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Gaming sector boosted by homebound users

Ted Pollak, ETFMG partner in the GAMR ETF, spoke with Yahoo Finance about the booming gaming industry as the coronavirus keeps more people at home.

Video Transcript

MYLES UDLAND: All right, welcome back to Yahoo Finance live. Myles Udland here in New York. We're joined now by Ted Pollak. He's the president at EE Fund Management. And, Ted, I want to talk about an ETF you guys are involved in-- GAMR-- G-A-M-R-- and kind of how that fits into the at-home trade and what you guys have seen as we kind of reorient our lives here amid the coronavirus-- a lot of self isolation, self quarantine, social distancing. What's the space been like just in the last couple of weeks? And then we can kind of get into some of the longer term trends that you guys are looking at as well.

TED POLLAK: Well, in the past few weeks, we've seen record number of concurrent users. That's the measure of people playing games at the same time. Steam announced they had 22 million concurrent users. Steam is the primary digital distribution platform for PC gaming. And as people set up their home computers and home offices, what they're really doing is also setting up home gaming platforms.

So the situation with the COVID has created more customers. It's not growth that we would hope for, of course, but it's inevitable that more people are going to be playing games, buying games, and setting up gaming platforms.

JEN ROGERS: I had never heard of Steam until this week. I'm now a member. So I've got my login and everything. It's not for me-- for a child. So this trend is certainly happening now. They're sold out of Switches. You can't get games sent to you fast enough anymore. Beyond this short term bump right now, who do you think are the biggest long term winners? Is it in the software? Or is it in the hardware? I also know we have a big Playstation cycle coming up soon as well.

TED POLLAK: It's-- honestly, it's across the board. And the GAMR index encompasses all of these components. And the technology spreads across semiconductors, it spreads across peripherals and input devices. The software companies themselves, cloud service providers, digital distribution providers-- and maybe anything that's in-person is not coming out on the best end of this.

But anything that's remote, which 99% of gaming is, is going to do quite well. And then there's some longer term trends that are really interesting too with the stay-at-home education stuff, with the remote collaboration. You have an opportunity for platforms like XR, which is the umbrella term that goes over VR and AR-- augmented reality and virtual reality. People need remote collaboration. They need remote ability to visualize.

And when you expand the platform for these display technologies, people will invariably play video games on them. And educational gaming-- you know, Microsoft was one of the first companies to really take it seriously-- Minecraft Education Edition is used by thousands of teachers across the world. And you have other companies starting to get into the educational gaming space as well.

ANDY SERWER: So what kind of outcomes do you see for a company like EA, in particular, and thinking about if there is no sports, is this a good thing or a bad thing? In other words, so they can't model games anymore, or they'll have to be all historical like that-- but on the other hand, maybe it's the only game in town-- pun intended.

TED POLLAK: Well, I'm not so pessimistic about no sports. I think that we might have a year of that-- of course, unfortunately, all the olympians have heard that there's going to be a year delay with the Olympics. And we all feel for them. However, people's passion for sports isn't going to change. People likely will play the last year's teams. The football games, the basketball games are just as much fun to play even if you don't have the up-to-the-moment stats and players.

And so I don't see it impacting too hard. Maybe one generation, one cycle of a new release of these sports games will be impacted. But people's passion for sports games is not going to change. And we're looking forward to moving forward with this whole incident and getting these sports teams back on the field.

AKIKO FUJITA: Ted, you talk about the shift in behavior that we've seen since we've seen everybody essentially just go home and stay locked down. And I'm just wondering how sticky you think that is. You talk about educational gaming, something like VR-- I mean, that was a really-- you know, that was something that we heard for years that it was going to be big, and we didn't quite see it take off the way it was expected to take off.

And yet now, I keep wondering if people are sitting at home, I mean, that's going to be the best experience, right? Because you want to feel like you're outside and not feel like you're contained in the same quarters day after day.

TED POLLAK: Absolutely. That's called telepresence. And being able to put yourself in a different place, whether it's on the beach or on the top of the Giza pyramid or at Machu Picchu, anywhere in the world that they've already digitized, you can go in VR. And so it's not just games that will increase the platform base for VR, which I like to call XR now. That's a whole other discussion, but I don't want to get into it too much.

But the more you have the platform base expanded, the higher probability that people will use the platform for video games. And so I completely agree. And one of the reasons that VR didn't take off five years ago is the resolution of these goggles was not very good. You saw these pixelization in the display. And now you have things like the Oculus Quest, which are self-contained, heads-up display systems with their own processors. You don't have to tether it to a computer. So as the technology advances in these heads-up display systems-- excuse me, head-mounted display systems-- you're just going to see more people accepting it as a good alternative to their traditional displays and enjoying the different ways they can use it.

MYLES UDLAND: All right, Ted, I'll go pretend that I'm sitting on a beach right now and that we're all outside and that this is all over. Because one day, I guess it will be. All right, Ted Pollak is president of EE Fund Management. Thanks so much for joining us today. We'll talk to you soon.

TED POLLAK: Take care.

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