Electronic sports, meaning digital games, are fun to play and have also become suddenly mainstream. It’s not just the nerds in their moms’ basements who play video games anymore. The popularity of multiplayer video games, such as Halo and Overwatch, have given rise to an eSports sector that is akin to major league sports in its profitability. The sector is predicted to surpass the billion-dollar mark in 2018. By 2020, eSports would have revenue similar to European Ligue 1 football. While the sector currently lags behind NFL or MLB in terms of revenue, it’s catching up fast.
This is a trend that even entrepreneurs and traditional investors, like Jason Sugarman, have been closely observing. Mr. Sugarman, a private equity investor with decades of experience, has made investments in the major eSports league Team Liquid. It paid off when Team Liquid recently won the annual Dota 2 championship and took home a winning prize of more than $10 million. The sector is definitely showing amazing opportunities for both sports and tech investors. If you are interested in making money through eSports, here are several tips for doing so:
Invest in a Well-Regarded Team
Investing in eSports can be similar to investing in regular sports, in that people can place money on teams, explains Jason Sugarman. As he did with Team Liquid, small-time investors can find a great team to invest in. A good eSports team would have a great dynamic between players and a history of winning. Observe the team for talent and see what type of talent the team displays toward the game. Finding teams specializing in a game or two would be better than teams that play in everything.
Consider Star Players
Unlike traditional sports teams, eSports teams are not contract-bound as of yet. Therefore, some teams may see players come and go frequently. If this puts you off investing in a team, then consider investing in star players. There are definitely star players in the sector who perform incredibly on many teams. Investors can back these players and win as they do. It’s not so different from investing in a star player like Ronaldo.
Don’t Forget the Merchandise
Merchandising is extremely strong in eSports, perhaps even more so than in traditional sports. Investing in merch is definitely a great way to earn excellent returns in the sector. But don’t bet on traditional merch like T-shirts and caps, though they matter as well. Digital sports fans are more likely to purchase tech-oriented merch, like supporting apps or gear. Investors can definitely earn a killing with tech gear in the eSports sector. Keep in mind that the console market is growing, which indicates a significant uptick in the type of merch eSports fans prefer.
There are also eSports stocks to consider. E-sports stocks are a great way to invest traditionally in a non-traditional sector. The stocks belong to companies that develop games like Activision or Blizzard. If a game does well, the company stocks go up. In general, invest in the stocks of companies with legacy titles that have remained popular for years. For example, Microsoft’s Halo is a lucrative legacy title. Blizzard has a number of titles, including Overwatch, Hearthstone, and Starcraft, which have remained popular for decades. If the informed predictors are right, then stocks of these companies will dramatically rise in the coming years.