This Product Has 125 Million People “Addicted”

“Don’t go in there, or I’ll kill you…”

That warning came from a harmless looking 8-year-old. It sounded like an empty threat, so I went in anyway.

But the threat was not empty. I was promptly killed… and the trash-talking began.

“I dominated you. I’m the greatest of all time!”

I had it coming… This was the twentieth time the little guy had killed me in Fortnite, a popular, multiplayer video game in which competitors battle one another.

I put up with this humiliation to do a little research on a profitable trend that’s largely flying under the radar: video gaming.

Fortnite is one of the most popular video games in the world.

In just 15 months, it has amassed 125 million players. That’s more than the number of people who watched the 2018 Super Bowl between the New England Patriots and the Philadelphia Eagles.

So when my wife and I recently visited some friends in Pewaukee, Wisconsin, I had their son show me the ropes. He was excited to do so… It’s all he and his friends talk about.

Look, I know most of our readers probably aren’t interested in video games. You may even think it’s just another way the “young’uns” waste their time.

But at the Daily, we’re interested in making you money. And video games are big business.

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The World’s Most Popular Pastime?

In yesterday’s Daily, I told you electronic sports (esports) would eventually surpass the NFL in popularity. But esports are just one segment of the larger—and rapidly growing—video gaming industry.

Gaming website WePC estimates that more than 2.5 billion people play video games every day. And the $108 billion market is growing by leaps and bounds…

Analysts forecast the video game market to grow 24.4% annually by 2021. And they expect esports (the competitive form of video gaming) to grow 35% annually over the next couple of years.

According to the Pew Research Center, 60% of males between the ages of 16 and 29 play video games. And they tend to be lifelong gamers… The same study showed that 53% of men between the ages of 30 and 49 continue to play video games.

You can even make money playing video games now… Some gamers have their own channels on video streaming websites like YouTube and Twitch…

The more people who watch their channels (and thereby, the advertisements aired on their channels), the more money gamers can earn. Some people even donate to gamers as a form of gratuity.

In fact, one Fortnite player named Tyler “Ninja” Blevins earns an estimated $500,000 per month. That’s about $6 million per year—similar to the salary of a mid-tier player in the NFL, NBA, MLB, or NHL.

ESPN The Magazine even featured Ninja on its September 21 issue cover. (The issue was titled, “The Legend of Ninja, Biggest Gamer in the World.”)

And he’s not even the highest-paid gamer. In 2017, YouTube star Daniel Middleton made an estimated $16.5 million streaming himself playing the game Minecraft.

I recently talked with a teacher who told me that boys’ attitudes about their future aspirations have changed. In the past, boys wanted to become football players or astronauts. Now, they want to be YouTube celebrities.

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Addicted to Gaming

Video games will be around for a long time… That’s because these games are addictive.

According to market research firm Statista, more than one-third of college and high school students who regularly play Fortnite report that they have missed school or work at least once due to the game.

And 20% of people with full-time jobs who play Fortnite report that they have missed work at least once.

If there’s one thing true about investing, it’s that you want to own companies that make addictive products like video games.

Regardless of what you think about them, two of the best-performing stocks over the past century are Coca-Cola and Altria (formerly Philip Morris). Both soda and cigarettes are addictive products. People get hooked and then keep buying.

The same is true with video games… People are addicted to playing—and watching—them.

SuperData Research estimates that more than 660 million people watched video game content online in 2017. It forecasts that number to grow 10% in 2018—which would equal another 66 million online viewers.

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How to Play This Trend

Many large corporations are already in the video game market…

Sony and Microsoft make the most popular video game consoles. And Apple and Tencent are the biggest players in the emerging mobile gaming market.

But these multinationals are far from pure plays on the sector…

The easiest way to gain exposure to the video gaming trend is through the ETFMG Video Game Tech ETF (GAMR). This fund holds video game makers, sellers, and hardware parts suppliers from across the world.

It’s positioned to fully take advantage of the growing number of addicted gamers… and the money they spend playing video games.

Regards,

Nick Rokke
Analyst, The Palm Beach Daily

Some readers think the institutional rush into the crypto market will be a double-edged sword. (See October 11 issue, “Teeka Tiwari’s Two Reasons to Buy Bitcoin Today.”)

From Rick G.: My concern about institutions getting into cryptos is this: Once Wall Street and the big banks get involved, the government will pass new laws that won’t allow people’s assets “under self-custody" to have value.

From Dave K.: Hi, Teeka. In your estimation, with TD Ameritrade and Fidelity Investments launching crypto trading to retail customers, which cryptocurrencies do you feel will benefit the most over the next 12 months, and also more long-term?

Nick’s Note: Thanks for the question, Dave. Bitcoin will likely be the biggest beneficiary—at least initially—from the wave of institutional money coming into the crypto market. Bitcoin is the reserve currency of the crypto space… Therefore, institutions will need to buy it before they can purchase other digital coins.

And one reader thinks the “new space race” isn’t much of a race at all…

From Wayne B.: The space race is a goddamn scam—the biggest scam since taxation. We can’t even build the F-35 fighter plane. Give me a break.

Do you have any questions or comments for our gurus? Send them right here…

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