Esports stocks are on the rise. The industry grew steadily over the past few years, and experts believe the future is even brighter. Pro gaming’s popularity amongst younger consumers could fuel growth in the industry for decades to come. It’s no wonder that a lot of investors want to get a piece of this young and exciting industry. However, it can be difficult to get started if you don’t know where to start.
Aspiring esports investors should know what they’re getting into. Before you buy stocks, you should understand the esports industry. Start your esports investing journey with a quick dive into the industry.
Investing in E Sports
According to studies by Newzoo, worldwide esports audiences totaled about 380 million viewers in 2018. That figure grew to 454 million in 2019, and it could rise to 654 million by the end of 2022.
Revenues also rose steadily over the past few years and could hit nearly $2 billion by 2022, according to Statista. However, esports companies are still exploring new ways to grow their businesses. If viewership continues to grow and esports stocks find sustainable ways to grow their businesses, it could result in prolonged growth for the sector.
For investors, the massive growth forecast of the esports sector is a great thing. With the expected growth of the industry, this could be the perfect time to buy esports stocks.
How Do Esports Companies Make Money?
Esports events make money by licensing their broadcasts, selling tickets, merchandise, and more. Video game developers also sell franchise rights to esports teams, so the actual game producers generate profits from esports too. For example, Activision Blizzard recently sold franchise rights to five teams for its Call of Duty League. These types of sales can fetch millions of dollars for gaming companies.
Large esports events also attract sponsorship deals and third-party advertisers. As the global esports audience grows, these channels could grow in popularity with advertisers and become more lucrative revenue streams as a result.
Esports IPO: Gaming Goes Wall Street
Last year, one of the world’s leading eSports teams – Astralis Group – made its public market debut, making it the first pro video game team to list publicly.
Most investors know that the eSports market is growing rapidly but there’s no pure-play eSports option that really taps the market.
However, now that mainstream investors have opened their doors to Astralis, that could change soon.
If Astralis Group’s Denmark-listed shares perform well, the listing could be the precursor to a wave of eSports IPOs.
Astralis opened trading at about $1.33 per share on the Danish market.
- Astralis Group trades under the ticker symbol [ASTGRP] on the Nasdaq First Growth Market Denmark.
How To Invest in Esports: Pure-Play Stocks
A lot of companies have a presence in the esports industry. However, there are only a few pureplay options. The industry is still young and growing, but there are a few companies that specifically run esports operations.
Enthusiast Gaming – [EGLX:TSXV (Canada)]
Enthusiast Gaming listed in Canada in October of 2018. The company operates eSports teams, but it also has a gaming media business as well. Since it runs several businesses, it doesn’t offer the kind of pure-play exposure as Astralis.
ePlay Digital Inc. [EPY:CSE (Canada)]
ePlay Digital develops and operates live broadcasting equipment that’s designed specifically for the eSports industry. It also develops mobile games with a focus on sports and augmented reality (AR). The firm maintains several marketing platforms and offers white-label videos.
Best E-Sports Stocks to Buy
These companies don’t have the pure-play exposure as the e sports stocks listed above but are all related to the gaming industry. However, these gaming stocks benefit from the industry’s growth. These are larger, more established companies so they could be better long-term investments.
Activision Blizzard (ATVI)
Activision Blizzard is a California-based video game developer. With a market cap of over $40 billion, it’s one of the largest video game companies on the planet. The firm has a substantial esports presence and its esports operations could be a key growth engine in the future.
Game developers like Activision have an advantage because they design the actual games and control the licenses. As a result, companies like Activision have end-to-end control over there products, and they stand to reap significant benefits if they can effectively leverage their games into the esports world.
In January 2020, Activision Blizzard announced a partnership with ESL and Dreamhack. The partnership will last for three years and includes Hearthstone, Starcraft II, and Warcraft III: Reforged. Similar collaborations could help Activision Blizzard grow its esports revenues over the coming years.
Take-Two Interactive (TTWO)
This New York-based firm is one of the leading game developers in the US. Take-Two Interactive’s annual revenues exceed $1 billion, making it one of the largest video gaming companies in the world.
Take-Two is known for producing A-list hits. Its game portfolio includes blockbusters like Grand Theft Auto, NBA 2K, Red Dead Redemption, WWE 2K, and more. The company is also making moves to boost its presence in the esports sector.
In December 2019, Take-Two Interactive opened its Cloud Chamber, a new game development studio under their publishing label. The studio will allow them to provide more interactive entertainment solutions and create games that offer unique and engaging user experiences.
Electronic Arts (EA)
EA is one of the biggest names in sports gaming, and its also one of the world’s leading game studios. Thanks to its presence vast pro sports gaming portfolio, Electronic Arts is has an established presence in the esports sector.
FIFA and Madden are some of the biggest games in esports. EA’s FIFA eClub World Cup tournament is one of the most world’s most prestigious gaming events. The competition continues to grow in terms of both tournament participants and viewers.
The partnership between the NFL and Madden Championship Series was another big win for EA. The gaming event continues to get famous and records an increase in unit sales. Madden’s collaboration with Tentpole events also helped boost the competition’s reputation.
The launch of more esports events by EA could see the company grab a large percentage of the industry, both at home and abroad.
HUYA Inc. (HUYA)
This is a Chinese-based broadcasting company that has a large presence in the video content streaming industry. Huya is often called “the Twitch of China” since it offers products similar to Amazon that allows people to stream gaming videos.
The company has a platform that allows users to broadcast their video gaming sessions to millions of people on social media. Huya monetizes its services by allowing the viewers to tip broadcasters and collect a commission from the tips.
Huya’s game streaming revenue grew substantially over the past few years. The platform is especially popular in China. However, the firm wants to extend its reach internationally.
Recently, Huya revealed that content diversification and globalization are the critical short-term focus of the company. In the long-term, they are focusing on cloud gaming and virtual broadcasting.
Sony Corp (SNE)
This Japan-based multinational conglomerate has a formidable gaming business. Sony is famous for manufacturing the PlayStation video gaming console, which helped lead the gaming revolution through the late 90s and early 00s. PS4 console hit a sales record of over 90 million units last year. Millions of gamers across the world play games on the system.
It is conceivable that Sony will control the platform for several esports tournaments, making it a great esports stocks to buy now. In 2019, Sony filed a patent for In-VR Esports tournament spectator system. The company is looking to push for new experiences in esports viewership using virtual reality.
Sony’s plans to improve its viewership through virtual reality could be a smart move. The company already has seasonal PS4 tournaments with cash prizes for the winners. The PS5 could attract more participants to its tournaments once it hits the shelves.
Tencent Holdings (TCEHY)
Although found on OTC platforms in the US, Tencent is currently the largest gaming company in the world. The Chinese multinational company has a presence in several sectors and is very much active in gaming and esports. With a revenue of over $15 billion in gaming software sales, Tencent is an esports stock you could buy.
The Chinese firm has stakes in several game publishers, developers, and esports platforms. Some of its ownerships include; Ubisoft, Epic Games, Activision Blizzard, Riot Games, Supercell, Kakao, Bluehole, Funcom, Frontier Developments, Grinding Gear Games, Paradox Interactive, and many others.
While it is not a traditional gaming live streaming company, its large stakes in several esports and gaming companies make Tencent an essential player in the sector. It sponsors League of Legends Championship, which records over 100 million unique viewers each time.
In addition to that, Tencent owns a piece of some of the most popular games in the world. Household gaming names like Fortnite, League of Legends, and Honor of Kings all record millions of players around the world. And Tencent has a share in all of them.
While esports is a small part of Tencent’s business at the moment, the company could record further growth and become more involved as the esports sector grows. Tencent’s entry into the cloud gaming sector with Nvidia would also help boost its presence in the esports industry.
The video gaming sector has been able to develop rapidly because of the high-end graphics players use. Thus, semiconductor companies play a crucial role in the development of esports. One such company is Nvidia.
The company creates a wide range of chips and gaming rigs to help people play video games. Some of the best esports participants spend hours practicing each day, and they use the best equipment to do that. Nvidia is responsible for manufacturing some of the best gaming rigs available to players. Thus, making it a valuable esports stock.
In January 2020, Nvidia unveiled G-Sync, a new technology that supports 360Hz refresh rates for PC users. The high-performance graphics boast extreme responsiveness, so the technology is ideal for pro gaming.
Nvidia is also working with Tencent Holdings to develop a cloud gaming service in China. Cloud gaming is seen as the future of esports. Nvidia venturing into cloud gaming means that the company is looking to expand its business in the esports sector.
The launch of the START program and a few other developments make Nvidia a sturdy esports stock to considering buying.
Turtle Beach Corp (HEAR)
This is another popular esports accessories company. Turtle Beach Corp is known globally for manufacturing and selling gaming headsets and other peripheral accessories to esports professionals and other gamers.
Turtle Beach has been in the esports business for long. Its partnership with the likes of English Premier League club Manchester City has helped boost its popularity. Thus, making it a good esports stock to consider.
The company is expanding operations after it acquired Roccat in May 2019. With Roccat, Turtle Beach now provides PC mice, keyboards, headsets, and software. Thus, Turtle Beach has ventured into PC gaming and has a strong presence in Europe and Asia.
If Turtle Beach continues to release gaming headsets and accessories as seen in recent history, the company will remain one of the best esports stocks available to investors.
Esports Stocks: Closing Thoughts
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