Why are more and more companies betting in this sector? What has happened to change the mentality of investors and mainstream companies so much in such a short period? The perspective of society is changing, and what was seen in a derogatory and minority way in the past is now consolidated as one of the fastest-growing industries in the world.
If we had to highlight two main reasons that have led to this abrupt evolution in the sector, accessibility and generational change would be the two engines of this event, although, fortunately, the growth of esports is conditioned by more factors and pieces that fit perfectly in one of the puzzles that are more difficult to finish. It’s so easy and so accessible, everyone has a game downloaded on their mobile to pass the time because you should know that this game for you is entertainment. For others, it is their job and lifestyle. There are millions of followers of different types of esports, and this is why companies are increasingly encouraged to support these professional teams, even sponsoring individual players.
As time goes by, new fans emerge for existing sports, and new games emerge to create new sports. This has no other interpretation than the possibility to make money from this profitable business that is so fashionable and will not decline. Video game developers are continually creating market niches and new opportunities for investors. But is this market exploited enough, or is it still an unknown world? For the time being, the size of the sector continues to allow affordable entry for companies and investors. However, over the last few years, the growth of the sector has been rapid and significant.
Investing in Esports, is it Profitable?
It is not a novelty that esports are a booming sector, as we have argued in previous articles. This is why more and more people and companies are asking themselves the million-dollar question, how to invest in esports? To see the different possibilities is critical to differentiate between two types of investors: the individual, whose focus may be to buy shares as it could do with any other company, and the companies whose strategy will be different and may explore avenues that the individual investor cannot.
The Individual Investor
Starting with the individual investor, there are not many options today. If we look at the ecosystem, we see that it is growing. However, we are not talking about a fully consolidated industry in which companies are listed on the stock exchange or have a structure comparable to a multinational.
Having said this, we could analyze indirect or alternative forms of investment with which to take advantage of the growth of this sector, such as investing in brands or equipment for specific actions and then continue with a more critical investment internally.
The Business Investor
With respect to companies, the range of opportunities is much higher, having various options ranging from creating your own team, acquiring an existing one, or, as in the case of Mediapro, even acquiring your own professional video game league (the last share package cost them 22 million euros) to creating advertising or marketing agencies.
It could be said that, nowadays, esports have managed to create their economic ecosystem that facilitates that companies already established in other industries do not have to move away from their core business to enter the esports. Thus, we can find specialized consultants, advertising agencies, video game developers, and many other business models that have already jumped on the bandwagon of esports.
If what you are looking for is a more speculative form of investment, without offering a service or adding value, for the small investor the current situation of the sector would not help, but nevertheless, it is increasingly common that venture capital or investors with a significant economic capacity, buy shares of companies, helping the expansion of these companies, usually equipment.
How Can You Get Started Investing in Esports?
As for esports or electronic sports, we are in the presence of the emergence of a new sports discipline. They are multiplayer video game competitions, which are developed in genres, such as strategies and battles. From here, perhaps, the future “rock stars” of world sport will come out. In recent years, professional video game players have become as famous as any other sportsman, and thousands of fans fill entire stadiums to watch competitions such as the League of Legends World Championships, in addition to millions who also watch live broadcasts around the world.
Two elements strengthen the future of the electronic sport, so some believe that far from being a fad can someday surpass in audience football (the sport with more followers worldwide). First, the great variety of games that makes there is one that fits each audience and then the inclusive in terms that there are no differences of gender, age, or nationality in the composition of the teams that compete globally.
Companies Associated with Development of Esport Titles
Now, which companies should we consider when investing in a market such as esport. Here we are once again inclined towards software developers, the fundamental basis of electronic sports. First of all, let’s consider Electronic Arts, present in the market since 1982 and that has been able to maintain itself in a highly competitive environment with its games FIFA, Sims, Need for speed, among others. Another company to consider is Riot Games, the creator of the popular MOBA League of Legends, and organizer of the most critical global esports event so far. Riot Games is a company that is not listed on any public stock exchange but belongs to the Tencent group, the Chinese internet tech giant, which does have public shares.
Companies that Manufacture Gaming Gear
However, we can not leave out the streaming services of esport events that are currently led by Amazon, through its Twitch platform. On the other hand, although these new athletes do not require a ball, a helmet or special shoes, if they need graphics processors that improve the performance of their machine and help their team to win championships, and in this field the worldwide supplier par excellence is Nvidia, so we must also keep an eye on this company.
The esports phenomenon encompasses an entire economic ecosystem, from game creators to companies that distribute content via streaming, through professional leagues that take advantage of their branding, as well as event organizers, etc. Large content distributors in the Internet era, such as Amazon or Google, have not been on the sidelines of all esports innovation. However, it still represents a tiny part of their business, so they are not a direct option to invest in the sector.
Of the listed companies, game manufacturers have seen very significant revaluations in recent years. Not only have they managed to increase their sales, but their business model has evolved towards a recurring revenue model, which could significantly increase its competitive advantages for the future. As we have already seen, the opportunities for investment in sports are many and varied, although these should focus on the long term, with a vision to 4 or 5 years (seeing the current growth of the sector) to be able to speak then, of an industry consolidated worldwide.
