms. An e-gaming ETF is a diversified way to access many of the world’s leading companies in this industry.
HERO ETF, Canada’s first video game and esports exchange-traded fund
Evolve E-gaming Index ETF (TSX Ticker: HERO), is an exchange-traded fund that invests in 55 global gaming companiesincluding Nintendo, Activision Blizzard, Electronic Arts, Ubisoft Entertainment, and Take-Two Interactive*. With a 0.70% management fee, HERO ETF also has one of the industry’s lowest management fees.
HERO ETF was one of only five TSX-listed ETFs (out of 581) to post a positive return in March. In a recent Wealth Professional article, Evolve ETF President and CEO, Raj Lala discussed his thoughts as to how HERO ETF achieved a positive performance in such a challenging environment. Mr. Lala explained that as traditional sports are unable to run, esports are seen as a substitute that can entertain and engage with audiences around the world. Mr. Lala also says that, even after this pandemic ends, people are likely to continue “firing up their consoles” for entertainment instead of spending money at restaurants or hockey games.
For more information about Evolve E-gaming Index ETF or any of Evolve ETF’s lineup of exchange-traded funds, please visit our website or contact firstname.lastname@example.org.
*Portfolio as at April 30, 2020.