Features

Subscriptions and the Business-to-Business Operating Model

The subscription model is one that is familiar to consumers; people have been subscribing to newspapers for decades. In recent years, the subscription model has expanded to just about every good and service that individuals consume, including streaming entertainment and news, groceries, and even travel.It is no surprise that the subscription model is infiltrating the model in which businesses sell their goods and services to other businesses (B2B). What is driving this shift? What advantages does the subscription model offer in the B2B world?Origins of the B2B Subscription ModelSalesforce is credited with launching the B2B subscription model in 2000 with its “the end of software” marketing campaign, according to subscription consulting company Zuora.[1] Salesforce, through its software-as-a-service (SaaS) to companies, provided a standard, distributed solution at a lower cost of entry so its customers wouldn’t need to worry about costly installation and maintenance.Potential AdvantagesTechnology advances quickly. What is cutting-edge today may soon become obsolete. Subscription models provide access to the latest software capabilities and innovations, with customers receiving automatic upgrades when available.Without a hefty, up-front purchase price, it may also allow companies to test new products and services. It also releases companies from the difficulty, expense, and skills required to manage on-premise technology.ConvenienceSubscription services are also geared toward providing convenience. Software subscriptions usually allow for a nearly instant set-up, simple scalability, and easy cancellation.Potential Cost SavingsBuying technology usually requires a significant up-front investment which may be beyond the ability of some companies, especially small and medium-sized businesses (SMBs). Subscription services may remove this up-front fee, making it easier to implement the improvement and innovation offered by new technology. Therefore, subscription-based models may help level the playing field for SMBs by lowering the cost of access to digital and automated technologies, allowing them to compete with larger companies.Potential Benefits for Companies Offering B2B SubscriptionsB2B subscription models may provide companies with a more predictable stream of revenue and cash flow. They may provide an additional source of revenue as companies, that could not afford an outright purchase of a good or service, may opt to subscribe.Additionally, companies offering B2B subscriptions may benefit from increased information and contact with the business customer and the ability to provide more customized products and services.Not Just for ConsumersSubscriptions are not only for consumers. The subscription-based model may also have the potential to disrupt the way companies buy or sell services to other companies.The Fount Subscription Economy ETF (SUBS)The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Fount Subscription Economy Index. The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.SUBS may invest in companies that offer subscription-based pricing models, including those in the technology hardware industry.For a list of fund holdings, please click here.[1] The Subscription Economy is Transforming B2B Operating Models, Subscribed, Zuora Website, Retrieved 5/1/22

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Why Is Meta Opening a Physical Store?

Meta, the company formerly known as Facebook, announced that it planned to open its first physical store on May 9. What is behind Meta’s move? Is this at odds with its goal of transforming into a metaverse company? Is this potentially a good thing for the metaverse?Complimentary and Potentially Enhancing to its Metaverse AmbitionsMeta announced in its blog that it planned to open its first physical retail space at its campus in Burlingame, California.[1] The store will allow customers to get hands-on experience with all of Meta’s hardware products.Meta’s physical store will enable customers to experience the metaverse experiencefirsthand. Meta founder Mark Zuckerberg noted, “The best way to understand virtual reality (VR) is to experience it.”[2] VR is one component of the metaverse.According to its blog, the Meta store will showcase the company’s Quest 2 VR headset, the Portal video calling device, and the Ray-Ban Stories smart glasses.Visitors can demo popular apps on Quest 2 and project their experience on a large, curved LED screen in the store for others to see.The company is also working on producing additional hardware products such as a smartwatch and more high-tech augmented reality glasses.Meta’s decision to open the store on its corporate grounds is deliberate. According to Martin Gilliard, Head of Meta Store, “having the store in Burlingame gives us more opportunity to experiment and keep the customer experience core to our development.”[3] Meta intends to learn from customer experience in its stores and help define its future retail strategy.Following Other Tech Company’s LeadMeta is not the first tech company to open a physical store. In May 2021, Google announced that it was opening its first physical retail store – the Google Store – near its offices in Chelsea in New York City.[4] The store showcases some of Google’s physical devices, such as Pixel phones, Nest products, Fitbit devices, and Pixelbooks. The store employs staff to help customers troubleshoot issues or help with installations.Although it closed most of its 83 physical stores, Microsoft left a handful open, including its London, New York, Sydney, and Redmond, WA locations. These stores were reimagined as “experience centers.”The locations showcase some of Microsoft’s products, such as its Surface PCs, Xbox, and its Windows and Office products.[5]And, of course, we have Apple, who, in 2001, opened its first of what would become many retail stores.Using Physical Space to Showcase TechnologyThere is a precedent for using physical locations to showcase a tech company’s technology: getting potential customers acclimated to new products and to engage in market research.As such, we believe that Meta’s opening of its first physical store is positive as it may allow consumers to experience the metaverse firsthand.The Fount Metaverse ETF (MTVR)The Fount Metaverse ETF seeks to provide investment results that, before fees and expenses, generally correspond to the performance of the Fount Metaverse Index. The index was designed to measure the performance of companies that develop, manufacture, distribute, or sell products related to metaverse technology.MTVR may be an attractive vehicle for investors looking to invest in the metaverse.For a full list of MTVR holdings, please click here.[1] Introducing Meta Store: A Hands-On Experience with Our Hardware, Meta Website, 4/25/22[2] Isaac, Mike, Meta Plans to Open Its First Retail Stores as It Highlights Metaverse-Related Products, The New York Times, 4/25/22[3] Introducing Meta Store: A Hands-On Experience with Our Hardware, Meta Website, 4/25/22[4] Kelly, Samantha Murphy, Google to Open its First Retail Store to Sell Devices, CNN, 5/20/21[5] Liao, Shannon, Microsoft is Closing All of Its Stores, CNN, 6/26/20

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Could the Metaverse Market Grow to $13 Trillion by 2030?

How large may the metaverse market become in the coming years? A recent report from Citi pegs the total potential addressable metaverse market at $8 trillion to $13 trillion by 2030.[1] What is behind these assumptions? Can the metaverse reach these lofty projections?It’s DefinitionalCiti’s definition of the total addressable metaverse market is broad. For example, it includes users who may access the metaverse via a mobile phone rather than solely through augmented reality (AR) or virtual reality (VR) platforms. Based on this broad definition, Citi reaches its $8 trillion - $13 trillion dollar estimate with 5 billion users.Constraining the definition to those accessing the metaverse via AR/VR, the audience may be closer to 1 billion users and a total addressable market of $1 trillion to $2 trillion, still a healthy potential market.Further Infrastructure Investment NeededCiti concedes that further investment is needed in infrastructure technology to enable the low latency required to build a fully immersive content streaming environment that allows users to move seamlessly from one experience to another.This may provide investment opportunities for companies building out the needed infrastructure.Expanded Use CasesWhile gaming may be the first thing that comes to mind when considering the metaverse, the Citi report highlighted expanded use cases that may propel the metaverse market.Smart ManufacturingDigital twin technology allows for the virtual representation of real-world physical assets or systems. Such technologies may permit companies to design in the metaverse. For example, mobile phone equipment manufacturer Ericsson is building city-scale digital twins to help study the interplay of 5G cells and the environment for maximum performance and coverage.Virtual CitiesGovernmental agencies are looking for ways to move administrative functions to the metaverse. Seoul, South Korea, as part of its Seoul Vision 2030, plans to establish a metaverse platform which will include a virtual city hall and public services centers.This is intended to allow for citizens to interact with city officials for virtual consultations and feature tourism locations.Virtual CollaborationEducation – The metaverse may be used to create virtual classrooms where students may interact with instructors and other students in a virtual classroom rather than just through boxes on a computer screenWork – Technology already exists to create virtual workspaces and conference rooms.Recruiting and Training – The metaverse may host virtual job fairs, while companies may use the technology for training purposes.These are just a few of the many potential ways that the metaverse may be used in the future.The Fount Metaverse ETF (MTVR)The Fount Metaverse ETF seeks to provide investment results that, before fees and expenses, generally correspond to the performance of the Fount Metaverse Index. The index was designed to measure the performance of companies that develop, manufacture, distribute, or sell products related to metaverse technology.MTVR may be an attractive vehicle for investors looking to invest in the metaverse.For a full list of MTVR holdings, please click here.[1] All data sourced from: Metaverse and Money: Decrypting the Future, Citi GPS: Global Perspectives & Solutions, March 2022

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Posts

05-May-2022

Is Netflix Signaling the Demise of Subscriptions?

Netflix stunned the investment world when it announced its first-quarter 2022 earnings on 4/19/22 and reported that it lost about 200,000 subscribers. This sent Netflix’s stock plunging 35% on the following day, according to a Forbes article.[1]The Netflix news came about six weeks after an article in “The Atlantic” predicted that subscriptions had peaked.[2]Have we reached peak subscriptions? Is the Netflix news signaling the demise of the subscription economy?We believe the answer is no.Companies Doing a Good Job Retaining SubscribersChurn is the rate at which customers stop doing business with a company. It is calculated by comparing the number of lost customers to the total number of customers at the start of the period.During 2021, the churn rate for the Subscription Economy Index declined to 5.4% from 6.3% during 2020. The churn rate is actually lower than the 6.1% and 6.5% rates registered in the pre-pandemic years of 2018 and 2019.[3] This implies that, on the whole, companies that offer subscription services are retaining their customers, not losing them.Post-Pandemic NormalizationWhile the pandemic was raging and lockdowns were widespread, subscriptions, particularly for services such as video streaming, digital news and media, and e-learning, surged. So, it should not be a surprise that as infections have waned in number and intensity, and the economy has opened up, there would be some slowdown in growth in these areas.Netflix Had Company-Specific IssuesNetflix’s earnings should not be used to interpolate overall subscription trends as it was affected by some company-specific issues.The company lost 700,000 members from its exit from Russia[4]Lack of content – Netflix lacks big hits, and its franchise-building power is weak compared to how much content it produces[5]Competition – Netflix never viewed other entertainment companies as their competition. Rather, they considered other activities, like sleep, gaming, and TikTok, as competitors.However, Netflix has faced serious competition from peer streaming companies such as Disney, Discover, Amazon, Apple, etc., which are also well-stocked with original contentBinge model – Netflix basically created the binge model. However, this creates a shorter shelf life for its content.Netflix may be too slow to adjust to new viewer habits. [5]Netflix Argues for Portfolio ApproachThe decline in Netflix stock highlights the potential wisdom in holding a portfolio of stocks that are part of the subscription economy. Company-specific issues may affect stocks from time to time, but overall, we believe that subscription economy stocks represent an attractive investment opportunity.The Fount Subscription Economy ETF (SUBS)The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Fount Subscription Economy Index. The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.SUBS may invest in companies that offer subscription-based pricing models, including those in the technology hardware industry.For a list of fund holdings, please click here.[1] Team, Trefis, Is Netflix Stock’s Post Earnings Sell Off An Opportunity to Buy?, Forbes, 4/22/22[2] Mull Amanda, This is Peak Subscription, The Atlantic, 3/3/22[3] The Subscription Economy Index, Zuora, February 2022; The Subscription Economy Index is designed to measure the growth in the volume of business for subscription-based products and services.[4] Forbes, 4/22/22[5] Adalian, Josef, Netflix’s Bad Habits Have Caught Up With It, Vulture, 4/21/22

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20-Apr-2022

Companies Investing Big on the Metaverse

As excitement surrounding the possibilities offered by the metaverse grows, major technology companies are also expressing their enthusiasm by announcing major expansions in the space. What large companies are investing in the metaverse? Whatdoesthis mean?Facebook Becomes MetaIn October 2021, the company then known as Facebook changed its name to Meta to emphasize its metaverse vision. Mark Zuckerberg, Facebook founder, stated during the company’s annual developer’s conference, “From now on, we are going to be Metaverse first, not Facebook.” Predicting that one billion people will be on the metaverse in the next decade, he stressed that the company’s future would focus on building virtual reality products that connect users through the new metaverse medium.He described the metaverse as the next generation of the internet.[1]Facebook already has more than 10,000 employees building consumer hardware like Augmented Reality (AR) glasses that Zuckerberg believes will become as ubiquitous as smartphones, as well as Oculus virtual reality (VR) headsets.[2]Microsoft’s Purchase of Activision BlizzardMicrosoft (MSFT) threw its hat in the metaverse ring with its January 2022 announcement that it would pay nearly $69 billion dollars to purchase video game company Activision Blizzard, the creator of such popular gaming franchises as “Call of Duty” and “Candy Crush.” MSFT CEO Satya Nadella explained his rationale for the purchase when he said, “Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms.”[3]Qualcomm Launches Metaverse FundIn March 2022, technology hardware company Qualcomm announced the launch of the Snapdragon Metaverse Fund, established to invest up to $100 million in developer and companies building immersive extended reality (XR) experiences, as well as associated AR and artificial intelligence (AI) technologies.Qualcomm is looking to fund developers who want to push the boundaries of what’s possible in a new age of technology.[4]Sony and the Lego Family Invest in Epic GamesIn April 2022, Sony and KIRKBI, the family-owned investment firm behind Lego, announced that they are investing $2 billion in Epic Games, the company behind Fortnite. This announcement follows a partnership announced by Epic and Lego only one week earlier aimed at co-developing a family-friendly metaverse for kids. Lego already has a line of video games based on franchises such as Star Wars and Batman.[5] Sony’s chairman noted that the investment in Epic would help to “deepen our relationship in the metaverse field.”[6]Putting Their Money Where Their Mouth IsThese major deals indicate that large technology companies are willing to invest heavily in what they believe will be the next phase of the internet.How may individuals participate in what may be the next technology boom?While several companies are building out their metaverse strategies, picking the winners is a difficult task.As such, it may be prudent for individuals to invest in a portfolio of metaverse companies.The Fount Metaverse ETF (MTVR)The Fount Metaverse ETF seeks to provide investment results that, before fees and expenses, generally correspond to the performance of the Fount Metaverse Index. The index was designed to measure the performance of companies that develop, manufacture, distribute, or sell products related to metaverse technology.MTVR may be an attractive vehicle for investors looking to invest in the metaverse.For a full list of MTVR holdings, please click here.[1] Bidar, Musadiq, Facebook to Change Corporate Name to Meta, CBS News, 10/28/21[2] Heath, Alex, Facebook Is Planning to Rebrand the Company with a New Name, The Verge, 10/19/21[3] Bary, Emily, Microsoft Bets on the Metaverse With $69 Billion Deal for Activision Blizzard, MarketWatch, 1/18/22[4] Qualcomm Launches $100M Snapdragon Metaverse Fund, Qualcomm Press Release, 3/21/22[5] Browne, Ryan, Sony and the Lego Family Bet Big on the Metaverse with $2 Billion Investment in Epic Games, CNBC, 4/11/22[6] Sony and KIRKBI Invest in Epic Games to Build the Future of Digital Entertainment, Epic Games Press Release, 4/11/22

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19-Apr-2022

Will You Subscribe to Your Next iPhone?

People are accustomed to subscribing to software services for their desktops, laptops, or tablets rather than purchasing them. However, if Apple Inc. has its way, it may be possible to subscribe to the newest iPhone or Mac. Is subscribing to hardware, or Hardware-as-a-Service (HaaS), the next evolution in the shift from ownership to usership? Why might one want to consider subscribing to hardware?Rent Your Next iPhone?Apple Inc. is working on a subscription service for the iPhone and other hardware products, according to Bloomberg.[1] This could make device usership similar to paying a monthly fee, much as the way that some people pay for software. Bloomberg went on to note that the subscription model may help Apple generate more revenue by making it easier for consumers to spend on new devices.Instead of a large upfront payment, monthly fees may be more financially palatable. Pricing would differ from a monthly installment fee in that the monthly charge would not reflect the price of the device split over a specific number of months. Rather, it would be determined by which device and services the consumer chooses.Start of a TrendIf successful, other companies could adopt a similar plan. HaaS could become the standard for device usership. And the concept could easily move beyond technology. Imagine subscribing to, instead of owning, household appliances like a refrigerator or washing machine.Potential BenefitsThe benefits of HaaS are similar to those offered by other subscription services such as software services.[2] For the consumer, the potential benefits may include lower up-front costs and the ability to try and upgrade to new devices.For companies offering the service, potential benefits include a more predictable and recurring revenue stream, increased engagement with customers, increased return on the cost of acquiring new customers as subscriptions often mean repeat business, and lower retention spending.HaaS ModelsSubscription consultant company Zuora notes three potential hardware subscription models:[3]Hardware-as-a-Service – moves the cost of hardware to a recurring monthly feeHardware enabled services – hardware is priced upfront, but associated software is offered on a subscription basis, e.g., Peloton, which sells the bike but offers subscription-based fitness servicesHardware related consumables-as-a-service – hardware is offered at a low price to drive long-term revenue from the commodities needed to use the hardware, e.g., HP using low-priced printers to sell ink refillsHow may individuals gain exposure to companies that may be well-positioned to benefit from the shift to usership in the technology hardware industry?The Fount Subscription Economy ETF (SUBS)The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before feesand expenses, generally correspond to the total return performance of the Fount SubscriptionEconomy Index. The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.SUBS may invest in companies that offer subscription-based pricing models, including those in the technology hardware industry.For a list of fund holdings, pleaseclick here.[1] Gurman, Mark, Apple Is Working on a Hardware Subscription Service for iPhones, Bloomberg, 3/24/22[2] See our blogpost How Businesses Might Benefit from a Subscription Model[3] The Hardware-as-a-Service Playbook for Business Model Change, Zuora, Retrieved 4/2022

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08-Apr-2022

Will Subscriptions Become the Model for the Gaming Industry?

More gaming companies are offering their products using the subscription model.What companies are leading this trend?What benefits does the subscription model offer in the gaming world? How may investors gain access to companies that may benefit from offering a subscription model?Big Companies Leading the TrendXbox Game Passand PC Game Pass are video game subscription services from Microsoft. Both services offer users a rotating catalog of games from a range of publishers for a single monthly subscription price. Plans vary by offering, and the company is reportedly getting ready to introduce a family plan.[1]Sony recently announced the release of its own version of Microsoft’s Xbox Game Pass, called the PlayStation Plus Collection. The service will come in three tiers called PlayStation Plus Essential, Extra, and Premium. Subscribers will have access to over 400 PlayStation 4 and PlayStation 5 games.[2]Rockstar Games announced a new subscription-based service, GTA Plus, for Grand Theft Auto players. Subscribers will get benefits like exclusive properties in the game, membership discounts, and more.[3]Strong Results from Subscription-Based GamingSome gaming companies are reporting impressive results from their subscription-based platforms. Xbox Game Pass has amassed over 25 million subscribers, according to online magazine TechRadar.[4] The same article highlighted that Xbox subscribers spend 60% more on games, 45% more on add-ons, and tend to play 40% more games than non-subscribers. Games that launch on day one on the subscription model see a 3.5X lift in players, while games from independent developers see an increase of 15X.Potential Benefits of the Subscription ModelSome of the potential benefits of the subscription model in the gaming industry include:Subscribers may be more engaged and spend more time playing games.With gaming add-ons, such as accessories, skins, etc., subscribers may generate more revenue for the gaming company relative to non-subscribers.[5]Predictable revenue – A subscription model may allow companies to build a predictable revenue stream.Users also experience potential benefits, including:Latest and Greatest – Subscribers have access to the latest updates and versions of the games.Often games in the subscription model do not contain ads or sales pitches, allowing for premium gameplay.Flexibility – Subscription models may allow flexibility in the price and number of games available.Elevated Status – Subscribers are often granted elevated status, giving them perks, such as exclusive access to content, discounts, etc.With potential benefits to both gaming companies and their users, it can be believed that the subscription model is likely to increase significantly from its 4% share of the North American and European game market.[6]How may individuals gain potential exposure to gaming companies offering subscription models?The Fount Subscription Economy ETF (SUBS)The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before feesand expenses, generally correspond to the total return performance of the Fount SubscriptionEconomy Index. The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.SUBS may invest in companies that offer subscription-based pricing models, including those in the gaming industry.For a list of fund holdings, please click here.[1] Khalid, Amrita, Xbox Game Pass Will Reportedly Get a Family Plan, Yahoo Finance, 3/31/22[2] Grubb, Jeff, Sony launched PlayStation Spartacus service for as much as $18 per month, GamesBeat, 3/29/22[3] Mehrotra, Shikhar, GTA+ Subscription Service Launched for PS+ and Xbox Series S/X Players, Republic World, 3/28/22[4] Vjestica, Adam, Xbox Game Pass Has Proved Its Doubters Wrong Once Again,TechRadar, 3/27/22[5] Grguric, Mihovil, Subscription Monetization: A Big Mobile Gaming Trend, Udonis, 1/18/22[6] Ivan, Tom, Subscription Services Reportedly Account for 4% of North American and European Game Markets, Video Game Chronicle, 3/30/22

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08-Apr-2022

Fashion Week Moves to the Metaverse

Move over Paris, Milan, and New York. Between March 24-27, 2022, Decentraland hosted its first-ever Metaverse Fashion Week, dubbed MVFW. How did the event work? What were some of the highlights?Virtual Fashion Shows and MoreDecentraland hosted a four-day event consisting of fashion shows, after-parties, panel discussions, and shopping experiences. The digital event occurred within the platform’s Fashion District and its neighborhoods, such as the Luxury Fashion District, Rarible Street, and others.Over 60 fashion brands, artists, and designers participated in the event.[1]Anyone could view the event, but they needed an Ethereum wallet to purchase items during the shows.Luxury fashion brands used the virtual event to host fashion shows and open stores in Decentraland, selling both physical items deliverable in the real world and digital goods accompanied by non-fungible tokens (NFTs).[2]Virtual avatarswalkedthe runways of several fashion brands. Some of the items were wearable, meaning that attendees, via their avatars, could purchase and wear the items. Some of the items had physical twins in the real world. A person could buy a digital item via an NFT and wear it instantly on their avatar. For some items, they were able to redeem the NFT for the brand’s physical complement. While visiting a virtual store, a customer may scan a QR code to see a realistic-looking 3D rendering of the item pop up in their physical space at home via a smartphone camera.Some HighlightsDolce & Gabbana put on a literal catwalk where cat-faced avatar models showcased the collection. After the show, the full collection became viewable in an exclusive D&G pop-up in the Luxury Fashion District.Estee Lauder gave away 10,000 NFT-backed digital wearables that it says gives avatars a glowing aura.Retailer Forever 21 rented the equivalent of 450,000 square feet of space to open a virtual store with digital avatars acting as sales associates and they had 10 NFTs for sale. The NFTs offered outfits for avatars to wear or collect.Etro decided to preview a real-world collection for their first fashion show in the metaverse. The collection of women’s and men’s ready-to-wear looks was worn by 20 avatar models.Coach was one of the brands who converted an existing physical item into an NFT wearable.There was a fireside chat with designer Tommy Hilfiger.Grimes gave a virtual performance.The event highlights the exciting potential that the platform has for melting the divide between the physical and digital worlds and expanding the ways that both technology and fashion companies connect with their customers.How May Investors Gain Exposure to the Metaverse?The Fount Metaverse ETF (MTVR)The Fount Metaverse ETF seeks to provide investment results that, before fees and expenses, generally correspond to the performance of the Fount Metaverse Index. The index was designed to measure the performance of companies that develop, manufacture, distribute, or sell products related to metaverse technology.For a full list of MTVR holdings, please click here.[1] Metaverse Fashion Week is Here, Decentraland website, 3/23/22[2] For more information, read our blog post on non-fungible tokens

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23-Mar-2022

Gaming and the Metaverse

Gaming and the metaverse seem like a perfect fit. What makes the metaverse an attractive platform for gaming? What opportunities exist for gaming and the metaverse?Why the Metaverse May Be a Good Platform for GamingGaming has always been a good candidate for virtual reality (VR). In fact, VR is a major component of online games. A recent survey quoted in XR Today noted that 59% of respondents believe that gaming will dominate VR, while 64% said that gaming has the highest potential to benefit from VR.[1] One of the main components of the metaverse is VR. Therefore, it is only natural to pair gaming and the metaverse.The metaverse takes gaming one step further. VR is usually stand-alone and two-dimensional, however, the metaverse allows for a 3-D, 360-degree interactive platform where gamers can interact with one another. The next iteration may be a gaming platform where users can navigate between games with the same users, use the same avatar, and carry over wins.Why Gaming May Be Good for the MetaverseGaming holds potential advantages that may be beneficial for metaverse platforms. Gaming keeps audiences engaged for long periods of time, according to Venture Beat.[2] This in-depth engagement is attractive because it may cause people to return, particularly to your realm or a virtual world within the metaverse. Venture Beat went on to note that people are spending more time playing games on their phones than before the pandemic. At the same time, gaming is generating more revenue with a smaller audience than social media.From Media Channel to Sales ChannelCommunications company WPP highlights that gaming is a great place for companies to look for fresh audiences, particularly younger consumers.[3] Animal Crossing, a popular online game, saw brands such as Valentino, Tommy Hilfiger, and Marc Jacobs contribute looks for avatars in the game, with others, such as H&M, appearing on the platform. According to WPP, consumers are spending real money to express themselves digitally. Furthermore, Louis Vuitton launched an interactive game in the metaverse, Louis the Game, to celebrate 200 years since the birth of its founder while Wendy’s integrated avatars into Fortnite.The integration of tokens into gaming may provide a way for gamers to earn digital currencies on a gaming platform, trade them in token form, and transfer the value into real-world currencies through crypto exchanges.Strong Growth Expected for GamingThe gaming industry is predicted to reach annual revenues of $178 billion by 2025.[4] Given the potential synergies, growth in global gaming has the potential to be positive for metaverse companies.How May Investors Gain Exposure to the Metaverse?The Fount Metaverse ETF (MTVR)The Fount Metaverse ETF seeks to provide investment results that, before fees and expenses, generally correspond to the performance of the Fount Metaverse Index. The index was designed to measure the performance of companies that develop, manufacture, distribute, or sell products related to metaverse technology.For a full list of holdings, please click here.[1] Gaming in the Metaverse: The Next Frontier, XR Today, 12/29/21[2] Takashashi, Dean, Gaming Will Lead Us to the Metaverse, Venture Beat, 1/26/22[3] Herbach, Christina, Gaming and the Metaverse, WPP, 10/6/21[4] Caselin, Ben, More Playing and Less Earning Will Make Better Metaverse Games, Cointelegraph, 2/19/22

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Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 855-425-7426 or visit our website at www.fountetfs.com. Read the prospectus or summary prospectus carefully before investing.

Exchange Traded Concepts, LLC. serves as the investment advisor to the Funds. The Funds are distributed by SEI Investments Distribution Co., (SIDCO) 1 Freedom Valley Drive, Oaks, PA 19456. SIDCO is not affiliated with Exchange Traded Concepts, LLC. or Fount Investment Co. Ltd.

Risk Disclosure:

 

Investing involves risk, including possible loss of principal. There is no guarantee the Funds will achieve their stated objectives. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. The Funds’ concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors. The Funds are non-diversified. The Funds are new and have limited operating histories for investors to evaluate. New and smaller funds may not attract sufficient assets to achieve investment and trading efficiencies. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility.