Expanding My Horizon

Expanding My Horizon

Day 75th of quarantine and I’m finding that my days revolve around work, fitness, and spending time on any form of entertainment. It made me think of the famous line that Axelrod once said on an episode of Billions after he contemplated the meaning of human existence: “Eat, Move, Shit, Repeat” .

Oh it rings a bell!

I picked up gaming again to spend my time instead of watching Netflix or other forms of online entertainment. Growing up, I have always been an avid gamer, especially Massively Multiplayer Online Role-Playing Game (MMORPG). One year before college, I decided to put a stop into it because I always got way too competitive in these games and always ended up spending way too much of my time, which then affected my grades negatively. Anyways, I got back into gaming to fulfill my social needs — and although I’ve been rather aware of the industry’s rapid growth (supported by e-sports and live streaming), I never fully realized its size and cultural relevancy until now.

Childhood Favorite

The video games industry is roughly worth $190B as of 2019. It has become a prime target for big tech companies to capitalize on with Microsoft leading the charge as one of the older players (XBOX). Google has been working on a cloud gaming platform (Stadia), Apple is offering a new type of subscription called Apple Arcade for consumers to access more games, and Amazon is creating its own MMORPG.

The top five biggest US companies which combined stock market capitalization is now equivalent to the bottom 50% of the S&P500 Index needs to prove to investors that they are able to reach new highs in five years (why? its just financial market shenanigan and how the investment world works, TBD for another time), which required them to find industries that are large enough in size and can be somewhat disrupted through technology and massive capital. Alas, gaming falls perfectly into this category. Additionally, its growth is also exacerbated by the quarantine, which effect I believe will not be short-lived. For some people, playing games during this quarantine reignites their passion and love for gaming that they pushed away as they got busier in college and early professional career. I’m not saying that these people are going to become hermits and just spend their time playing games moving forward, but it definitely re-instigate gaming into a lot of people’s lives.

There are already a couple of investment products (especially ETFs) related to the gaming and eSports industry, with VanEck being one of its players. They’re relatively new and have a limited amount of historical reference, but thus far, one of the ETF is outperforming even S&P500 as shown in the chart below.

ESPO VS SPX.png

Many exciting moments are happening in the gaming industry, with one of the most fascinating phenomenon being the popularity of Animal Crossing. The game becomes extremely popular worldwide selling more than 13 million copies as of May 11th. Although I don’t play it myself, I’ve heard stories from friends about the depth that the game has to offer; from being able to design your own custom sprite, to having its own sophisticated market system that can be arbitraged correctly just like the real financial market. Another bullish event for the gaming industry is PlayStation 5 release in November 2020, seven years after its predecessor. Without a doubt, the future is bright for my childhood’s favorite industry.

I’m Frustrated

Not mentally, I’m doing perfectly fine and extremely grateful for the things that I have during this uncertain times. However, I’m just genuinely baffled by the amount of people who are not taking quarantine seriously and the stupidity (yes, I said it) that I’ve seen online from people refusing to abide by their state’s guidelines or even simply, wearing a freaking mask. This frustration largely comes from spending some time on Twitter, which can either be a gold mine of valuable knowledge or a death trap of mad stupidity.

There are many studies and examples showing that COVID-19 second wave potential is real and it should be taken seriously. China closed down the city of Shulan after a potential second wave, and the US have seen a rise in cases as states reopen.

With that said, if you have the ability to sustain a living while being home, then please, in the words of Samuel L. Jackson:

Talk to you soon.

-Marco

P.S. Final Fantasy XIV, one of the most popular MMORPG in 2020; paid respect to a player that passed away because of COVID-19 with a Memorial March joined by the global community.

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