Introducing the TriplePoint Video Game Index
How is the video game industry doing? This is a common question that underlies much of the business and trade industry press. Individual stocks’ quarterly reports give meaningful anecdotes, but there is not one good benchmark to provide the capital markets’ answer to that question over time. Until now.
The TriplePoint Video Game Index, ticker: GAMER, comprises of the top performing companies in the space as calculated by the S&P Dow Jones Indices. It launched April 26th, 2021 for investing professionals on the Bloomberg Terminal and commonly available on public investing information sites such as Google Finance.
The index consists with the following list of most representative global stocks in the video game industry. TriplePoint clients as of August 2023, or their significant subsidiaries, are listed in bold. It should also be noted that The Pokémon Company, though not listed, is a TriplePoint client with Nintendo as a significant shareholder.
Activision Blizzard Inc
Bandai Namco Holdings Inc
CD PROJEKT RED SA
Corsair Gaming, Inc.
Cyber Agent Ltd
Embracer Group AB – B shares
Enad Global 7
Focus Home Interactive
Gamania Digital Entertainment Co
GameStop Corp A
Glu Mobile Inc
Gravity Co. Ltd. ADR
GungHo Online Entertainment
Keywords Studios plc
Koei Tecmo Holdings Co Ltd
NetEase Inc ADR
Nexon Co Ltd
Nintendo Co Ltd
Paradox Interactive AB
Pearl Abyss Corp
Perfect World Co Ltd A
Rovio Entertainment Oyj
Sega Sammy Holdings Inc
Square Enix Holdings Co Ltd
Stillfront Group AB
Take-Two Interactive Software
Ubisoft Entertainment SA
Unity Software Inc.
Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co (37Games)
The TriplePoint Video Game Index is weighted by the size of the company based on their free-floating market capitalization, with a minimum requirement of $250 million. This is the most common method of modern index development. That means the same percentage move in the stock price of Roblox has proportionally more of an effect on the index’s price than one in one of the currently smaller firms such as tinyBuild.
The index is owned and composed by TriplePoint and is calculated by S&P Dow Jones Indices. As you may recognize from their name, they are the leading provider of index calculation services.
S&P does a calculation of the real-time value of the index every fifteen seconds during United States market hours and distributes that information to a variety of services. The ticker symbol on wire services to see and track this information is GAMER.
What Companies are NOT in the index?
There are many companies important to the video game industry but who are not, in our judgement, primarily-to-exclusively engaged in the industry.
Most notably, these include the console makers Sony and Microsoft, who are more critical to the industry than the industry is to them. A closer call to not include in the index is Tencent. Though their stock price is heavily affected by the games industry presence they have, their proprietary social media platform and payments businesses have a meaningful impact on the stock price. We have also chosen not to add semiconductor leaders, important though they are as well.
We have also not included “social casino” stocks and other companies which principally rely on a gambling mechanic. We believe this is not representative of the health of the industry. We have not included entertainment conglomerates that also have significant games divisions but are more affected by other business divisions, such as Disney.
So, How IS the Video Game Industry Doing?
As part of index development, S&P back-calculated the index with the components that were public at the time to the market close on December 19, 2019. This date was chosen as if a normal December “rebalancing” had occurred, and we wanted to get a pre-Covid snapshot of the industry. The further back a back calculation goes however the less reliable and useful it becomes. Many game companies have gone public in the last sixteen months. Their contribution to the index of course occurs only from the time they were public, but no stocks were part of this calculation and subsequently dropped.
We chose the starting value of the industry arbitrarily – but we hope a fun representation of the culture of the industry – at 1337. The index is trading at ~2100 as of this writing, an over 50% gain which has outpaced the broader S&P 500.
The index was not able to add a couple of firms in time for the launch, most notably AppLovin, which had an IPO immediately prior to our own launch. They and likely others will be added to the index during the “quarterly rebalancing” custom indexes do. A company currently on the list that changes their business model from gaming would be dropped from the list for ongoing calculations.
Can I Invest In It?
While we’d love to have an investible financial product built off this index, there is none built for it at launch. There is no way to invest in any index directly, even the S&P 500. You can invest in products like the ETF SPY, or the futures contract ES that closely hew to it however.
There are several existing ETF (“Exchange Traded Funds”) that do cover a lot of the companies listed above. They also, in our opinion, unnecessarily cover some companies that are not representative of the industry. Investors should examine their holdings to be sure it is reflective of what they are looking to get exposure to. Furthermore, as actively-managed funds with different weights of the components, they cannot provide the first utility TriplePoint was looking for – an objective yardstick such as an index.
We believe wider awareness of the global offerings in video games and their performance will help raise the status of the industry, and help facilitate more capital availability for new and existing game companies. TriplePoint is a leading video game strategic communications firm that is a member of the industry, not just a vendor to it.