Unlike many other industries that were affected by the COVID‐19 pandemic, the e‐gaming industry flourished during 2020. Video games and e‐sports became the go‐to form of entertainment for tens of millions of people who were confined to their homes in the wake of government-imposed lockdown conditions. This resulted in record sales and massive levels of engagement.

Right Time to Play

IDC estimates that global videogame revenue surged 20% to $179.7 billion USD in 2020. This makes the videogame industry more lucrative than the global movie and North American sports industries combined.

According to a Nielsen survey, there was a sharp rise in both the e‐gaming and e‐sports markets during the pandemic. The survey found that 83% of esports fans aged 18 to 34 spent more time playing games in 2020. Meanwhile, 29% of this demographic viewed more esports content than they were before lockdown orders took effect.

Nielsen also noted a substantial impact on consumer spending during the pandemic. Fully 37% of survey respondents said that they spent more money on video game downloads, with 34% stating they spent more on in‐game microtransactions as well.

Nintendo was one of the early beneficiaries of the pandemic bump. In March 2020, as lockdowns began, monthly sales of Nintendo’s popular Switch console more than doubled year-over-year compared to March 2019. In comparison, other leading gaming consoles like Microsoft’s Xbox One and Sony’s PlayStation 4 saw their sales jump by 25% in March, according to NPD.

Nintendo’s life simulator Animal Crossing: New Horizons was also a massive hit for the company, selling a staggering 13.4 million copies in its first six weeks of launch. Square Enix’s Final Fantasy VII Remake becoming the top game of April, with the best launch month in the 32‐year‐old franchise, according to the NPD Group.

 

Sea Ltd. was a standout performer in 2020. According to data from S&P Global Market Intelligence, the Singapore-based tech company’s stock climbed 394.9% in trading during 2020 thanks to strong performance in its video game and e-commerce businesses, and especially its hit game Garena Free Fire, which was one of 2020’s top-grossing mobile apps.

As a result, Sea now has a market capitalization of roughly $104 billion—up nearly 450% from just a year earlier. Gaming and e-commerce still have room for huge growth in Southeast Asia, and as Singapore and Southeast Asia’s most valuable company in 2020 based on market capitalization, Sea has positioned itself for continued growth in Asia and around the world.

In the United States, total videogame spending in 2020 rose 22% from a year earlier to $44.5 billion USD. Hardware sales rose 34% to nearly $4 billion USD, software sales rose 21% to $38.4 billion USD, and sales of accessories and peripherals rose 22% to $2.1 billion USD versus the prior year. These figures in the US were driven in large part by the November release of Sony’s PlayStation 5 and Microsoft’s new Xbox Series X were released along with some long-awaited game titles.

All three of the largest publicly traded US videogame publishers—outperformed the S&P 500 index in 2020. Activision Blizzard was up 49%, Electronic Arts Inc. was up 30%, and Take-Two Interactive Software Inc. was up 64%, compared with a 14% gain for the S&P 500.

Live Games

Despite the pandemic, the industry also continued to hold live online events during 2020. Entertainment Arts (EA) held its Play Live 2020 event in June, featuring new games such as Star Wars: Squadrons and the new FIFA, as well as updates on what’s coming for games such as Apex Legends; gaming website IGN’s also hosted its Summer of Gaming in June, featuring reveals, charity live streams in support of the World Health Organization’s COVID‐19 Solidarity Response Fund and The Bail Project, and gameplay demos; and GameSpot launched Play For All, a summer digital event that featured more than 30 publishers in a weeks‐long event that got started on June 1, among several other events.

 

Investing in Esports and Video Games with HERO ETF

Esports has stood out in this challenging economy as an industry that has experienced record-breaking viewership and increasing prize pools. The Evolve E-Gaming Index ETF (TSX Ticker: HERO), Canada’s first esports and video game exchange-traded fund (ETF), is a great way to access the world’s leading companies involved in the esports and gaming industry.

For more information about the Evolve E-Gaming Index ETF, please visit our website or contact info@evolveetfs.com

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