The global esports market generated $660m in revenue in 2017 and is expected to reach $1.5bn by 2020, and as such investors are taking notice, according to Newzoo. Game publishers, team owners and event organisers are attracting venture capitalists, private equity firms, and traditional sports teams as investment opportunities. The investment options include investing in esports companies, teams, and events such as championships and tournaments. Esports investments do have risks that include high volatility, regulation and competition, as the industry is still new and maturing. However, many investors remain optimistic as the industry is expected to become more diversified and accessible.
The Economics of Esports
Esports, or competitive video gaming, has been rapidly growing in popularity over the last decade. What was once a niche subculture has now become a mainstream phenomenon, with millions of fans and players around the world. As the industry continues to expand, so does its economic potential. Investors are taking notice of the growing esports market, and the opportunities it presents for financial gain.
The Growing Industry
The esports industry has seen exponential growth in recent years. According to a report by Newzoo, the global esports market generated $660 million in revenue in 2017, and is expected to reach $1.5 billion by 2020. This growth is being driven by several factors, including:
- The proliferation of high-speed internet access and streaming technology, which has made it easier for fans to watch esports events from anywhere in the world.
- The increasing popularity of multiplayer games like Fortnite and League of Legends, which have large and devoted fan bases.
- The rise of professional esports teams and leagues, which have attracted investment and sponsorship from mainstream companies.
The Potential for Investors
Given the impressive growth of the esports industry, it is no surprise that investors are taking notice. There are several ways in which investors can gain exposure to the esports market:
Investing in Esports Companies
There are a growing number of companies that operate in the esports industry, ranging from game publishers to team owners to event organizers. These companies are attracting investment from venture capitalists, private equity firms, and even traditional sports teams. Some examples of major esports companies include:
- Riot Games, the publisher of League of Legends, which is valued at around $1.5 billion.
- Activision Blizzard, which owns the popular Call of Duty and Overwatch franchises.
- Cloud9, a professional esports team that has raised over $50 million in funding.
Investing in Esports Teams
Esports teams have become an increasingly popular investment opportunity, particularly as more leagues and tournaments emerge. These teams are often privately owned and operated, and can generate revenue through sponsorships, merchandise sales, and prize money. Some notable esports teams include:
- Team Liquid, a multi-game team that has won numerous championships and is valued at $200 million.
- Fnatic, a Europe-based team that has won multiple world championships.
- Cloud9, as mentioned earlier, which has teams in several different games.
Investing in Events and Leagues
Esports events, such as tournaments and championships, are big business. These events can attract thousands of fans, generate significant advertising revenue, and offer major payouts for winners. There are also several professional esports leagues that have emerged in recent years, including the Overwatch League and the League of Legends Championship Series. Investors can participate in these events in a number of ways, such as sponsoring a team or tournament, or investing in the league itself.
The Risks of Investing in Esports
As with any investment opportunity, there are risks associated with investing in esports. Some of the potential risks include:
- High volatility: The esports industry is still relatively new, and as such is subject to rapid fluctuations in value.
- Regulation: As the esports industry grows, there may be increased regulation from governments and other bodies, which could impact the value of esports investments.
- Competition: The esports market is becoming increasingly crowded, with new companies and teams emerging all the time. This competition could lead to consolidation and lower valuations in the future.
Despite these risks, many investors are optimistic about the future of esports. As the industry continues to grow and mature, it is likely that investment opportunities will become more diversified and accessible.
Conclusion
The esports industry is a rapidly growing market with significant potential for investors. Whether investing in esports companies, teams, or events, there are multiple ways to gain exposure to this exciting industry. While there are risks associated with investing in esports, the potential rewards are substantial, and many investors believe that the future of esports is bright.