The esports industry has been taking what we view as the traditional form of sport, tearing it up, and blazing towards its own future, bringing with it a massive crowd and some even bigger investment opportunities.
If you want to get an idea of the scale of esports popularity, just look at the 127 million people who tuned into the 2018 Mid-Season Invitational Final, making it the most-watched esports event in history. That’s more than all six games of the NBA finals this year. The prize pools for esports are pretty tidy as well, and definitely hold up well alongside traditional sports. Back in July, 16-year old Kyle “Bugha” Giersdoff took home a cool $3 million USD grand prize from the Fortnite World Cup, almost 50% more than Tiger Woods collected from his first major win in 11 years in April.
If these figures haven’t got your blood racing just a little, let’s look at some of the projections for the esports industry. Activate, a technology consultancy firm, estimates that esports will bring in more viewers than every single US professional sport other than the NFL—and let’s face it, second to the spectacle that is the SuperBowl isn’t a bad place to be. In 2018, the esports industry generated about $900 million USD in revenue, and this is expected to hit $1.6 billion USD by 2021. That’s an increase of nearly 80% in three short years.
Now don’t worry, you don’t just have to sharpen up your Fortnite skills to make big money on esports because it clearly represents a serious investment opportunity. Let’s take a look at some of the esports stocks that could benefit the most from this booming industry.
HUYA
HUYA inc (NYSE:HUYA) is a Chinese firm that is growing into a streaming giant when it comes to esports. Over 70% of esports viewers come from outside the US, with China being the biggest market, and Huya is widely recognized as the leading streaming platform for esports in its home country. The company has also made a series of promising expansions and investments, branching into quality professionally generated content (PGC), as well as signing an exclusivity agreement with Team Liquid, the world’s top esports team, to broadcast its matches in China.
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Huya has also been posting some very strong results recently. In its fiscal second quarter, the company reported net revenue of $293 million USD, an increase of 94% year-on-year. With third-quarter guidance of around $325 million USD, Huya looks set to beat $1.2 billion USD in revenue for the fiscal year. This esports stock is currently valued at $26.45, and although that could be a little volatile given Trump’s trade war with China, it looks almost certain that esports’ upward trajectory will last a lot longer than Trump.
Activision Blizzard
Activision Blizzard (NASDAQ:ATVI) has one of the strongest portfolios in the gaming industry and has been at the forefront of esports development. This developer is the name behind some of the biggest games in esports, including Overwatch, Call of Duty, and World of Warcraft. Its commanding $42.5 billion market value and revenue of $7.4 billion the past 12 months makes it an industry blue chip. No other US pure-play video game developer even comes close.
Added to this, the company brought in over half a billion dollars by selling more than 25 Overwatch and Call of Duty esports teams over the last couple of years, which doesn’t even include broadcast rights or sponsorship revenue. ATVI stock is currently valued at $53.96 and is actually down for most of the year; however, this is as a result of 2019 being a period of transition as the company shifts resources around and bulks up its development staff to increase the frequency of content releases in the short term.
While esports has come such a long way in an incredibly short period of time, it is still quite a nascent industry that will inevitably be prone to a few bumps in the road. Yet the untapped potential in esports stocks is incredible, and the two stocks mentioned above could help your portfolio really seize on that potential.
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Featured image: DepositPhotos © eranicle
