Drop Another Quarter In
As niche as it may seem, video games are a rapidly rising sector of the technology industry. It is seeing explosive growth due to factors such as the expansion of mobile and online gaming and the shift from physical to digital distribution of software. The video game market, which is estimated to be worth well over US$100 billion globally, will be on an upward trend over the next 5 to 10 years, says Ted Pollak, president and portfolio manager at EE Fund Management, a US-based investment management firm. According to a Nov 28 industry report by international market intelligence provider NewZoo, the growth of the global gaming market will see a compound annual growth rate of 8.2% and revenues will reach US$143. The past few years have been very good for the video game industry.
Nvidia Corp – the creator of the graphics processing unit responsible for improving video game graphics – saw its share price surge 80.72% over the 12 months ended Dec 27, 2017, recording an astounding return of 1,358.18% over a five-year period. The share price of video game developer Nintendo is up 76.42% over a one-year period. To capture and leverage these well-performing stocks in the video game and digital entertainment industry, Pollak founded the EEFund Video Game Tech Index. As year’s end, GAMR ETF’s top five holdings were G5 Entertainment, Webzen, Gravity, Gumi and Netmarbe. According to Pollak, one of the most exciting spaces in the video game industry is eSports, or organised multiplayer video game competitions.
Pollak says there are many segments in the video game industry that will drive its growth and benefit the index that the GAMR ETF tracks. There are other trends supporting the video game industry – with virtual and augmented reality, and better screen resolution, the video game industry and most of its components will benefit, says Pollak.