Final 2020 tallies for the gaming industry were released in January by NPD Group, and showed record US games spending $56.9 billion during the year. That represents a 27% increase year-on-year from 2019. These figures were driven in part by increasing numbers of people turning to gaming as a pastime during the pandemic lockdowns.
Software represented the lion’s share (86%) of this figure, with game content spending reaching $48.9 billion in 2020. Software sales included physical and digital games, DLC, and subscription across console, cloud, mobile, portable, PC and VR platforms. This represents a 26% increase over 2019 software sales.
Hardware sales saw even bigger growth on a percentage basis, with console revenue of $5.3 billion last year, up 35% from $3.9 billion in 2019. 2020 was the best year for console sales since 2011 when the Xbox 360 and Nintendo 3DS released.
Gaming accessories sales also increased 21% in 2020, for a total of $2.6 billion.
Call of Duty: Black Ops Cold War (published by Fund holding Activision Blizzard) was the best-selling game of the year—the 12th year in a row for a game in the Call of Duty franchise. In all, games by companies held in the Fund represent all 5 of the top 5 best-selling games of 2020, as well as 8 of the top 10, and 13 of the top 20.
While not directly affecting the holdings of the Fund, the gaming industry was roiled in January by the trading saga of GameStop stock. Online investment communities, driven primarily by the WallStreetBets subreddit, took advantage of an unusually high number of short sellers betting against the gaming retailer to buy shares en masse and drive up the price, as well as short-seller losses. At one point, GameStop’s share price spiked 135% in less than 24 hours and was up more than 700% in less than a week.
Amidst the volatility Melvin Capital, the hedge fund singled out by the online investors for its shorting of GameStop stock, was forced to close out its entire position, taking a massive loss.
Over the last weeks of January, some major brokerage houses restricted trading in GameStop and other targeted companies that saw triple-digit percentage surges after activist investors began driving up their prices, too. The trading in GameStock even drew the attention of newly appointed US Treasury Secretary Janet Yellen and her economic team, who was “monitoring the situation.”
“There’s nothing normal about what you’re seeing with this stock right now,” said CNBC’s Andrew Ross Sorkin. “It clearly has nothing to do with the fundamentals of GameStop itself anymore, and much more to do with pop psychology of who’s going to be left holding the bag.”
Activision Blizzard announced that it moved its Vicarious Visions studio from the Activision side of the business to the Blizzard side. The Vicarious Visions team of about 200 people will be employees of Blizzard and be “fully dedicated to existing Blizzard games and initiatives.” Vicarious Visions was acquired by Activision in 2005 and has worked on many of the publisher’s biggest franchises, including Guitar Hero, Spider-Man, Tony Hawk, Crash Bandicoot, Destiny, Skylanders, and Call of Duty. According to sources, Vicarious Visions is expected to take a larger role in the development of Activision Blizzard’s highly anticipated remake of Diablo II.
Avatar-based social platform Imvu closed an investment round of over $35 million, led by NetEase, a holding of the Fund. This investment will help grow the Imvu social network, which has seven million monthly active users, as well as its new user-generated platform WithMe Entertainment.
Capcom reported a 22.6% increase in sales year-on-year for the nine months ended December 31, 2020, reaching $622 million. Games sales were up 20.6% year-on-year to nearly $470 million, with digital sales representing $332.7 million of that total, and boxed console games and mobile making up $95 million and $45 million respectively. Capcom’s performance was driven by Resident Evil 3, which released in April 2020 and has sold 3.6 million units, as well as 2019’s Monster Hunter World: Iceborne, which has sold 7.2 million copies to date.[viii]
Investing in Video Games with HERO ETF
The video game industry has been booming with record-breaking sales since the first quarter of this year, giving investors the opportunity to take advantage of this upward trend.
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 gaming companies like Nintendo, Activision Blizzard, Electronic Arts, Ubisoft, and Take-Two Interactive.*
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