The Rise of Esports: Is It a Good Investment?
Esports is competitive gaming and sees players, or teams of players, pitted against one another in competition. The market is currently worth approximately $2 billion a year and is expected to see marked growth in the coming years. There are approximately 200 eSports teams around the world, competing in tournaments for games ranging from DOTA 2 to Rocket League and Fortnite.
Investing in eSports is possible by buying shares in teams or companies involved in the industry as well as through other financial products like ETFs, including VanEck’s dedicated eSports exchange-traded fund. Some eSports teams also offer fan tokens, which are types of cryptocurrencies that tend to increase or decrease in value as the team gains exposure or falls away from the spotlight.
The Games
Although we think of eSports games as being first-person shooters or Massively Multiplayer Online games, poker can be considered the leader of the pack. As well as being popular in card rooms and homes around the world, poker is extensively played online and can be found in offshore online gambling websites alongside roulette, blackjack, and other casino table games.
Its popularity has been enhanced by casino bonuses, advanced membership, and crypto deposit options. According to technology journalist Krishi Chowdhary, live dealer games have also become very popular with players.
History Of eSports
Competitive computer gaming dates back to the 1950s with the launch of Tennis for Two. The launch of the Sea Wolf arcade game in 1976 saw the introduction of permanent high score lists and, soon, global competitions featuring games like Pacman and Tetris followed.
However, it was in 1982 that we saw the first tournament that might be considered the beginning of modern eSports. The Atari VCS Bundesliga featured various clubs, all of whom competed against one another. By the turn of the millennium, eSports leagues could be found around the world, once again led by Germany.
The Current Market
Today, there are believed to be nearly 200 professional eSports teams, with many traditional sports teams also establishing partner eSports teams, perhaps because of the number of sports players who have invested in eSports themselves. Such is the popularity of eSports that it now has an estimated global market value of $2 billion and attracts around half a billion viewers.
Market Expectations
The eSports market is expected to increase from a value of around $2 billion in 2024 to nearly $10 billion in 2032, representing a compound annual growth rate of approximately 20% per annum. Choosing the right companies or funds could lead to significant growth over this time.
Shares
It is possible to buy shares in eSports companies. For example, Faze Clan, which is one of the best-known competitive teams, went public in 2022.
Manchester United has its own eSports team and is listed on the New York Stock Exchange, and many other football clubs and other sports teams are following a similar pattern of establishing eSports divisions. However, Manchester United’s football teams and commercial interests far outweigh its esports revenue, so share prices are not especially linked to its esports performance.
You don’t have to invest directly in the teams or competitors. nVidia’s shares have risen ninefold since the end of 2022, making it one of the best-performing investments in the past few years.
Other Financial Products
Exchange Traded Funds (ETFs) invest in companies that are closely involved in specific industries or have shared goals. eSports ETFs not only invest in teams that are likely to perform well but also in the manufacturers and publishers of the games and even the machines that are used to play.
Expect to see investment in companies like Electronic Arts and Capcom, bringing greater exposure to gaming, as well as companies like nVidia, who sponsor a lot of streamers and competitions, and produce the graphics cards that many competitive PC gamers use.
Fan Tokens
A recent innovation that represents another possible eSports investment path is that of fan tokens. Fan tokens are a type of cryptocurrency from esports and traditional sports teams. The tokens are launched and sold by the team. They do hold financial value and rise and fall like shares. But they also offer additional benefits.
Some teams allow token holders the chance to vote on certain issues: typically trivial matters like what color banner they should use. They may also allow token holders to join in games with some of the competitive players. These tokens tend to do well as the team performs better. They get more exposure for their brand, which leads to more eSports fans buying their tokens, and with that increased demand comes a price increase.
eSports Competitor Sponsorship
Sponsorship is another possibility. The sponsor pays the player to compete in events and takes a share of any prize winnings. This does require a lot of research to find the players most likely to register wins, however, and while the big tournaments do have substantial prices of millions of dollars, smaller tournaments have much smaller prize money.