3 ways to invest in esports

There’s a lot of crossover between the sports and gaming audiences, and Take-Two’s basketball franchise makes a natural fit for the world of esports. Stephen Hays. The approach is pretty interesting because it directly encourages player engagement — and therefore also in-game spending. Stock Advisor launched in February of It’s ramping up investment in esports tournaments, has a partnership with Activision Blizzard for broadcasting Overwatch League — and even owns a team in the league. With those statistics in mind, let’s look at three ways investors can capitalize on the emergence of esports.

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The idea of sitting and watching others play video games for hours may not sound appealing to some, but you may be surprised to find that this is a growing trend and it’s also big business. Those looking for stories on esports can turn to ESPN ‘s esports hub for the latest news or to YouTube for exclusive coverage of competitions. With those statistics in mind, let’s look at three ways investors can capitalize on the emergence of esports. Twitch is an online service for players to live-stream their games while others watch. More than 22, «streamers» earn money on the platform through the Twitch Partner Program. The company boasts 15 million daily active users, with minutes of content watched per person per day, fed by over 2. The company launched YouTube Gaming to create a one-stop destination for game content, invesy, and streamers, supported 3 ways to invest in esports advertising dollars.

Esports are still just heating up, and these five companies have the potential to be long-term winners in the space.

Esports is a booming global industry where skilled video gamers play competitively. In the same way that traditional sports have competitions in baseball, basketball, and football, esports encompasses competitions across a variety of video games. Contrary to common perception, esports is not simply a phenomenon occurring in the basements of unemployed twentysomethings; the industry is real, growing globally, and investable. In fact, over million people watch esports worldwide both online and in person. More people watched the world finals of popular esports game League of Legends 43 million viewers than the NBA Finals Game 7 that year 31 million viewers.

How fast is esports growing?

Esports is a booming global industry where skilled video gamers play competitively. In the same way that traditional sports have competitions in baseball, basketball, and football, esports encompasses competitions across a variety of video games.

Contrary to common perception, esports is not simply a phenomenon occurring in the basements of unemployed twentysomethings; the industry is real, growing globally, and investable. In fact, over million people watch esports worldwide both online and in person. More people watched the world finals of popular esports game League of Legends 43 million viewers than the NBA Finals Game 7 that year 31 million viewers.

With its fragmented landscape and digital platform, the esports sector holds promise for a multitude of monetization opportunities. The following article will include an introduction to the industry as well as insights for those interested in investing in it.

It will cover the parties involved in esports, the size and demographics of the audience, the industry dynamics, and how to approach investing in the space. I will provide not only third-party data and analysis, but also my personal experience and insight after listening to people, learning about the industry, and launching an esports company myself Konvoy. The experience is similar to watching a professional sporting event, except that instead of watching a physical event, spectators watch video gamers compete against each other in a virtual environment.

Just as traditional sports fans enjoy watching top invesr perform at the top of their craft, the same is true of those who watch top video gamers compete. The players can engage with their fans in a variety of ways including social media, live-streaming platforms, and in-person at tournaments. On the other side, fans can watch and follow their favorite teams compete in regional and global tournaments.

Many technology platforms, services, events, analytics platforms, and substantial investor capital surrounds this ecosystem as it continues to grow. Esports esport further level the playing field for factors such as genderculture, and location. In esports, however, new games with infinitely scalable dynamics, variances, and players can be created. In fact, a new installment of, or update to, an established game franchise can hold massive implications.

When updates are released to established games, it causes a massive learning curve as game dynamics and strategies can dramatically evolve. Though the actual rankings of the most popular esports games change slightly month-to-month, the ten most watched games on dominant streaming site Twitch remain consistent Table 1. As of right now, League of Legends remains the most-watched eSport in the world. The esports landscape is admittedly invesy and at times difficult to navigate. The following section outlines the major parties involved in the industry.

Becoming a top esports player is no simple achievement. To rise through the ranks, players specialize in a specific game, developing their skills through extensive, competitive play. Some even train up to 14 hours a day to hone quick reflexes and multi-tasking abilities.

Talented nivest primarily have two options wayys pursuing their esports careers:. Professional players join teams in multi-player games or play solo in 1v1 games to compete for cash prizes. Each team specializes and competes in one specific game, such as League of Legends, Dota, or Counter-Strike. The teams that compete at these tournaments have millions of followers on Twitter, millions watching online, and tens of thousands of spectators following them to in-person tournaments.

Iinvest best esports teams are recruited to be a part of organizations, have several teams that specialize in their respective video games but operate under the same name e. A few of the games are 1v1 while others are team esportd and involve two squads competing against each. Leveraging a larger fan base following as the organization recruits more high profile players and teams, organizations will seek out wayz with brands to access additional revenue streams outside of cash prizes.

These are determined by the following and successes of the underlying players and teams of too specific organization. Just as basketball teams are part of the NBA and compete against each other, esports teams typically under an organization umbrella compete in video game leagues. When Major League Gaming first launched in the early s, its tournaments drew dozens of fans.

Earlier this year, the Intel Extreme Masters tournament, held in Katowice, Poland, drewfans to the stadium over two weekends. Perhaps unsurprisingly, prize money for the largest tournaments can be enormous. This means that they have rights around where the game is played, who can host video game tournaments, and. At the end of the day, publishers own the intellectual property of each game, and other industry participants players, teams, tournament organizers are keenly aware of this reality.

However, in June of this year, Riot Games announced franchising and revenue sharing possibilities, which would allow for select players and teams to participate wayd the upside. Esports to reach million viewers in According to Newzooan esports market research organization, inthe audience of esports will reach a total of roughly million people globally.

In fact, North America and Europe have taken a prominent place in the global esports and gaming ecosystem Chart 4. Fans are deeply engaged: Fans are already averaging minutes per session spectating. Interestingly, only about half of viewers actually play the video game they are watching. In North America, the most popular sport in the region, football, is only 2x as popular as esports among male millennials. For male viewers between the ages of 36 and 50, football is only 3x as popular.

This purchasing power and ability to engage on technology platforms makes the esports audience particularly desirable to target for big brands, which we will discuss later on. With investt now included in the Asian Games, gaming companies can now start to develop similar revenue streams as media companies, including advertising, ticket sales, shares of TV rights and.

The figure does not include betting or fantasy esports numbers. Advertising comprises the revenue generated from the advertisements targeting esports viewers, including ads shown during livestreams on online platforms, on video-on-demand content of esports matches, or on esports TV. If the esports viewership and influence continues to expand, exposure to this fan base will get more expensive. On top of that, local teams, leagues, and events are starting to tap into new marketing budgets to reach this audience.

Currently, game publisher fees represent a large portion of the industry. Much of this capital has been an investment in marketing by game creators in order esorts extend the shelf life and relevancy of their games. According to Newzoo, game publisher fees will experience the slowest growth in the upcoming years. Merchandise and ticket revenue is money generated from the sale of merchandise and live tournaments. Media rights revenue is the revenue paid to industry stakeholders to secure the rights to show esports content on a channel.

This includes payments from online streaming platforms to organizers for broadcasting their content. This also includes foreign broadcasters securing rights to show content in their country and paying for copyright to show video content or photos of esports competitions.

Exclusive content deals, as seen espotts traditional sports, will drive this growth. A recent announcement from Riot on dsports League of Legends title has established onvest franchise model for the North American league. As franchising becomes the dominant model, elite teams and organizations will become revenue-generating machines. However, those without franchise spots will be forced 3 ways to invest in esports find revenue in secondary leagues or look to establish themselves in titles that have yet to be franchised.

While this consolidation will certainly be painful initially, I view this as a much-needed step forward for the industry as it continues to grow and prune the market.

The below chart includes franchising details for the Riot and Overwatch leagues. In esports, broadcasting and media rights will be a key growth driver as the worlds of media and gaming continue to converge. This includes restrictions around which software licensees members of the public, teams, league organizers can play the game, permit others to play, and allow others to watch the game.

Up until recently, publishers have been fairly relaxed about their restrictions. However, the industry is now reaching a turning point where the adoption of games and of esports has exploded.

Consequently, publishers are looking to capitalize on this audience and momentum by monetizing broadcasting and signing exclusive content deals. And, since players and organizations draw in these fans, they are seeking revenue share agreements with publishers. These new developments are catalysts for the emerging franchise models explained above, whereby teams, players, and publishers yield similar revenue splits.

Looking ahead, publishers will selectively grant broadcasting rights to specific partners and media outlets. One key thing to watch is whether heightened control over streaming and viewing rights will cause fan and player pushbacksince publishers have historically encouraged users to share and stream content at their own discretion.

It is true that virtual reality headsets are already being developed specifically for esports audiences. For example, existing VR technology features often lack adequate interactive components. It will be interesting to see how the virtual reality and esports industries converge going forward, but widespread adoption is unlikely in the short term. Although now is a great time to invest in esports, many investors understandably find it challenging to navigate its days.

Still, this complexity translates to a vast, broad range of investment opportunities. Exciting times undoubtedly lie ahead as these various verticals continue to develop monetization strategies for the massive audience base. One way to gain exposure to the esports sector is through public markets. Below is a list of publicly traded companies that have various connections to and investments in esports.

At this point, esports revenues only comprise a small percentage of the overall revenues of these public companies, so at this stage, public market investing is not the primary way to gain exposure to this space. The private markets are where most esports investments and activity have occurred.

Investment sources are varied, including media companies, angel investors, sports celebrities, and professional sports teams, and more ssports sources of private capital such as venture capital funds. Nevertheless, despite growing interest essports VC and angel investors, until today esports is an industry that has been largely untouched by conventional investors.

While VC and angel participation has begun to tick up, generally professional investors remain hesitant. In a newer industry, there are even more unknowns and risk invdst typical startup investing normally entails, and this is especially true with a space as unique as esports. Overall, though, I think the tide is starting to shift. Another concern that many venture capital and angel investors often voice pertains to deal volume.

However, the data shows that there actually is substantial deal volume. Consider this figure in comparison to those in kn established industries: Internet of things 3. Furthermore, though drones and Bitcoin have received substantial hype and funding, the number of esports and gaming startups is 4x the amount of drones industry startups and 2x the amount of Bitcoin startups.

While a lack of understanding and knowledge of this emerging space may therefore justify the hesitation that many VCs and angel investors continue to have, the concern relating deal flow is misguided. The best deals in esports and gaming can admittedly take some time to. Today, they are found primarily through word-of-mouth and through your personal network. Below is a quick checklist for evaluating companies in the esports industry:. As users adopted social media, companies like Facebook, Instagram, and Snapchat each saw high traction globally, just like with esports but did not come up with effective monetization strategies until further down the road.

Today, as you know, these companies are now worth billions.

How Do You Invest in the Booming eSports Industry in 2019?

Key Highlights

How to Invest in Esports. Juniper divided esports into three distinct segments: Those competing in esports for money esportsthose who participate in online commentary and tutorials involving casual gameplay the «let’s play» segmentand the streaming of games by broadcasters as they happen the «watch play» segment. The esports space won’t be esporhs great fit for every investor. Using the price-to-earnings ratio can be a helpful way to gauge how expensive a stock is because it compares the stock price to how much profit a company is bringing in. Companies can also sell exclusive rights to esports teams, just esporrts Activision Blizzard did with its Overwatch League and Call of Duty League. Earnings are calculated by subtracting a company’s expenses from its revenue across a given time period, wayx comparing the profits generated across stretches of time can reveal how fast a company is growing relative un its competitors and provide information about how its stock is priced relative to other companies on the market. You have to consider that the odds are that any one startup investment will fail, but you do have the potential for a decent sized short term win, and a massive long term win if you 3 ways to invest in esports your bets correctly in direct startup investments.