investing in gaming

for years, video games were treated as an entertainment segment designed for children. but recently, it has grown to become the largest segment in the entertainment industry, by far. in 2019, the gaming industry clocked $135 billion in revenue, more than the music and film industry combined. 

it is expected that the global gaming market size will grow to $545.98 billion by 2028, an annual growth rate of 13.20% between 2021 and 2028. with the rise of chatter around the metaverse and how it can make video gaming a more immersive experience, one could expect more green shoots in this space in the coming years.

it’s no surprise that companies that operate in this space have grown exponentially as well, generating huge amounts of wealth for their investors. take Electronic Arts for example, the publishers of titles like FIFA and NFL Madden, the stock price of the company has generated 670% returns for investors since 2010.

or take Poland-based CD Projekt Red, the publishers of the popular Witcher gaming series. despite being under pressure due to the unsuccessful launch of the much awaited Cyberpunk 2077, the company stock is sitting on 267% returns over the last five years.

it’s not just video game publishers but also firms which provide for the hardware on which these games are played have grown. semiconductor companies like NVIDIA and AMD have given returns of 971% and 1142%, respectively, in the last five years. 

while it might be difficult to pick the next multibagger in the gaming space, one could reduce their risk by diversifying into products which can give exposure to a bouquet of companies which stand to gain from the growth of the gaming sector.

exchange traded funds (ETFs) like VanEck Video Gaming and eSports ETF which tracks around 30 companies in the gaming and esports development, hardware, and software, and the  casinos and online betting space, has generated an annual return of 164% over the last three years.

video game console makers like Sony, Microsoft, and Nintendo are direct proxies which will also benefit as the demand for video games grows. time to play the game?