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Investing in the Business of Video Games

Don’t just play the game.
Learn more about investing in ETFs and stocks in the companies that are leading the video game industry.

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Here’s what you’ll learn in this guide:

  • Why video games are a huge global business
  • How the industry is innovating in virtual reality and eSports
  • How the industry appeals to an increasingly diverse population and demographic of consumers

Learn more about investing in the video game industry.

Video games have gone way beyond sticks and consoles, they’re a huge global business worth hundreds of billions of dollars. Learn how video game companies can fit into a diversified portfolio.

What is the video game industry?

Video games have gone way beyond the console. We play on our phones, create virtual lives, and get to live and play in fantasy worlds. Once upon a time, you had to stand on line at an arcade to play your favorite video game. Now you can choose your fighter—and play with people around the world.

Video games are a big, global business, potentially worth as much as $230 billion in the next five years. Two-thirds of American households contain people who regularly play video games, according to industry data.

As for the size of the industry and its overall economic impact, the sector comprises nearly 2,500 companies around the world, employing more than 220,000 people. The employment outlook in the industry is good, too—the number of jobs has been growing at a rate of about 3%, according to industry data.

As the gaming industry has expanded over the years, so has the number of companies working in and around it. While some companies focus solely on software—games themselves, in other words—others build both hardware and software. Yet others build hardware only, including processors and chips to improve consoles, phones, and computers.

Some of the bigger names in game development are Activision Blizzard, Capcom, Square Enix, and Electronic Arts. Alongside these companies are ones that act as both developers or publishers, and that build hardware,  such as Microsoft, Sony, and Nintendo.

Who’s gaming?

America’s gamers are also increasingly diverse, as the results of a recent Pew Research survey show. Young men make up the industry’s largest base of consumers, but gaming is popular across racial, age, and educational levels.

Along racial lines, Hispanics are America’s largest group of gamers with 48% playing at least some of the time. Black (44%) and white (41%) Americans were somewhat less likely to play, overall, according to Pew’s data.

Gaming’s most populous demographic are young American men—specifically, men between the ages of 18 and 29. Roughly 70% of men younger than 30 play games, compared with only about 50% of women in the same age range.

In terms of education, individuals that have some college experience are more likely to be active gamers (50%) than those who never attended college or graduated. College graduates (36%) are the least-likely to actively play.

What’s new in the video gaming industry?

Film and TV

Today, the gaming industry makes more money than other stalwarts of the entertainment sector, including music and movies.

Studios are spending hundreds of millions to produce games such as “Grand Theft Auto V” and “Destiny” (and their sequels), and the profits for successful games tally in the billions.

And there’s still a lot of room for the sector to grow.

Virtual Reality

Virtual reality, or VR gaming, is still in its early stages but is advancing at a rapid pace. There are many VR systems already available to consumers, from the low-tech Google Cardboard to the PlayStation VR.

eSports

Gaming is also breaking new cultural barriers. eSports, for example, which started in the early 1990s, has exploded in popularity. In eSports, professional players compete against each other in popular games like “DOTA 2,” “League of Legends,” and “Counter-Strike: Global Offensive.”

Like other sports leagues, eSport athletes  can earn big salaries from sponsors and spectators who pay to watch. It’s a growing element of the industry that’s expected to earn as much as $1.5 billion by 2020, according to industry reports.

Investing in the video gaming industry

For investors interested in the business of gaming and who want to add some of these companies to their portfolios, there are a few simple ways to do it.

Investors in the U.S. can buy shares of stock in video games and related companies on a publicly-traded exchange, or buy shares of a fund—like an exchange-traded fund, or ETF—that offers exposure to those companies.

Investing in video game stocks

A single stock is just that, a share of ownership of a company. For example, investors can purchase shares of stock in companies like Activision Blizzard, Microsoft, Take-Two Interactive, or Electronic Arts. You can also buy shares in companies that support the industry, such as gaming microchip maker NVIDIA*.

Investing in gaming ETFs (exchange-traded funds)

Exchange-traded funds (ETFs) are a basket of investments bundled into a fund that’s traded on an exchange like the Nasdaq or NYSE.

When you invest in an ETF, you are effectively buying small fractions of the companies within that ETF. The fraction depends on the weights stocks held in that fund. That fund owns the stocks within it and generally tracks an index–or group of investments that represent part of an industry or investment theme.

ETFs vs stocks

ETFs have become popular in recent years as they give investors the opportunity to invest in the performance of a group of stocks without having to buy every single stock in the fund or handpicking single stocks.

Not only can this save time and research, ETFs can offer diversification, which many consider to be an essential investing strategy.

Investing in the video gaming industry on Stash

Want to invest in the video gaming sector? You can check out the themed investments offered on Stash, as well as single stocks.

*Listed investments currently available on Stash but not necessarily representative of all investments.

Investing with Stash

What is Stash?

Stash is a financial services platform that makes saving and investing available to everyone through education, personalized guidance, and mobile-first technology. Stash speaks to a tech-friendly audience, providing user-friendly education, and personalized guidance.

Stash is for everyone

Stash is for the millions of Americans who have been overcharged and underserved by traditional banks, brokers, and investment advisors. Stash is for people who want to take charge of their financial future but need a helping hand to get them started and see them along their journey.

Getting started

If you are a U.S. citizen, permanent resident, or a certain visa holder, and are 18 years of age or older, you can sign-up for Stash here.

What are the fees?

Stash charges its customers $1 a month to maintain an investment portfolio for accounts with an average monthly balance below $5,000. For average monthly balances of $5,000 or more, the fee adjusts to 0.25% of the total balance you have in the account per year, charged on a monthly basis.

If you decide that a retirement account like a traditional or Roth IRA is suitable for your investing goals, you can open a tax-advantaged account with as little as $5. The fee is $2 a month for accounts with an average monthly balance of less than $5,000 or 0.25% per year, charged monthly, for accounts with an average monthly balance of $5,000 or more.

How is Stash regulated?

Stash is as an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). The SEC is a federal agency that regulates the financial securities market, including exchanges, brokerage firms, and investment funds.

The SEC requires investment advisers, including Stash, to act in the best interests of their customers. It also regulates other financial services companies and requires them to provide customers with clear information about potential investments. It also guards against fraud and deception by financial services firms. (Note: Registration with the SEC does not imply a certain level of skill or training.)

You can find out more about Stash on the SEC’s website and its registration with the SEC.

What if Stash goes out of business?

Stash has every intention of sticking around for the long term. However, if anything were to happen to Stash that required us to close up shop, you would maintain complete control of your brokerage account. All the investments in your Stash portfolio are owned by you. Your account will not face any penalties if anything happens to us.

That’s because your investments are held at a federally regulated broker-dealer called Apex Clearing Corporation. This company acts as a custodian for all the investments Stash customers purchase. Apex is regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Apex is also a member of the Securities Investor Protection Corporation (SIPC), which together protects your investments in case of bankruptcy of the company holding your investments.

Your current investments are covered up to a maximum of $500,000 total, including $250,000 in cash balances through the Securities Investors Protection Corporation (SIPC). SIPC coverage does not insure against the potential loss of market value. For uninvested funds, your Stash account is enrolled in something called the Apex FDIC-insured Sweep Program. And here are the details:

Stash accounts are enrolled in an interest-bearing Federal Deposit Insurance Corporation (FDIC) insured Sweep Program (“Sweep Program”) offered through our clearing firm, Apex Clearing Corp. Uninvested Cash in your Stash account will automatically be transferred into the Sweep Program and will earn interest based on the amount and duration of deposits and applicable interest rates. Deposits to the Sweep Program are covered by FDIC insurance up to the $250,000 limit per customer at each FDIC-insured bank that participates in the Sweep Program.

Once your cash balances are deposited with the participating banks under the Sweep Program, they will no longer be covered by SIPC.

Please ensure that you read the Terms and Conditions of the Sweep Program carefully. As with all investments, you should consider carefully if the Sweep Program meets your investment objectives.

Security

Stash uses 256-bit encryption to secure your information, including personal data and fund purchase history. Stash further secures your account with Secure Socket Layer (SSL) technology, which ensures any and all information sent between Stash and its servers is protected.

Stash will never withdraw funds from your checking or savings account without your consent. In order to purchase any of the investments offered through Stash, you need to link a bank account to transfer funds and to make your desired investment purchase.

If you have more questions about whether it’s safe to link your bank account to Stash, send us an email. You can also read more about Stash’s security protocols here.

The Stash team

You can reach out with any questions at support@stashinvest.com or simply call (800) 205-5164.

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This material has been distributed for informational purposes only and is not intended to provide investment, tax, or legal advice or a recommendation of any particular security, strategy or investment product. This material is confidential to the recipient and must not be reproduced or distributed to any other person without the prior written consent of Stash Investments LLC (“Stash”). This material has not been independently verified, is subject to updating and amendment and the material, information and descriptions contained herein are not intended to be complete. This material discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research. This material may not be current and Stash has no obligation to provide any updates or changes. Any reference to a specific company or security does not constitute a recommendation to buy, sell, or hold any such investment. This material does not take into account the financial position or particular needs or investment objectives of any individual or entity. Certain information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.

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