The ESports industry consists of a highly organized and very competitive sector which has built up tremendous interest in organized video gaming in the form of a spectator sport. Odd as it may seem, there’s a big market for people watching others play video games.
Of course, the individuals actually playing the games are usually celebrities or other kinds of social influencers, and that provides much of the appeal for observers. This fact has caused many potential investors to visit trading platforms like this site and take a close look at investing in Esports as a possible lucrative investment.
Growth of ESports
Surprisingly, the market for watching professionals playing video games is rapidly growing, and this is partly attributable to the social distancing and lockdowns which were implemented at the height of the COVID-19 pandemic.
Once those restrictions eased off in the latter stages of 2023, the Esports Industry just continued right on with its torrid expansion.
While it might be somewhat difficult to forecast future industry growth, it seems safe to say that for the next several years at least, there will be even more growth in this rapidly expanding industry.
However, any kind of projections about just how much it will grow vary a great deal, depending on how you define the Esports market.
It has been estimated that there are approximately 2.6 video game enthusiasts around the globe, and a further estimate has the global audience for Esports in the neighborhood of half a billion people.
This means there’s plenty of opportunity for developing some content that’s really competitive and compelling, and for developing some lucrative marketing strategies.
It must be admitted that the industry is somewhat riskier than the stock market in general. Quite a few companies in this sector have built their valuations on expectations for significant long-term growth.
That being said, it’s true that the gaming industry does have a very optimistic long-term outlook. Many of the biggest companies involved in the industry have recorded greatly increased player engagement for the duration of the pandemic.
It’s also true that the global demand for Esports gaming and video gaming in general will likely continue to rise well after the pandemic completely subsides. If you’re an investor who has a diversified portfolio of stocks, you may already have holdings with some companies that are involved with Esports.
This is particularly true of investors who have exchange-traded funds (ETFs), for instance the ETFMG video game Tech ETF, because these investors are the ones who buy video game stocks outright.
How ESports companies make money
The way that ESports companies make money comes through several channels, and they don’t usually rely on a single source of income. First of all, they can arrange for broadcast licensing deals, merchandise sales, and sponsorships, all of which can be very appealing to some clients.
Then too, they earn money through advertising and live-event ticket sales, which can often bring in significant amounts of money.
Some Esports companies sell the exclusive rights to operate teams in leagues that are organized and usually administered under their umbrella organization. In some cases, competitive gaming leagues actually work as live advertisements for their associated franchises.
The most successful Esports companies earn their revenues through some combination of the above strategies, and in some cases, the amount of money they make can be quite lucrative.
If you’re thinking of investing in one particular Esports company, you should definitely investigate its revenue sources, to find out how stable their income streams really are. This will help enormously when you’re trying to figure out which company you want to invest in.
Just getting started
This is a relatively new area for investment opportunities, so naturally, it’s still evolving at present. This makes for a very exciting, albeit risky, opportunity to become involved and see where the investment might take you.
While it must be stated that most ESports companies do face challenges in establishing their businesses, that is pretty much true of every startup.
It’s likely that the rate of failure will be fairly high for the next several years, with so many new companies throwing their hats in the ring. If you’re an investor who tends to shun risk, this type of investment may not be right for you.
However, the prospects for getting a big return are certainly there as well. If you’re the type of investor who just buys stocks and holds them for a while, you may have a very pleasant return at some point in the near future.