Movers and SHAKERS
As the world continues to become more technologically integrated, new markets will start to emerge. The world of competitive video gaming is developing quickly and becoming an international phenomenon. With millions of fans and billions of dollars up for grabs, eSports has investors very excited for what the future of the industry has to offer. Gamers have come together from all over the world, developing from casual players to serious stars who have the ability to rake in seven-figures. A huge chunk of their revenue stems from streaming services, like Twitch, where fans can tune in as their favorite gamer plays. There are new financial commitments every day, and more are trying to get a piece of the pie before it’s to late.
Tremendous Growth. The development of eSports has provided a new lucrative market for investors. Traditional institutions, professional sports organizations and high-profile individuals are all racing to get ahead of the game in this new emerging market. More and more investors are looking to add an eSports team to their portfolio. The industry currently has investors feeling an ‘if I get in early’ promise that does not come around too often and is receiving tons of attention. According to a new study, revenue from eSports is expected to surpass $1 billion in 2019. The same research concluded that the industry will continue to thrive and exceed $1.6 billion by 2021. This industry is not only appealing to the sports and gaming sectors, but investors from many different areas are attempting to capitalize on the idea.
Increased Opportunity. eSports has created a completely new sector for individuals to capitalize on. This new lucrative market provides opportunity not only for the players, but all parties involved. Brands and video game producers are seeing an increase in demand for their games and the top players involved in the tournaments can easily earn seven figures in a year. Event organizers and teams also benefit from ticket sales and streamers. The majority of the revenue comes from sponsorships and advertising, as big investors are also aiming to benefit from the market. Robert Kraft paid $20 million to own a Boston-based team in Activision Blizzard’s Overwatch League. One of the biggest trends is the continued entry of non-gaming related companies. These companies range from auto to telecom, and are attempting to get ahead of the game, with the hope of a buyout as the industry continues to prosper.
Industry Collaboration. Online gaming has brought many different industries together. It has contributed to science advancement for years in a way that many not have been possible before. New and connected research methods have steamed from the complexity and ambiguity of living and playing. Gaming is said to have health benefits such as improved thinking, treatment of chronic diseases and pain relief. The collaboration between science and gaming has provided the opportunity for scientists to study all the effects.
Unknown Market. As with all new markets, investors have a lot of research to do before jumping into this completely new sector. Currently to investors it is a right place, right time kind of deal. This mentality of beating everyone to the game comes with an additional risk, as the fate of the industry as a whole is unknown. Following in line with other emerging industries, the eSports sector presents a deep learning curve for outside investors. These individuals must perform significant due diligence to fully understand the possible downside to their investment.
Industry Specific Issues. eSports changes the way sporting events are conducted, in return, also changing the risks associated with it. Injuries are still prevalent, but they will not necessarily appear like they do in traditional sports. These types of injuries can take years to surface but can end an athlete’s career. Another issue that is mainly associated with eSports in not all players are operating on their own time, as many of them are children and still answer to their parents. This could become an issue for the investors or owners when the parents are not comfortable with their child ‘practicing’ for 10 hours a day in front of a screen.
Unfamiliar Investment. Investors always care about the type of entity in which they are investing, mainly because of liability, tax and ownership concerns. eSports teams can be organized as international, domestic or just a group of individuals that play together. One of the biggest concerns for investors is understanding where in the company their investment will be made as these entities contain many different teams competing in different games. These teams could even be separate legal entities under one parent company, so investors are going to need to know where their money is going. eSports teams can be particularly volatile companies, as their revenue mainly comes from tournaments, meaning they must prove their competence on the field to profit.
Emerging industries provide opportunity for investors. There are many unknown characteristics that will play out within the coming years, and investors are hoping for business to boom. Although there are new industry specific issues, the upside to investors who have joined early could be colossal. eSports has the ability to provide growth for different involved parties, but also comes with unfamiliar risks. It is an undiscovered market but after investors perform the due diligence, the opportunities are vast.
https://www.cnn.com/2018/08/27/us/esports-what-is-video-game-professional-league-madden-trnd/index.html, AJ Willingham, August 27, 2018
https://www.cnbc.com/2019/01/20/heres-why-esports-can-become-a-billion-dollar-industry-in-2019.html, Annie Pei, January 21, 2019
https://www.emarketer.com/content/esports-disrupts-digital-sports-streaming, Lucy Koch, February 5, 2019
https://www.usatoday.com/story/tech/news/2018/01/12/more-people-watch-esports-than-x-dont-get-here-basics/1017054001/, Brett Molina, January 12, 2018
https://world.edu/8-benefits-gaming-rely-scientific-research/, James Mikel, October 29, 2017
https://www.fool.com/investing/2018/08/08/why-esports-deserves-investors-attention.aspx, Keith Noonan, August 8, 2018