Markets

Video Game Sales to Keep Rising in Holiday Season: ETFs to Gain

The coronavirus outbreak has been a blessing in disguise for the video gaming industry, which is seeing solid demand this year. In the current scenario, as the health crisis is worsening, it seems that people will continue to resort to more in-house entertainment sources.

Highlighting this fact, the latest report from theThe NPD Group projects that consumer spending on video games in the United States may touch $13.4 billion this holiday season (November and December 2020), increasing 24% year over year. Going on, the upside is largely expected to be led by console hardware, headsets, gamepads, mobile, digital full-game and post-launch content on console and PC, and subscription.

Video Game Sales to Get a Holiday Boost

The pandemic has already provided a push to the e-commerce industry as people continue to prefer staying indoors and shopping online for all essentials, especially food items. Keeping up with the digitization trend, the upcoming U.S. holiday season is expected to see a significant surge in online sales. Going by the latest forecast from software provider Salesforce.com, a 34% year-over-year (nearly triple from the last year’s growth) jump is expected in online holiday sales in the United States (per a Digital Commerce 360 article). Per the same article, digital sales are expected to account for around 30% of seasonal spending.

Riding the trend, annual U.S. consumer spending on video games could reach a new high by the end of 2020 and exceed $50 billion, per The NPD Group report. Moreover, there are about 244 million video game players in the United States, about 30 million more than in 2018, according to The NPD Group’s 2020 Gamer Segmentation Report released earlier this year. An average gamer is spending about 14 hours per week playing video games this year compared to 12 hours in 2018.

The NPD Group’s report predicts that PlayStation 5 and Xbox Series consoles should be among the best-selling holiday gifting items this year. Going on, Nintendo Co.’s (NTDOY) Switch can also be the hottest-selling console again, with more households purchasing several Switch consoles in the fourth quarter.

There are a number of reasons that can drive the uptake of video games in the upcoming holiday season. An aggravating coronavirus outbreak, limitations or restrictions on some outdoor entertainment options like theme parks, amusement parks, travels or sports tickets, new consoles, increasing player engagement, number of players and also expanding video game titles and content options, can lead the video gaming industry to new highs, per the above-mentioned report.

Video Game ETFs to Keep Shining

It seems that the rest of 2020 will continue to bear the brunt of the coronavirus outbreak as the number of cases continues to rise. Against this backdrop, investors can take a look at the following video gaming ETFs:

VanEck Vectors Video Gaming and eSports ETF ESPO — up 59.9% year to date

The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Video Gaming and eSports Index, which is intended to track the overall performance of companies involved in video game development, esports, and related hardware and software. It holds 25 stocks in its basket. Top gaming companies like Nintendo and Activision Blizzard (ATVI) have spots in the first 10 holdings. With AUM of $560.3 million, the fund charges 55 basis points in expense ratio (read: ETFs in Focus on AMD-Xilinx Deal Talks).

Global X Video Games & Esports ETF HERO — up 64.4%

The fund seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming         or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. It holds 40 stocks in its basket. Big gaming companies like Nintendo and Activision Blizzard are in the top 10 holdings. With AUM of $370.3 million, the fund charges 50 basis points in expense ratio (read: ETF Areas That Remained Strong in the First 9 Months of 2020).

Wedbush ETFMG Video Game Tech ETF GAMR — up 51.2%

The fund provides pure-play and diversified exposure to a dynamic intersection of technology and entertainment. It also corresponds generally to the price and yield performance of the EEFund 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 holds 89 stocks in its basket. With AUM of $126.2 million, the fund charges 75 basis points in expense ratio.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Global X Video Games Esports ETF (HERO): ETF Research Reports
 
Wedbush ETFMG Video Game Tech ETF (GAMR): ETF Research Reports
 
VanEck Vectors Video Gaming and eSports ETF (ESPO): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

ETFs

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More