The gaming industry is booming and through the stock market you can quite easily get in on the ongoing development of this multi-billion dollar industry. Don’t have anything to do with gaming and think this world is mostly spent on mancave-like practices? Then check it out with me and read more about investing in video gaming in this article.
“Hi, I’m Lies! My passion for investing and financial independence started about 5 years ago when the book “Rich Dad Poor Dad” by Robert Kiyosaki came my way. Never before had I thought about the fact that money, which you have worked hard for, can work for you afterwards. Not by spending it on yet another coffee to go, but by investing it! I give the beginning investor tips & tricks on ETFs and thematic investing. Among others, through my Instagram channel, and through elfin.”
Investing in video gaming
In the late 1950s, the first computer game was already developed called “Tennis for two,” while the real popularity of games did not materialize until the 1970s. Super Mario was created in 1981 and the first Nintendo Gameboy was released in 1989. Now video games, especially for smartphone and tablet, are impossible to imagine our lives without.
Two new revenue models
Two developments in particular have taken the gaming industry to the next level. The first is the digitization of games.
Digitization
Whereas we used to buy CD-ROMs to play Rollercoaster Tycoon or the Sims, the lion’s share of games are now downloaded online. Cloud gaming is expected to be the future. This will involve streaming the games, just as we already do with our music via Spotify and our movies via Netflix. The company NVIDIA, known for the graphics chips I wrote about before, also has a game streaming service. If you take advantage of that then you no longer need to buy an expensive, powerful game console of your own.
In game purchases
The second development in the revenue model that has really taken the video gaming industry to the next level is that of in-game purchases. Long after purchasing a game, gamers are tempted to make purchases during the game. Think of skins (outfits for your characters), or new soccer players for your team, for example. As a result, creators like EA now earn more after the game is sold than with it.
Multi billion business
These two developments have made the gaming industry a multi-billion dollar business. Investing is video gaming has been booming ever since. This 2021, a report came out from Accenture estimating the direct and indirect value of the gaming industry at $300+ billion. This is expected to go toward double that by around 2028! Perhaps a buy & hold investment in this industry is not such a crazy idea….
No hassle or stress, invest with an ETF
Despite having done some research on this industry before I bought my Gaming and eSports ETF, I cannot claim to be such an expert in this field that I know which companies are not going to make it and which companies will actually become the gems. For this reason, I invest in an ETF,
Exchange Traded Fund
, which tracks an index consisting of 25 companies with at least 50% of revenue derived from video gaming and/or eSports. With this, I have in one fell swoop the major players in the industry.
It is a nice list that includes the aforementioned companies such as NVIDIA, Nintendo and Electric Arts (EA). But it also includes Tencent, the company behind WeChat and Activision Blizzard, known for World of Warcraft and Call of Duty.
I don’t have a day job keeping up with developments, but just quietly wait with my ETF until this industry doubles in value.
