VanEck’s ESPO ETF: Insights into the Gaming and eSports Industry

VanEck’s
recent
Q&A
blog
provides
valuable
insights
into
the
ESPO
ETF,
focusing
on
the
gaming
and
eSports
sector’s
growth
outlook,
potential
challenges,
and
key
industry
trends.
The
blog
underscores
the
criteria
for
ETF
inclusion
and
offers
a
comprehensive
view
of
the
market’s
future
trajectory.

Industry
Challenges
and
Threats

The
gaming
and
eSports
industry
faces
several
challenges
as
it
moves
towards
future
growth,
including
short-term
volatility
and
persistent
layoffs
post-2021.
The
tech
sector’s
over-hiring
during
the
pandemic
has
had
lingering
effects,
expected
to
continue
into
2025.
Additionally,
while
Artificial
Intelligence
(AI)
enhances
productivity
for
developers,
it
also
poses
a
threat
to
live
actors
and
game
performers,
as
Generative
AI
(GenAI)
can
now
capture
real
emotions
and
lifelike
details
in
characters.

Major
players
like
Microsoft,
Netflix,
and
Disney
are
making
significant
investments
in
gaming.
Microsoft’s
acquisition
of
Blizzard
Studios
for
$68
billion
in
2022,
Netflix’s
beta-testing
of
a
cloud
gaming
service,
and
Disney’s
$1.5
billion
investment
into
Epic
Games
highlight
the
industry’s
growing
appeal.
Furthermore,
Saudi
Arabia’s
Public
Investment
Fund,
through
its
subsidiary
Savvy
Games
Group,
is
actively
expanding
its
presence
in
the
eSports
market,
accumulating
$37.9
billion
in
assets
under
management
since
its
inception.

Projected
Market
Growth

The
global
video
games
market
is
set
to
grow
from
$187
billion
in
2024
to
$213
billion
by
2027.
In
2022,
the
gaming
industry
generated
an
estimated
$184
billion,
outperforming
the
combined
revenues
of
the
music
($26.4
billion)
and
movie
($26.2
billion)
industries.
The
number
of
gamers
worldwide
is
expected
to
reach
3.32
billion,
with
Asia
leading
at
1.48
billion
and
Europe
following
with
715
million.

Emerging
economies
play
a
crucial
role
in
the
gaming
industry’s
growth,
driven
by
increased
internet
penetration
and
higher
smartphone
adoption
rates.
The
rollout
of
affordable
5G
networks
further
supports
this
expansion,
enabling
high-quality
gaming
experiences
without
expensive
hardware.
According
to
Niko
Partners’
2023
study,
Asia
and
MENA
regions
are
expected
to
host
nearly
2
billion
gamers
by
2028,
up
from
1.6
billion
in
2022.
Saudi
Arabia’s
Vision
2030
plan
aims
to
establish
250
gaming
firms
and
produce
over
30
top
300
titles
by
2031,
with
the
International
Olympic
Committee
partnering
with
the
country
to
host
the
Olympic
Esports
Games
for
the
next
12
years.

Key
Industry
Trends

Mobile
gaming
is
a
significant
trend,
projected
to
contribute
nearly
half
of
the
global
gaming
revenue.
This
growth
is
driven
by
expanding
mobile
app
ecosystems
and
global
antitrust
legislations
like
the
EU’s
Digital
Markets
Act.
Companies
like
Epic
Games
and
Microsoft
are
expanding
into
mobile
platforms,
while
consumer
brands
leverage
mobile
gaming
through
strategic
partnerships
and
in-game
experiences.

Advancements
in
AI
and
Virtual
Reality
(VR)
are
revolutionizing
the
gaming
experience.
AI
tools
streamline
the
development
process,
from
automating
bug
fixes
to
enabling
dynamic
in-game
interactions.
VR
innovations,
such
as
the
Virtuix
Omni
treadmill
and
Apple’s
Vision
Pro,
enhance
player
immersion
and
expand
the
capabilities
of
game
developers
and
hardware
manufacturers.
These
trends
indicate
significant
growth
and
innovation
in
the
gaming
and
eSports
industry
in
the
coming
years.

Leading
Industry
Players

The
gaming
industry
is
dominated
by
global
conglomerates
like
Sony,
Microsoft,
Nintendo,
Tencent,
and
Electronic
Arts,
all
of
which
have
steady
product
launches
planned
through
2026.
In
the
console
gaming
market,
Sony’s
PlayStation,
Microsoft’s
Xbox,
and
Nintendo’s
Switch
are
the
top
contenders.
As
of
September
2023,
Sony’s
PS5
leads
in
sales
with
39.9
million
units.
Nintendo
plans
to
launch
a
new
Switch
model
in
2025,
while
improved
versions
of
the
PS5
and
Xbox
are
anticipated
in
late
2024,
highlighting
the
ongoing
competition
and
innovation
in
the
console
segment.

For
more
detailed
insights,
visit
the
original
[VanEck](https://www.vaneck.com/us/en/blogs/thematic-investing/espo-etf-question-and-answer/)
blog.

Image
source:
Shutterstock