Lala’s “aha” moment came when he saw an e-gaming tournament. Thousands of people filling a stadium to watch people play a video game. That was something he could never have imagined, and something that made him realize there’s a much, much, bigger market for gaming than the sale of a Nintendo cartridge.
He explained how sophisticated the revenue streams for gaming companies have become. Where the old model was one of instore or online sales, now many games are given away for free with in-app purchases, subscription fees, or downloadable content (DLC) integrated into the game. Companies are putting together professional tournaments, and broadcasters are bidding for media rights. The sheer number of gamers is staggering. Gaming market research Newzoo estimates that in 2019 there were 2.4 billion gamers, meaning people who play video games more than six days a week, worldwide.
“It’s not just kids,” Lala said. “It’s people my age who are getting up on a Saturday morning and hopping onto their console to play NHL 2K with their friends. It’s my mom playing Candy Crush on her phone.”
Gaming, to Lala, was a perfect fit within Evolve’s wider strategy. He explained that they try to look for the ways the world will change in the next 10 or 20 years and invest in the forces either driving those changes or set up to benefit from them. That’s the approach that informs their cybersecurity ETF, their future of the automobile fund, and HERO.
Lala explained that in all their disruptive tech funds, Evolve tries to add diversity to a portfolio. Though Amazon owns the game-viewing platform Twitch, Lala won’t put Amazon in his fund because it’s likely already a part of most investors’ portfolios. He will include Take-Two Interactive, though, the gaming company behind such marquee titles as Grand Theft Auto, NBA 2K, and Civilization.
