SHARE THIS

Sony’s PlayStation 5, released over a year ago, has sold over 13 million units globally, announced the company last October. However, due to product shortages, the original price of around HK$4,000 has been marked up by scalpers in Hong Kong to as high as US$6,000. Undoubtedly, according to the foreign media AllTopEverything, Sony ranked first among the top 10 highest grossing video game companies of 2020. Coming in third was Nintendo, which released Pokémon Go and then Animal Crossing: New Horizons during the pandemic. The latter has become very popular in Hong Kong. Japan’s video game culture has long been leading the way globally.

Evolution of Metaverse Games

The 2016 launch of Pokémon Go jointly by Nintendo and Niantic was an AR (augmented reality) mobile game that broke down the boundary between games and reality, sparking a global Pokémon hunting craze enjoyed by players of all ages. It was common to see groups roaming the streets, phones in hand, in search of Pokémon. As of the first half of last year, Pokémon Go had accumulated nearly $5 billion in revenue over four years since its release.

As for Animal Crossing: New Horizons, part of what makes it so engaging is how it applies the metaverse concepts. Players embodied as villagers are allowed to design their island, homes, and crops in a virtual animal village. They can also interact with friends, visiting each other’s islands in the virtual world to explore and socialize together, making the game an alternative virtual social platform.

Tencent (00700), the second highest grossing game company, previously acquired a 40% stake in the U.S. game developer Epic Games for $330 million. That stake has now grown nearly 35 times in value to $11.5 billion. Their popular game Fortnite has officially launched “Party Royale” to construct a virtual public space where players can chat and interact with friends and participate together in activities like skydiving and fishing, marking the beginning of Epic Games’ metaverse. Coming in fourth is Microsoft, which recently acquired Activision Blizzard for a premium price with the goal of developing the metaverse.

An Irreversible Trend

The metaverse integrating VR (virtual reality), AR (augmented reality), MR (mixed reality), and XR (extended reality) is considered an evolution of the internet. Various industries will soon apply strategies using immersive technology to create near-real scenarios for property viewing, concert watching, online shopping, video conferencing, and more. “When falsehood is taken as truth, truth also becomes falsehood.” Geography will no longer be a limitation. People in different locations can enter a shared virtual landscape. Of course, further advancing the metaverse will take companies more time, but video games have already demonstrated its value.

Nikko Asset Management is one of the world’s top 10 ETF issuers and Asia’s largest asset managers. Since its parent company was founded in 1959, it has fund managers distributed across countries including Japan, China, and Singapore, giving it a deep understanding of market developments in each region. In recent years, it has entered Hong Kong’s ETF market, issuing two ETFs focused on the internet and video game industry with widely diversified constituent stocks.

Learn more: https://www.nikkoam.com.hk/etf