Stay-at-Home Trend Boosts Video Games Sales: ETFs to Gain
[Zachs, BigStock]
In the wake of the coronavirus pandemic, sweeping travel bans, cancellation of large events as well as shutting down of schools, colleges, universities, restaurants and bars, and shopping malls are being observed globally. In such a scenario, people are increasingly resorting to modes of in-house entertainment like video games or streaming services.
Video Games Sales Surge in March
Lockdown measures have resulted in a spike in video game sales to the highest level in March over a decade. Interestingly, according to Verizon, overall video-game Internet traffic has risen 75% since stay-at-home orders were imposed in the United States, per The Economist Group report. Going on, the average daily user engagement on Bungie’s game “Destiny 2” rose 10% globally and was up 20% in severely-affected markets, according to the report.
A NPD Group report, which keeps a track of physical retail sales and a subset of digital downloads in the United States, states that all game-related purchases, including software, hardware and accessories, totaled $1.6 billion (up 35% year over year) in March. The video games sales growth is the highest since March 2008, when sales had risen to $1.8 billion, per NDP Group.
Notably, software sales rose 34% year over year to $739 million in March, per the NPD Group. This marked the highest figure since $787 million sales were recorded in March 2011. Meanwhile, hardware sales rose 63% year over year to $461 million in March, per the NPD Group. Nintendo Switch from the Nintendo Co., Ltd. (NTDOY – Free Report) saw record sales in March. In fact, the company sold more than 50 million Switch gaming consoles. Also, Nintendo’s Animal Cross: New Horizons, launched in March, topped the list of best-selling games, steering past Sony Corporation’s (SNE – Free Report) PlayStation 4 and Microsoft Corporation’s (MSFT – Free Report) Xbox One in console sales (per the NPD Group). Notably, Nintendo’s newly-launched game witnessed the third-best opening month for a Nintendo-published game in terms of physical dollar and unit sales, only behind Super Smash Bros. Ultimate (December 2018) and Super Smash Bros. Brawl (2008), per the NPD Group.
Other bestselling games in the month were Call of Duty: Modern Warfare, MLB: The Show 20, Resident Evil 3 and NBA 2K20, according to NPD Group.
Gaming ETFs to Ride the Tide
Against this backdrop, investors can take a look at the following ETFs:
VanEck Vectors Video Gaming and eSports ETF (ESPO – Free Report)
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, Activision Blizzard (ATVI – Free Report) and Zynga have got spots in the top ten holdings. With AUM of $149 million, the fund charges 55 basis points in expense ratio.
Global X Video Games & Esports ETF (HERO – Free Report)
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 41 stocks in its basket. Top gaming companies like Nintendo, Activision Blizzard and Zynga have got spots in the top ten holdings. With AUM of $74.5 million, the fund charges 50 basis points in expense ratio.
By Sweta Jaiswal