The gaming sector has seen a sudden growth with pre-orders for Sony's Playstation 5, and Microsoft's Xbox X Series sold out almost everywhere before their November release. The console cycle is going to benefit mostly all of the videogame companies. The recent volatility and sideways-trading over the past month suggest there needs to be a new catalyst to extend the rally.
The last major videogame console upgrade cycle occurred in 2013, again headlined by previous iterations of PlayStation and Xbox devices. Back then, major game publishers Electronic Arts, Activision Blizzard, Take-Two Interactive Software, and Ubisoft Entertainment generously outperformed the broader market for at least 24 months. Since the beginning of September, the drop in the Solactive Video Games and Esports Index indicates some fear among traders about how a move toward a reopened economy impacts the industry's prospects.
With pre-orders for Sony's Playstation 5 and Microsoft's Xbox X Series sold out almost everywhere before their November release, videogame ETFs are ripe for a boom. As life gets a little closer to normal, the increase in videogame playing won't completely reverse course because people will be more used to entertaining themselves at home.