Videogame Attributes as Alternative Investments

We study financial returns on videogame attributes as digital alternative investments, using CS:GO skins as an example. Using an extensive dataset of monthly returns on 4,565 skins for 2013-2024, we find that these niche investments outperform most traditional and alternative assets with the average return about 40% pa and provide diversification benefits. The time-series analysis indicates independence of their returns from equity market risk factors, as well as other financial markets, however, the returns exhibit strong seasonality patterns with peaks observed in January and April. The cross-sectional analysis reveals that items from direct drops and of better quality sell for higher prices and generate higher returns, whereas the presence of premium features and higher rarity are associated with significantly higher prices, but lower average returns. We observe a strong “penny stock effect” that cheaper items yield higher percentage returns. Lower financial returns on expensive skins are likely compensated by the “emotional dividend” of gamers.