When it comes to investing, people often look for stability and longevity. Putting your money in a new industry or company is seen as risky. Well, despite perception of the esports industry being new, it’s not. Esports dates back to the 1970’s and has seen steady growth ever since. Esports is quickly going from a niche market to mainstream entertainment, competing with traditional sports more than ever. The latest generation spends more time playing video games than any other pastime. They also consume media differently than previous generations preferring platforms like YouTube, Instagram, and streaming platforms like Twitch and Mixer.
When it comes to industry growth and profitability, the proof is in the numbers.
- In 2018, consumers spent $43.4 billion on video games and video game hardware, and this number does not include digital sales, which has increasingly become the choice method to purchase video games.
- On average, millenials spend $112 month on video games and gaming content. Of those gamers 71 percent watch gaming content on Twitch and YouTube.
- The average millennial gamer will spend about $29 a month in donations to video and streaming content creators on Twitch and Mixer.
- Every age group has seen a rise in the amount of video games they play each week, with 26 to 35 year olds seeing the largest increase at 26%. Even the 60+ demographic has seen an increase in play time of 14%. GrndPaGaming, a 66-year old Twitch streamer, currently has 195k followers on Twitch.
- Esports revenue is projected to reach over $1 billion this year “up 27 percent since last year, thanks to ballooning revenues from advertising, sponsorship and media rights” according to Newzoo, a game industry analytics firm. (Reuters, 2019)
Investors are paying attention and taking action with 2017 investments reaching $490 million and massively increasing to $4.5 billion in 2018. Even non-endemic brands have been looking to capitalize on the space with State Farm Insurance sponsoring Team Rogue’s Fortnite captain and streamer, DrLupo. State Farm also “became the first non-endemic sponsor in North America of the League of Legends Championship Series (LCS), the first NBA partner to sign a separate deal to sponsor the NBA 2K League, and a major sponsorship of the Rocket League Championship Series”. (State Farm, 2019) Celebrities are getting in on the action too. Former NBA star Rick Fox created his own esports organization, Echo Fox, with teams in League of Legends, CS:GO, Call of Duty, and fighting games such as Street Fighter V and Super Smash Bros. Ultimate. Grammy award-winning artist, Drake, invested in 100 Thieves who, not only has esports teams, but presents itself as a lifestyle brand and clothing line.
And, then there is the audience and the prizes. In November 2018, the League of Legends World Championship drew over 100 million unique viewers, beating out the Super Bowl that previous year. This past July, the Fortnite World Cup Finals gave out $30M in prize money and Kyle “Bugha” Giersdorf won $3M, becoming a millionaire and household name overnight. DOTA’s shared prize pool for their International 9 Tournament broke $30.8M, “which will officially make it the largest prize pool at a single esports event ever”. (Stubbs, 2019)
New Wave’s Tiidal saw its team Lazarus Esports take home $3.45 million in winnings at the Epic Games hosted Fortnite World Cup this year. This achievement positioned Lazarus Esports as the top esports team in North America according to earnings.
So what can you do to capitalize on this growing industry and get those big multipliers on your initial investment? A lot! There are five primary categories of esports investment:
- Team Organizations
- Broadcasting Production & Tools
- 3rd Party Event Coordinators
- Media Platforms & Advertising
- Consumer Products
New Wave Esports helps remove the guesswork for investors unfamiliar with the space by already coming with a diverse portfolio. ”The esports ecosystem offers a variety of different investment opportunities across a range of subsectors. Some are unique to the industry, such as team organizations, while others hold similarities to other traditional industries, such as consumer products and event planning, which could be more palatable to investors entering the space for the first time”. (Murray, Ashton, Seck, & Hayword, 2019, p. 3-4)
Through Tiidal Gaming, which owns Team Lazarus, New Wave has invested in an esports team organization and data analytics. Even Matchup Gaming covers 3rd party event coordination, and Thunderbolt CDG is involved in media platforms & marketing. New Wave is continuously looking for new opportunities to invest and deploy capital to companies that inspire, support, and innovate the industry within all facets of esports, while also drawing upon collaborative opportunities for shared revenues between portfolio companies.
Another upside to a diversified investment in esports, as opposed to a single investment with a team or gaming company, is price and reduced risk. The cost of entry is still so low and the target audience so large that the potential rewards greatly outweigh the risks.
Get ready to gear up as New Wave Esports takes the portfolio public on the Canadian Securities Exchange (CSE:NWES) in late October 2019! Sign up for our newsletter and follow us on social so you don’t miss a beat.
- Russ, H. (2019, February 12). Global esports revenues to top $1 billion in 2019: report. Reuters.
- Morris, C. (2019, January 23). We Spent Over $43 Billion on Video Games Last Year. Fortune.
- Novet, J. (2019, April 16). Microsoft launches $250 Xbox with no disc drive. CNBC.
- Murray, T., Ashton, G., Seck, T., & Hayword, A. (2019, April). The rise of esports investments: A deep dive with Deloitte Corporate Finance LLC and The Esports Observer. The Esports Observer.
- State Farm.
(2019, January 29). State Farm Sponsors Professional Esports Athlete
- Perez, M. (2018, October 3). Drake And Scooter Braun Invest In Esports Company 100 Thieves. Forbes.
- Pei, A. (2019, April 14). This esports giant draws in more viewers than the Super Bowl, and it’s expected to get even bigger. CNBC.
- Webb, K. (2019, July 25). The Fortnite World Cup Finals start this Friday, and $30 million is on the line. Here’s what you need to know about the competition. Business Insider.
- Minotti, M. (2019, June 6). SuperData: Millennials spend average of $112 a month on gaming content. Venture Beat.
- Reuters (2019, July 28). US teen wins $3 million at video game tournament Fortnite World Cup.
- Stubbs, M. (2019, July 27). The International 9 ‘Dota 2’ Tournament Prize Pool Breaks $30 Million. Forbes.
- GrndPaGaming. https://www.twitch.tv/grndpagaming