John Patrick Lee from ETF investment firm VanEck discusses the recent boom for gaming and where the sector may be headed next.
John Patrick Lee is an ETF product manager at VanEck, which specializes in investments through ETFs. The firm’s offerings include the VanEck Vectors Video Gaming and eSports ETF (NASDAQ:ESPO).
The Investing News Network (INN) spoke with Lee about recent trends in gaming investments and what he sees as the current key cornerstones of the sector.
While there is no doubt that COVID-19 helped boost the gaming sector as people spent more time at home, Lee believes the market was in a good place prior to the outbreak and will continue to thrive post-pandemic. “We view that as an acceleration of trends that are already in place,” he told INN.
Research firm Newzoo estimated the entire value of the gaming sector at US$174.9 billion in 2020, which represents a 20 percent increase from 2019. It expects to see the value of the gaming market keep climbing and foresees it reaching US$217.9 billion by 2023.
Lee said gaming’s ability to satisfy changing consumer demand trends when it comes to media consumption is a big reason for its growth. The ETF expert said consumers want to interact with the media they consume, a trend he linked to user power in social media.
The top five holdings for VanEck’s gaming fund are Nvidia (NASDAQ:NVDA), Tencent Holdings (HKEX:0700,OTC Pink:TCTZF), Advanced Micro Devices (NASDAQ:AMD), Sea (NYSE:SE) and Nintendo (TSE:7974,OTC Pink:NTDOF). It also holds large game publishers such as Take-Two Interactive Software (NASDAQ:TTWO), Electronic Arts (NASDAQ:EA) and Activision Blizzard (NASDAQ:ATVI).
Lee is encouraged by the ways gaming can approach new revenue models. Game makers have found success with free-to-play games that have monthly purchasing drops, as well as in-game buying options. While these games are free, consumers can be incentivized to spend money on improving their experience through cosmetics or in-game advantages.
Fortnite is one of the biggest examples of this game category, and Lee referred to its success as something the entire gaming industry can continue to grow on. “It’s this idea that you can launch this amazing free game, get people in your system and they’re spending money,” Lee said.
Check out the video for the full conversation with Lee. For more from VanEck, click here for the firm’s recent online conversation on what it anticipates in terms of the potential for gaming investments.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.