Video games aren’t just for teenagers anymore. In fact, the electronic sports (eSports) industry has grown substantially in recent years, bringing in $865 million USD worldwide in 2018, and is expected to surpass $1.48 billion USD in revenue by 2020, representing a CAGR of 32%.
The eSports audience size is also increasing, as more and more fans tune in to watch amateur and professional gamers compete. The fanbase has already grown massive, with an estimated 25.7 million eSports viewers in the US alone last year. By 2022, analysts expect there to be nearly 300 million frequent viewers of eSports around the world, while 347 million people are forecast to be occasional viewers.
Investors looking for the next big thing after the cannabis and cryptocurrency booms should definitely consider investing in companies that are involved in the burgeoning eSports industry. From eSports game developers and publishers to digital media platforms and eSports tournaments, there are ample opportunities to cash in on the growing eSports industry.
Investing in the eSports Industry
eSports involve multiplayer video games that are played competitively by both professional and amateur gamers for spectators. These can be first-person shooter games (FPS), real-time strategy (RTS) games, multiplayer online battle arena (MOBA) games, sports games, card games, strategy games, or fighting games.
Although the eSports industry is dominated by well-known game publishers like Tencent Holdings Ltd. (OTCPK:TCTZF) and Sony (NYSE:SNE), there are a few up-and-comers offering promising products to the market.
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One of these is Vancouver-based Axion Ventures Inc. (TSXV:AXV) (OTCQX:AXNVF), which just launched two video games in the last two weeks. Axion Ventures is a video game and IT company that has majority ownership in Shanghai-based online video game development and publishing company Axion Games and True Axion Interactive (TAI), a Bangkok-based video game development company that Axion co-founded with True Corporation (OTC:TCPFF).
There is also Take-Two Interactive (NASDAQ:TTWO), which develops and publishes products mainly through its wholly-owned labels 2K and Rockstar Games, as well as through its Private Division label and Social Point, a leading developer of mobile video games.
Another company in the space to consider is Glu Mobile (NASDAQ:GLUU), a US developer and publisher of mobile games for tablets and smartphones. The company portfolio features top-grossing and award-winning original and licensed IP titles like Deer Hunter, Cooking DASH, Covet Fashion, MLB Tap Sports Baseball, Design Home, and Kim Kardashian: Hollywood, all of which are available on various platforms, including the App Store and Google Play.
Other Ways to Invest in the eSports Industry
Investing in game developers is far from the only way to capitalize on the growing eSports industry. Another great way to gain access to the market is by looking at the companies that are publishing games, hosting eSports tournaments, and developing digital platforms for gamers.
Enthusiast Gaming Holdings Inc. (TSXV:EGLX) (OTCQB:EGHIF) is one digital media company that has created an impressive online community, boasting an online platform of over 80 gaming content websites that together bring in over 75 million active users every month. The company also hosts Enthusiast Gaming Live Expo (EGLX), the largest video gaming expo in Canada, which brought in over 55,000 attendees last year.
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On March 7, Enthusiast Gaming announced that it will be launching its own eSports tournament and entertainment series, EGLX Rising Stars.
Another company creating platforms for fans to connect is Fandom Sports Media Corp (CSE:FDM), an entertainment company focused on curating and creating fan-focused content. The company’s main product, the FANDOM Sports app, allows fans to express their passions for sports, pick fights with other players, and earn rewards.
eSports Industry Exchange-Traded Funds (ETFs)
At present, there aren’t any pure-play eSports ETFs available due to the infancy of the industry. However, for those who want to gain exposure to the eSports industry through an ETF, there are a couple of options out there. One of these is the Video Game Tech ETF (NYSEARCA:GAMR).
There is also the VanEck Vectors Video Gaming and eSports ETF (NYSEARCA:ESPO), which includes a globally diversified group of video game and eSports companies, including those engaged in video game development and eSports, as well as related hardware and software.
Canada will also be getting its first global eSports ETF soon. Evolve Funds Group Inc. filed a preliminary prospectus this week for the Evolve E-Gaming Index ETF. The fund will be trading under the ticker HERO and is aiming to track the Solactive Electronic Gaming Index—a collection of stocks involved in software, hardware, and services connected to the eSports industry.
It will be exciting to see how big the eSports industry will get and which companies will capitalize on its growth.
Are there any eSports stocks on your radar? Let us know in the comments!
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Featured Image: Pixabay
