How to Invest in Esports

- February 19th, 2019

What’s the best way to invest in esports? It’s important for investors to know their options and pick what best suits their needs.

With the cannabis and blockchain rushes seemingly over, investors are looking for the next big thing, and some people say that’s esports.

Esports — or electronic sports — involve competitive gaming with computers or consoles. Two or more players compete in multiplayer online battles until a winner is determined, usually by points.

Fans can tune into these competitive events via game-streaming service Twitch, which has 140 million unique users every month, and viewers also turn up in droves to watch live esports programming.

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Indeed, with major arenas around the world selling out for live esports events, and new purpose-built venues for esports tournaments springing up, it’s clear the industry has an enviable audience that appears poised to keep growing into the future.

Given this enthusiasm, many investors are looking for ways to get involved in esports. While the space is just opening up, there are already diverse methods to get in. Here’s a look at stocks and exchange-traded funds (ETFs), two of the simplest ways to potentially make money in this exciting market.

Invest in esports: Esports stocks

The first and perhaps most obvious place to start when investing in esports is with publicly traded stocks. The esports industry already includes large players such as Amazon (NASDAQ:AMZN), which burst onto the gaming scene when it acquired Twitch back in 2014 for US$970 million.

Although a company like Amazon does not offer pure-play esports exposure, it does offer stability. Major companies like this could be a good investment for those who are new to the esports space and are looking for a stable way to get access to the growing world of competitive video games.

Of course, others may prefer investing on a smaller scale, and there are new esports options appearing all the time — for example, Enthusiast Gaming Holdings (TSXV:EGLX) completed its IPO in October 2018.

As in any market, earlier-stage companies generally come with increased volatility. But that can also bring the potential for major investment returns for those who get in on the ground floor. It’s up to individual investors to gauge what investment opportunities they are comfortable taking advantage of.

Invest in esports: Esports-related stocks

While esports stocks are a solid investing choice, it’s important to remember the scale of the market.

To put the wide reach of the esports gaming industry in context, over $155 million in prize money was awarded in nearly 3,500 esports tournaments last year. The top games in terms of prize money awarded were: Dota 2, Counter-Strike: Global Offensive, League of Legends, StarCraft 2 and Fortnite.

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2018’s top esports team was Team Liquid, a professional gaming organization made up of 60 “championship caliber athletes” — its members brought in more than $25 million last year.

What does all that mean? Put simply, while esports itself is starting to take off as video game viewers continue to tune in, so too are its affiliated markets — for instance, companies that develop and sell a products related to gaming have the potential to reap major rewards.

NVIDIA (NASDAQ:NVDA), which makes computer chips that are considered “the gold standard in gaming,” is one example, with a reported 86 percent of gamers using its chips.

There’s also the hardware to consider, including things like headsets, mice, gaming keyboards and consoles. For that reason, companies like Microsoft (NASDAQ:MSFT) and Logitech International (NASDAQ:LOGI) could also be opportunities to profit from growing popularity of esports.

Invest in esports: ETFs

Since esports is still somewhat in its infancy, there aren’t any pure-play esports ETFs out there just yet. However, if you’re still looking for some exposure and would prefer to go the ETF route, the Video Game Tech ETF (NYSE:GAMR) is an option to consider.

It should be noted that its expense ratio is a little high at 0.82 percent. And again, most of its 68 holdings are technology related, but not pure esports companies. So if you’re wanting to dip your toe in the pool as opposed to diving in, this could be a viable option. 

Invest in esports: Opportunities abound

In review, it seems like there’s no better time to get in on esports in some way, shape or form. Whether you choose publicly traded esports stocks, stocks related to esports or ETFs, there are lots of opportunities to get exposure in this exciting and growing market.

What esports investment would you choose? Let us know in the comments.

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Amanda Kay, currently hold no direct investment interest in any company mentioned in this article.

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