eSports started from nowhere and today, its popularity is rising with viewership expected to reach 560 million in 2021. On key streaming platforms such as YouTube, and Twitch, viewership has already surpassed popular sports such as NHL. In fact, experts forecast that revenue will reach $2.96 billion by 2021 from $493 million in 2016.
Since 2013, there has been an increase in venture investment in eSports. Thanks to technological evolution in eSports, the industry is entering a new and critical phase. Due to its popularity, eSports stocks are now in every investor’s radar.
Want to know how to invest in eSports stocks?
What is eSports?
This is a form of competitive video gaming at the professional level where competitors from different teams face off in a tournament. Short for electronic sports, gamers play popular games such as Counter-Strike, Call of Duty, Madden NFL, and Fortnite among others.
These gamers are usually watched on popular streaming services such as YouTube and Twitch. Millions of fans from around the world watch their favorite teams or gamers compete in real-time.
In 2018, 380 million people watched eSports according to a report by Newzoo. That includes 165 million eSports enthusiasts. Majority of these viewers watch from China, South Korea, and North America.
These tournaments can attract more viewers than traditional professional sports such as the NFL and NHL. In 2017, the League of Legends World Championship attracted more than 80 million viewers. In the same year, there were 588 major eSports events.
How Did eSports Start?
The first competitive tournaments in video games started in the 1970s and 1980s. Back then, world top gamers competed for high scores in classic games such as Donkey Kong and Pac-Man. With the help of the internet in the 1990s and the release of advanced games, eSports started to gain popularity.
This helped to pave way for gaming tournaments for games such as Counter-Strike, Warcraft, and Quake. Global popularity reached the 2000s with tournaments for games such as Warcraft III and others. Between 2005 and 2008, ESPN hosted Madden Nation, an NFL competition which gave North America the taste for eSports.
Making Money in eSports
In traditional sports, a sports team has a venue (in most cases) and they earn revenue from ticket sales. As is the norm, traditional sports clubs charge a premium for halfway line and courtside tickets. When it comes to eSports, things are different. Teams don’t have stadiums but there are gaming houses around the world.
In eSports, 95% of the money generated comes from sponsorship deals. Apart from sponsorship deals, players and teams make money from prizes, regular salaries, and streaming. For instance, a Twitch streamer with 2,000 subscribers can earn $5,000 every month. Streamers also have the opportunity of monetizing their streams with ads. It’s no secret that eSports teams are earning millions of dollars every year. In fact, the average salary for eSports is around $60,000. In 2017, the top player earned a prize of $2.436 million
Today, gaming publishers are looking into broadcasting rights. As an interesting aspect, it is something that will help eSports teams to build relationships with tournament organizers and game developers.
Popular eSports Stocks
As said earlier, eSports is gaining popularity and even it has become a buzz word among Wall Street investors. To invest in eSports, you must first learn the different types of eSports stocks on offer.
Want to know more about eSports stocks?
Here are the top eSports stocks.
Publicly Traded eSports Stocks
The first place where investors can invest in eSports is in publicly traded stocks. Major players include Take-Two Interactive Software (TTWO), NVIDIA (NVDA), Activision Blizzard (ATVI), and Electronic Arts (EA). Others include NetEase (NTES), Logitech (LOGI), and Tencent Holdings (TCEHY). These companies have different roles in eSports.
For instance, Take-Two Interactive is a gaming developer and publisher. The most popular game behind Take-Two Interactive is the NBA 2K franchise. This game became popular after the launch of the NBA 2K League which is the first eSports league promoted by a pro sports organization.
NVIDIA is a chipmaker specializing in GPUs. A vast majority of gamers use GPUs from NVIDIA. As such, NVIDIA is one of the top hardware providers for most popular eSports leagues. This makes NVIDIA one of 2019 top eSports stocks together with Take-Two Interactive.
Activision Blizzard is another popular gaming publisher renown for the online game, Overwatch. In the past few years, Activision has grown thanks to sales from Overwatch League and Major League Gaming. The company also struck a deal with Walt Disney for the House of Mouse.
Last, we have EA or Electronic Arts. Like Take-Two Interactive, EA is a gaming publisher whose franchises include Madden NFL and FIFA video games. In 2018, 45 million unique players signed to play FIFA 18 and FIFA 19. This positioned the company as a popular eSports stock to watch.
How to Invest in Esports by Buying Shares Through a Broker
Today, you can buy eSports stocks from the comfort of your home. Let’s review the steps for how to buy shares through an online broker.
Step One – Open a Brokerage Account
A brokerage account is an investment account opened with an online broker and allows you to trade stocks and other financial instruments. As an investor’s connection to the stock market, most online brokerage firms allow you to open an account from the comfort of your home.
The process takes a few minutes and after the initial deposit, you can begin trading stocks, ETFs, mutual funds, CDs, bonds, forex, and options. The brokerage firm acts as an intermediary between you and the investments you want to buy.
To trade, most online brokerage firms allow you to fill an order ticket. What you need to know is that there is no limit on the number of brokerage accounts an investor can have. Also, there is no limit to the amount of money deposited in a brokerage account.
Before opening a brokerage account, there is one hurdle you have to jump over – choosing the right brokerage firm that meets your needs. Factors to consider when choosing a brokerage firm include:
- Cost and fees
- Good customer services
- High payout
- Deposit and withdrawal options
- Smart trading platform
- Introductory bonuses
- Low-cost commissions
- Education tools
- Stock trading research
- Investment guidance
Online brokerage firms offer cash and margin accounts. As a beginner, we recommend that you stick with a cash account at first.
Step Two – Buying eSports Stocks
After transferring funds to your online brokerage account, you are ready to trade or pick stocks. A good place to start is to research companies that you are familiar with. For instance, start with the eSport stocks listed above. Remember, you want to buy into a company that you want to become a part-owner.
The best way to make an informed decision to invest in eSport stocks is by starting with the company’s annual report. This report will give you a peek into the performance of the company.
Most brokerage firms offer analytical tools which can help you evaluate a company. Information to use include quarterly earnings updates, conference call transcripts, SEC filings, and recent news.
Once you find a company that fits your investment goals, buy a certain number of shares. Starting small allows you to have a feel of individual stocks. As time goes by, you can add more shares to your portfolio.
To buy shares, simply search using the ticker symbol and place your order. There are two order types:
- Market order
- Limit order
Choose between the order types and execute the trade. Now, you are a shareholder of an eSport stock.
Step Three – Optimize Your Portfolio
What you need to know is that every investor goes through a rough patch. You cannot control market trends and prices. All you can do is come out in the long term as a successful investor having met your long-term goals.
Remember, always use the right tools. This will allow you to evaluate eSports stocks and make sound decisions. You also need to be mindful of brokerage fees. If you are not careful, they may erode your returns.
Consider diversifying to build wealth and lower your risks.
What Next for eSport Stocks?
The eSports industry has stolen the thunder from traditional entertainment and media industry. Experts forecast that it will surpass $20.2 billion by 2021. Remember, pick the right stocks, make sound decisions and watch your portfolio grow.