E-Sports & Gaming Luca Berger Portfolio Manager Michael Haupt Senior Advisor Investment Strategies - Vontobel
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E-Sports & Gaming
Luca Berger Michael Haupt
Portfolio Manager Senior Advisor Investment Strategies
25.11.2020
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Megatrends are long-term themes… 2020
Megatrends will have a significant impact on our
lives for decades
Megatrends are structural changes that arise
from demographic, environmental, behavioural
and socio-economic developments.
Megatrends
High
They have a significant impact on our society, our
Impact
private life and businesses.
Ordinary Trend
(e.g. Alternative Proteins, Hydrogen)
Technology and Innovation is an Hype
inevitable part of our life – in private and (e.g Medical Cannabis)
business. It helps to overcome inefficiencies and Fad
Low (e.g. Pokemon Go, Fidget Spinner)
enables businesses to grow. It is the cornerstone
of many Megatrends.
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Overview of our 13 investment themes 2020
Aqua: Problem-solving companies related to water
scarcity, water contamination and water efficiency.
Smart Healthcare: Companies that provide innovation Cloud Computing: Cloud titans like Amazon or Microsoft
as well as fast growing niche players in areas like Software-as-
and technology for the healthcare sector, which helps to
a-Service, cloud infrastructure, IT Consulting, etc.
gain efficiency and ultimately save costs.
Smart Farming: Companies within the Disruptors: Artificial Intelligence, future mobility
agricultural and food sectors that aim at reducing concepts, the internet-of-things or changing
costs/improving production efficiency, protect the consumer behaviour of millennials. The selected
environment and natural resources, or contribute companies have the potential to disrupt whole
Demographics industries.
to human and animal welfare and health.
&
Urbanization
Power of Global Brands: Companies E-Commerce: We focus on companies that
with strong brand recognition, a loyal offer services and technologies across the value
customer base and a strategy towards Innovation chain of E-commerce, from software to logistics.
attracting millennials and the Generation Z. &
Technology
Sustainable
Value Multipolar Era of Robotics: Our investment portfolio is
Power of Diversity: Companies that Creation World
diversified and offers exposure not only to robotics
successfully embrace diversity of gender, companies, but also to software providers and
race and thought. semiconductor equipment makers.
E-Sports & Gaming: Areas like cloud gaming,
Impact for Good: Companies that provide positive
chipmakers, game developers & equipment and also video
environmental & social impact. The main goal is to
streaming. This fast-growing trend offers many investment
promote an environmentally sustainable and socially
opportunities.
responsible economy.
Energy Revolution: Strategy that benefits from energy- related Family Influenced Businesses: Companies that benefit from
trends by investing in companies which are active in e.g. renewable strongly aligned shareholder and management interests, a longer-term
energy, smart grid, energy storage, green buildings, recycling, hydrogen strategic vision (less focused on quarter-to-quarter earnings “management“)
and so-called enabling technologies. and lower financial leverage ratios.
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Investment Case –
E-Sports & Gaming
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The difference of E-Sports and Gaming 2020
E-Sports Video Gaming
Short for electronic sports, The action of consumers playing
pertains to competitive or video games
professional gaming
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ESL One Cologne - 2019 2020
Source: MTG, ESL
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Fortnite beats major sporting events in prize money 2020
Winner's prize money in selected individual sporting events in 2018/2019 (USD)
Fortnite World Cup 3’000’000
Wimbledon 2’980’000
Indy 500 2’530’000
The Masters (Golf) 1’980’000
Word Dart Championship 640’000
Tour de France 580’000
World Snooker Championships 560’000
Ironman World Championship 120’000
New York Marathon 100’000
Source: Epic, Statista
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The E-Sports ecosystem 2020
How this whole industry works
Leagues &
Teams Games Distributors Fans
Tournaments
Streamed Watched
Plays
by by
Sponsor
Organize
Publishers &
Brand Sponsors
Developers
Publish Sponsor
Source: MTG, Company Website
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Global game revenues are rising steadily 2020
By category, in USD billions
+9.9%
+8.3% 196.0
+8.2% 178.2
+9.6% 164.6 With the 5G era quickly
152.1 descending upon us, these
pocket-sized game consoles
138.7
could transform online
gaming, and make the
industry even more exciting
PC
Console
Mobile
2018 2019 2020 2021e 2022e
Source: Vontobel, Newzoo
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Online gaming platforms that games are played on can
be broken down into three main categories: 2020
PC Gaming Console Gaming Mobile Gaming
Mobile gaming is the largest online gaming
segment, producing USD 68.5 billion in 2019 45%
45% of the total market
Source: Vontobel, Newzoo
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The growth rate of the global gaming market are insane (2019) 2020
By regions By segments
Latin America Browser Games
Tablet Games
USD 5.6bn USD 54.9bn
USD 13.6bn
(+11.1% YoY) (+11.6% YoY)
(+5.0% YoY)
Asia-Pacific
Europe & USD 72.2bn
Africa (+7.6% YoY) PC Games
Smartphone
USD 34.7bn USD 32.2bn
(+11.5% YoY) (+6.6% YoY) Games
USD 54.9bn
(+11.6% YoY)
North America Console Games
USD 39.6bn USD 39.6bn
(+11.7% YoY) (+13.4% YoY)
Mobile Gaming
→ By 2022, the global games market will grow to USD ~200 billion with an estimated CAGR of +9%
Source: Vontobel, Newzoo
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Gaming is not a question of age or gender 2020
Age breakdown of people playing video games (US, 2018)
The average female gamer is
36 years old
11% 13%
12%
8%
The average male gamer is
32 years old
17% 16%
12% 11%
Under 18 18-35 36-49 50+
Male Female 45% of US gamers are women
Source: Vontobel, Newzoo
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Vontobel’s
E-Sports & Gaming
Strategy
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Vontobel E-Sports & Gaming Framework 2020
Vontobel’s
E-Sports & Gaming Strategy
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Video Game Developers 2020
The new consoles and cloud gaming will create new opportunities for game developers
– In the past companies sold their games as CD at a price between USD 30-60, but in recent years, games have
developed into a recurring and diversified source of revenue - made possible by the cloud
– The focus has shifted to digital downloads (rather than buying a physical disc), in-game purchases of downloadable
content (DLC) and microtransactions. The ability to offer additional maps, characters, achievements, and more extends
the life of a game by providing new and exciting opportunities for the fan community over time
How Developers make money with games and expand New games which will be launched next
their life time (Q4 2020 – 2021)
Source: Vontobel, UBS, Company Website
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E-Sports & Streaming 2020
The viewership in E-Sports and video game streaming is rising
– The e-sports market has experienced a boom in recent years as more and more viewers watch their favourite games
being played by some of the best gamers in the world. By 2023, it is expected that there will be almost 300 million
regular viewers worldwide and it is also predicted that by 2023 351 million people will be occasional e-sports viewers.
– The Twitch viewer base has shown strong and stable growth since 2013. Due to the pandemic, the number of active
users skyrocketed. On average in 2020, 1.44 million people are on the streaming platform simultaneously.
E-Sports audience size worldwide from 2018 to 2023 (in The numbers of hours watched on Twitch increased
millions) massively during lockdown (in millions)
700 2’000
Covid-19 pandemic
600 351
1’500
500
272
400 245 Occasional viewers
222 1’000
300 Frequent
295 viewers/enthusiasts
200 223 500
198
173
100
0 0
2018 2019 2020 2023* 2013 2014 2015 2016 2017 2018 2019 2020
Source: Statista, Newzoo, TwitchTracker
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Gaming Technology 2020
The viewership in E-Sports and video game streaming is rising
– For gamers there is nothing worse than long loading times and so-called network lags. According to a study by Akamai,
delays and connection problems are the main reason why players stop playing a game.
– It is therefore important that video game companies invest in this technological area.
– As video games have become increasingly complex over time and have to meet consumers' high quality expectations, it
is important that developers can always use the best and latest technology when developing their games.
Software to develop videogames Technology makes it possible to download video games quickly and safely
Save Download End User
Developer & in Cloud Delivery
Publisher Analytics
for D&P
The publisher is The technology Once customers have
uploading the provider makes sure, purchased the game
gaming content into that the confidential digitally, they can
the Cloud data is secured and quickly and easily
downloadable for download data to their
paying end users gaming platform and
have fun
Source: Vontobel, Akamai, Newzoo, Unity
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Consoles & Equipment 2020
The viewership in E-Sports and video game streaming is rising
– Global sales of computer accessories experienced a major surge due to the corona crisis, which will continue in
subsequent years. The increasing number of gamers will continue to drive this.
– Seven years after Microsoft and Sony brought their last consoles onto the market, it is now time for the next generation.
The demand for the consoles is huge, as both are already sold out before the official launch. Whether PS5 or Xbox
Series X, the new gaming experience will be an enrichment for all gamers.
Gaming peripherals market revenue worldwide from The next-gen consoles PS5 and Xbox Series X will
2017 to 2022 (in billion, USD) shake up and revolutionise the gaming market
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5.13
5 4.64
4.14 4.28
4.06
4
3.04
3
2
Price: USD 499.99* Price: USD 499.00
2017 2018 2019 2020* 2021* 2022*
Release on 12th Nov 2020 Release on 10th Nov 2020
Source: Sony, Microsoft,
*(Version with disc drive)
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For the launch Sony had several ideas to promote the PS5 2020
Source: Vontobel, Sony, Doritos
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The new era of entertainment 2020
As audiences continue to grow, it is clear that the technological possibilities of online gaming are endless
Virtual reality Cloud Gaming Real-time personalization
The industry leaders Oculus and Valve have
Cloud gaming takes advantage of faster and
announced that they will sell more affordable In the future, games could automatically
more reliable internet connections by
VR glasses in the future. This could give a generate game content that is customized
allowing players to stream games even on
further boost to the VR trend in 2021, giving to fit each player’s personality and
old computers instead of buying an
many players access to the new virtual playstyle, based on their player data.
expensive setup.
world.
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Portfolio
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Bottom-up stock selection at theme level 2020
1 2 3 4 5
Portfolio
Global Equities Opportunity Set Investable Universe Shortlist at theme level
(20 – 30 stocks)
Identifying Megatrends Thematic Exposure Fundamental Analysis Portfolio Construction Active Management
- 3-Alpha Megatrends - Investment managers use - Fundamental company - Analysis of investable - Constant review of
portfolio managers together their in-depth knowledge of analysis and forecast of universe for trading attractiveness and return
with the investment the sector to identify a potential returns for liquidity and share price potential of our portfolio
committee and the thematic subgroup of companies that shareholders. Assessment volatility to determine initial holdings
advisory board identify is representative for the based on company portfolio weights
relevant investment themes theme fundamentals for the - Engagement with
forecast period of 5-10 - Optimization of portfolio stakeholders of core
- A quantitative screening years profile for long-term holdings through company
helps to find relevant investors visits, management calls
companies with significant - Analysis of valuation and relevant events
sales/earnings exposure to metrics vs. relevant peer-
the respective theme group companies
- Comprehensive ESG
analysis
Alternative Data plays an important role in every step of the investment process
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We use alternative data as part of our decision making process 2020
Social Media Analytics
Data Analytics
Using data can develop a store of knowledge
that enable predictions and insights about
consumer activity. Relevant providers such
as Bloomberg BQL, Factset and a tool
developed in-house help us to screen
relevant information fast.
Alternative Data
Alternative sources like ESG Research or
Venture Capital data are meaningful
additional resources for our investment
managers. Employee satisfaction, social IT Software reviews
media recognition or customer reviews often
tell more about a consumer company than
financial models.
Engagement
Our investment managers are not only
number crunchers, but are also on the
ground. They engage with companies via
site visits, management calls or industry
events. They visited a “smart” farm in the
Trend/VC data ESG/Sustainability
Netherlands and tracked down the newest
gaming trends at Gamescom in Cologne,
Germany.
E-Sports & Gaming strategy
Portfolio Manager Luca Berger
Source: Company Websites, Vontobel
Vontobel has not acquired any rights or license to reproduce the trademarks, logos, or images set out in this document. The trademark, logos and images set out in this document are used only 23
for the purpose of this presentation.Public
Portfolio as of November 2020 2020
Investment examples in each subtheme Master Data
Performance 1M 3M 12M YTD Issuance
Name Industry Weight Product 0.1% 4.8% 50.3% 37.7% 49.0%
MSCI ACWI -2.4% 0.2% 4.9% -1.1% 6.3%
Video Game Developers
Activision Blizzard Inc Video Games 4.9% Risk Figures* Volatility Sharpe IR Beta
Electronic Arts Inc Video Games 4.4% Product 23.6% 2.13 2.86 0.68
Ubisoft Entertainment SA Video Games 3.6% MSCI ACWI 29.1% 0.17 - 1.00
E-Sports & Streaming
AfreecaTV Co Ltd Internet Media & Services 2.8% Net Performance since issuance (USD)
DouYu International Holdings L Video Games 3.1%
HUYA Inc Video Games 3.7%
60.0%
Gaming Technology 50.0%
Akamai Technologies Inc Infrastructure Software 2.9% 40.0%
Keywords Studios PLC IT Services 3.9% 30.0%
Unity Software Inc Application Software 3.1%
20.0%
10.0%
Consoles & Equipment
Sony Corp Consumer Electronics 5.9% 0.0%
Nintendo Co Ltd Consumer Electronics 4.4% -10.0%
Corsair Gaming Inc Consumer Electronics 3.1% -20.0%
NVIDIA Corp Semiconductor Devices 4.3% -30.0%
-40.0%
Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20
E-Sport & Gaming MSCI ACWI Net TR
Source: Bloomberg, Vontobel
As of 01.11.2020 24Public
Performance since we launched the our E-Sports Strategy 2020
Our strategy outperformed the MSCI ACWI Benchmark massively
60.0%
50.0%
Since launch:
+47.8%
40.0%
30.0% Outperformance:
+41.5%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20
E-Sport & Gaming MSCI ACWI Net TR
Source: Bloomberg, Vontobel
As of 01.11.2020 25Public
Product details
Vontobel E-Sports & Gaming Index 2020
PRODUCT DETAILS
SSPA product type Tracker Certificate (1300)
Underlying Vontobel E-Sports & Gaming Index
Initial fixing/payment 07. December 2020 / 11. December 2020
Term Open end
Management fee 1.25 %
Issuer Vontobel Financial Products Ltd., DIFC Dubai
Index calculation agent Bank Vontobel AG
Currency CHF USD
ISIN/symbol CH0573944482 / PSTIOV CH0573915953 / PSTINV
Issue price CHF 101.50 (incl. CHF 1.50 issuing USD 101.50 (incl. CHF 1.50 issuing
commission) commission))
Reference price certificate CHF 100.00 USD 100.00
Details page Term sheet Details page Term sheet
SSPA product type: Tracker Certificate (1300) essentially maps the performance of the underlying. It must be noted that an investment in an Open End Tracker Certificate carries largely the same risks as a direct 26
investment in the underlying: in particular, the corresponding foreign currency, market, and price risks. Open End Tracker Certificates do not generate ongoing returns and offer no capital protection.Public
Your E-Sports & Gaming experts: 2020
Luca Berger Daniel Wenger
Portfolio Manager Senior Investment Advisor
Lead Manager Co-Manager
T +41 58 283 64 65 T +41 58 283 78 29
luca.berger@vontobel.com daniel.wenger@vontobel.com
Favorite Game: Favorite Games:Public
Legal information 2020
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advice.
This publication is deemed to be marketing material within the meaning of Article 68 of the Swiss Financial Services Act and is provided for informational purposes only. We will be happy to provide you with additional information about the specified
financial products, such as the prospectus or the basic information sheet, free of charge, at any time.
This brochure should not be construed as a solicitation or offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction. The services described in this brochure are supplied exclusively under the agreement
signed with the service recipient. The facts presented and views expressed herein are for information purposes only and do not take account of any individual investment targets, financial circumstances or requirements. Moreover, the nature, scope
and prices of services and products may vary from one investor to another and/or due to legal restrictions and are subject to change without notice. Before making an investment decision, investors are advised to consult a professional advisor
regarding their individual situation. Prospective investors should be aware that past performance is not necessarily indicative of future results. In no event will we be liable for any loss or damage of any kind arising out of the use of the information
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