The business of sports is increasingly becoming an interesting sector for growth investors. Technological advancements have revolutionized the different aspects of sports investments. Esports is one of the few that are experiencing rapid growth.
Top gaming companies like Electronic Arts (EA) and Activision Blizzard (ATVI) have made significant investments in the industry with the latter reportedly having raked in revenue of more than $500 million from the eSports-related business. Companies operating in other industries including McDonald’s (MCD), food and drink and Nike (NKE), sporting goods are targeting marketing opportunities while Comcast is building an eSports stadium.
Esports is becoming a powerful force of attraction, something that some people will be surprised to hear. It is reported that the market will cross 550 million annual spectators next year, which is impressive considering the fact that in 2018, the active audience was estimated at about 380 million.
Some analysts have also estimated that the market will hit annual sales of about $2.96B by the year 2022, which again shows that gaming companies could be about to open another lucrative revenue stream that will drive growth in the coming years.
How does the business of eSports work?
Ideally, eSports is a term derived from the interactivity between spectators of video gamers. People gather in designated eSports locations to watch and cheer up their favorite gamers competing against each other. The rapid growth of eSports is driven by increased interaction between spectators on digital platforms including social media and this has become a huge target of marketers looking to promote their companies through established eSports brand names.
As such, the market is now attracting contract sponsors from around the globe akin to what you would associate with traditional sports like football, baseball, and athletics, among others. Even betting companies are beginning to take a keen interest in the opportunity that this presents since some of the traditional sports teams they sponsor are actively involved.
In the English premier league, clubs like Manchester United (MANU) have already formed a shadow league of eSports, where supporters who are gamers can represent the club in live broadcast competitions.
The most interesting part comes when you see football pundits trying to analyze the profiles of the competing gamers and predict who could win similar to traditional football. This is spreading rapidly across the globe with more countries now beginning to explore business opportunities created by eSports.
Esports-centered platforms are popping up all over the internet. There are even some that now provide pre-match previews, post-match reviews and in-depth football analysis that explains why a particular team of gamers lost or won. So, in general, the business of eSports is growing in bounds mimicking traditional sports. This presents a great opportunity for growth investors.
There are several privately-held startups that could be interesting. Dojo Madness, Haste, Maestro, and Gamer Sensei are among the few that have received funding worth millions of US dollars. But they also reasonably risky. However, with notable tech companies and gaming giants like Electronic Arts and Activision Blizzard already heavily involved. They could provide the perfect opportunity for risk-sensitive investors that want to invest in eSports.
In summary, the blockchain and cryptocurrency markets were among the top breakout industries of the last decade. In the current decade, we could witnesses massive growth in the business of eSports. It could be the breakout industry of the 2020s.
Therefore, whether you choose to invest in the interesting privately-held enterprises that solely focus on the business of eSports or you prefer the less risky option of investing in publicly- traded tech companies that are investing in the industry, it could be one of the best investments of this decade. Now could be the time to invest in stocks that are investing in eSports.