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As video games have become entrenched in everyday life for millions of people, esports has also grown into a sizable global market. Esports, which turns playing video games into a spectator sport, is expected to grow to an audience of more than 530 million in 2022, according to market research firm Newzoo.
The growth in esports has generated interest from investors and could have the potential for significant profits. Here’s what you should know about investing in esports.
• Esports is expected to generate about $1.38 billion in global revenue in 2022, according to Newzoo, with China accounting for almost one-third of the market.
• Global esports audience is expected to grow 8.7 percent in 2022 to 532 million and Newzoo expects the total audience will surpass 640 million in 2025.
• Just over 261 million people will consume esports content more than once a month in 2022 and that number is expected to grow to 318 million in 2025, according to Newzoo.
• Esports accounts for less than 1 percent of the overall gaming market, according to the World Economic Forum.
• Top earning esports teams can earn millions of dollars, with Team Liquid earning nearly $40 million since tracking began to capture the top spot, according to esportsearnings.com. All teams in the top 10 have earned at least $15 million.
• Johan Sundstein is the top esports player based on earnings of about $7 million, according to esportsearnings.com.
• Microsoft (MSFT) agreed to acquire Activision Blizzard (ATVI) in 2022 for $68.7 billion and if regulators approve the deal, it could help spur continued growth in esports.
Expansion of the esports industry
Though the concept of watching other people compete in video games may sound odd to the non-gaming crowd, esports has attracted a significant number of viewers in its early years. Newzoo projects the global esports audience will grow almost 9 percent to 532 million people in 2022. Roughly half of that number fall into the group of “esports enthusiasts,” which means they watch esports content more than once a month.
The Asia-Pacific region, North America, and Europe are the three largest esports markets currently, with Asia-Pacific accounting for more than half of the esports global audience, according to Juniper Research. Latin America is also expected to be a key growth region.
Several companies have invested heavily in the potential of esports, but Microsoft’s pending $68.7 billion deal for Activision Blizzard could be the largest. Activision owns popular games such as Call of Duty, StarCraft and Overwatch that some think could be a natural fit for esports. The deal must be approved by regulators before the companies can complete it, and that’s expected to occur in mid-2023.
Growth of esports platforms
As esports have grown, different platforms have emerged to help viewers experience their favorite interactive content. Twitch, which is owned by Amazon (AMZN), was among the first platforms to gain popularity with the esports crowd and remains one of the largest today. At any given time, Twitch has about 2.5 million viewers, according to the company, and in 2021, Twitch viewers watched more than 1.3 trillion minutes of content.
Other tech giants are also in on the gaming fun, with Meta Platforms (META) seeing success with its Facebook Gaming platform and Alphabet’s (GOOG) YouTube being one of the most watched sites on the internet. Some of these platforms are blocked in China, where esports are very popular, so users there rely on sites such as iQiyi, Tencent Video and Youku.
Top live streaming platforms in Q1 2022
- Twitch – 6.13 billion hours
- YouTube Gaming Live – 1.13 billion hours
- Facebook Gaming – 803 million hours
How to invest in esports
If you’re interested in investing in the growing esports market, you’ll have a few different options to choose from.
- Individual stocks: Buying a stock means you’ll have an ownership stake in the company you’re invested in. This approach requires you to do more research and can be riskier than investing in funds because you won’t be as diversified, but it also has the most potential for significant profits.
- Dedicated funds: Buying mutual funds or ETFs that invest in companies that are involved in esports is another approach that comes with less risk than buying individual stocks. You’ll hold a basket of companies, so the fund’s success won’t be tied to just one or two holdings. Be sure to pay attention to the fund’s fees, which will come out of your investment return. The best ETFs charge low fees, improving your overall returns.
Before investing in any security, you’ll need to open a brokerage account and deposit money to be used for your investing purposes. The best online brokers have numerous research offerings to help you select investments and once you’ve made a decision, you can place your trade in just a few seconds.
Celebrity investments in esports
Esports has attracted a number of well-known investors including basketball legends Michael Jordan and Magic Johnson as well as music star Drake. Jordan and Johnson are both investors in aXiomatic Gaming, the parent company of Team Liquid. Drake invested in the esports organization 100 Thieves in 2018 along with producer Scooter Braun.
Other celebrities who have reportedly invested in the esports industry include: Stephen Curry and Andre Iguodala, Steve Young, Sean Combs, Kevin Durant and Odell Beckham Jr.
Types of esports stocks
As the esports industry continues to grow and evolve, there are a number of different ways you can invest to benefit from that growth. Here are a few to consider.
- Game developers: One of the most straightforward ways to invest in esports and the videogame industry is to own companies involved in game development. This might include Activision Blizzard, Electronic Arts (EA) or Take-Two Interactive Software (TTWO). These companies own popular games such as Call of Duty, Madden and NBA 2K.
- Esports teams: Investing in esports teams is a little bit harder to do because many of them tend to be private companies, but there are some public options. Some European football teams have created their own esports teams and are also publicly traded such as AFC Ajax (AJAX.AS) and AS Roma (ASR.MI). Media giant Comcast (CMCSA) also owns an esports team and is building an arena in downtown Philadelphia.
- Gaming hardware: If you’re looking to invest in the companies that make gaming hardware you’ll likely consider Xbox-maker Microsoft or the maker of the Playstation, Sony (SONY). You might also consider Meta, whose Oculus virtual reality headset has proven to be popular with gamers.
- Esports gambling: Gambling has taken off in the sports world, and esports is no exception. DraftKings (DKNG) is one of the leaders in sports betting that also offers esports options.
Esports stocks to consider
|Company||Ticker symbol||Current market cap*||Known for|
|Activision Blizzard||ATVI||$61.3 billion||Call of Duty, Starcraft|
|Electronic Arts||EA||$34.7 billion||Madden, FIFA|
|Meta Platforms||META||$459.5 billion||Facebook Gaming, Oculus|
|NVIDIA||NVDA||$377 billion||Gaming processors|
|Take-Two Interactive Software||TTWO||$20.3 billion||NBA2K|
|Tencent||TCEHY||$426.8 billion||League of Legends|
*Note: Market cap data as of July 6, 2022.
Esports ETFs to consider
|ETF||Symbol||Assets under management*||Expense ratio|
|Global X Video Games & Esports ETF||HERO||$242 million||0.5 percent|
|VanEck Video Gaming and Esports ETF||ESPO||$334 million||0.55 percent|
|Roundhill BITKRAFT Esports & Digital Entertainment ETF||NERD||$34||0.5 percent|
*Note: AUM data as of July 5, 2022.
Most valuable esports teams
|Esports team||Value||Estimated revenue (2021)||Owner|
|TSM||$540 million||$56 million||Andy Dinh|
|100 Thieves||$460 million||$38 million||Matthew Haag, Drake, Scooter Braun, Dan Gilbert, others|
|Team Liquid||$440 million||$38 million||aXiomatic Gaming, Victor Goossens, Steve Arhancet|
|FaZe Clan||$400 million||$52.9 million||Lee Trink, Michael Stang Treschow, Nordan Shat, others|
|Cloud 9||$380 million||$35 million||Jack and Paullie Etienne|
The future of the esports industry
Esports is still very early in its overall development, and only time will tell how it evolves and whether it grows into a mainstream sport alongside more traditional areas like baseball, basketball and football. There is considerable potential in areas such as mobile gaming and live esports betting that could help push esports to new heights.
While some believe we are in a sort of “golden age” for esports, it still represents less than 1 percent of the overall gaming market. That number shows the enormous potential that lies ahead for esports, as well as the sizable hill to climb.