Check out these four major reasons for investors to get excited about the esports sector, which is poised to be a US$1 billion industry.
With the esports market poised to become a US$1 billion industry, outpacing traditional forms of entertainment, there are four key reasons that investors should be interested in esports.
At a 2018 conference put on by StableView Asset Management in Toronto, industry insiders and newcomers alike were given a glimpse into the ever-growing world of esports and how it has shifted from a platform for amateur gamers to a professional industry.
The Investing News Network attended a panel titled “Esports, Sports and Entertainment: The Investment Opportunity,” which outlined four major reasons investors should get excited about the esports industry. Even three years later they are still worth considering — read on to learn what participants said.
1. The industry is new and has growth potential
While the gaming industry has been around for decades, the concept of investing in a sector that gives gamers a global reach in terms of what they play, who they play with and how those things come together for an overall experience is relatively new.
Pushing the industry along further is the fact that it is breeding professionals who are fast becoming global legends on par with athletes and movie stars; demand is thus growing, and esports is attracting financial support from larger institutions.
“The fact is that the institutions, the bigger players, the bigger money, the support that the industry really needs, is finally coming and recognizing how this (sector) has matured,” stated Menashe Kestenbaum, founder and CEO of Enthusiast Gaming (TSX:EGLX,NASDAQ:EGLX).
“The mature sectors — the institutions and players coming down, there is amazing chemistry right now of a new industry I think we are seeing being born right in front of us,” he added.
Kestenbaum noted that market interest and financial backing have put the esports sector more firmly on the proverbial map, continuing to increase the amount of people participating in the gaming world and thereby creating greater value for future investors.
2. It is more accessible than standard sports
Esports and the competition entertainment world as a whole have been attracting a growing number of users turned video game players because of their lower participation cost and easier physical access compared to the standard sporting industry.
“I really do think that this (industry) is going to far eclipse standard sports,” Kestenbaum explained. “Especially because you don’t have to go buy US$500 worth of hockey gear and dress up,” he added.
If a growing industry can surpass the long-term, multibillion-dollar professional sports industry, that means that there is money to be made from it.
3. People aren’t outgrowing the industry
While competitive gaming was once seen as being for young people, with images of video game competitions between college students, today’s esports and entertainment industry is not losing its consumers with age.
“People aren’t growing out of gaming as they get older,” Kestenbaum explained.
“Same as film, television, you don’t get out of the ’90s and say you don’t like television anymore — you may like it more, so what we are finding is that (gaming) is actually a predominant form of entertainment in North America right now … and it’s only going to continue,” he added.
Kestenbaum elaborated, saying that there has been a shift and the esports games sector has become more mainstream; it is now considered major-league gaming. This means it will continue to attract more and more new users and increase the industry’s value as a whole.
4. Low-risk investment due to constant evolution
One of the items that was stressed many times throughout the panel was the fact that the esports sector is never stagnant and will constantly be in a state of evolvement.
Scott Burton, CEO of Askott Entertainment, broached the subject by using the popular game Fortnite as an example of the esports and entertainment world’s ability to change and adapt.
“I’m sure that everyone has heard about Fortnite, and that has really come about because of technology. Suddenly Fortnite came out, and because you could have 100 people play at once that created an entirely new excitement,” Burton explained.
“In terms of a risk perspective, as long as you are agnostic or you are with a company like Activision Blizzard (NASDAQ:ATVI), which is at the forefront of technology, they will always be adapting, they will always be cognizant of that,” he added.
In addition to the professional esports players who attract both fans and revenue, social media has picked up on the recent hype that surrounds the industry. YouTube is known for hosting a wide variety of videos that feature individual gamers or an esports team playing some of the most popular video games.
Chris Overholt, CEO of OverActive Media, added to the conversation by saying that the top players in the industry have built enduring leagues and franchises that rest on the pillar of constant innovation and have the ability to adapt with changing times, allowing for an industry that does not have room to falter.
This is an updated version of an article first published by the Investing News Network in 2018.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.