For older investors, in particular, the subject of “Esports” (i.e. virtual sports) may seem like just a new fad – and certainly something that would only be of interest to the younger people who play these “sports” (video games). An increasingly large body of evidence suggests that such investors would be well-advised to take a second look.
As an investment, Esports offers the two, general qualities most important for any new commercial opportunity:
- Rapidly growing demographics in terms of not only the total number of players of Esports but also the growing audiences of spectators for these virtual competitions.
- Rapidly growing dollars that are chasing this surging market.
An
article published last year by the World Economic Forum tossed out these numbers. “The
global eSports audience will reach
380 million this year, made up of 165 million dedicated eSports fans and 215 million occasional viewers.”
That’s right: 380 million people interested in
watching other people play games. It may (still) sound trivial to some, but these are numbers that rival the audiences of major-league professional sports. And Esports is still in its infancy.
Then there are the major-league dollars up for grabs. Total prize money for a single tournament in 2018 topped
US$25 million. This compares to an overall purse of just US$11 million for the 2018 Masters golf tournament and older investors are very familiar with the popularity of golf.
Going forward:
- Epic Games has already announced US$100 million in funding for its 2018-2019 “Fortnite” tournaments
- Brands were estimated to invest US$694 million in Esports in 2018, and this is projected to more than double, to US$1.4 billion by 2021
Esports is already big and it’s getting much bigger – fast. Still, to people who have little familiarity with video gaming it seems silly. How can so many people be just as interested in these games as they are in real sports, or even
more interested in the case of avid gamers? One answer to that question is that the gap between a “game” and a “sport” is becoming increasingly nebulous, at least with some forms of “sport”.
Automobile racing is a multi-billion dollar industry with global popularity, and its most-enthusiastic fans unequivocally consider such racing to be a sport. A recent
article in Popular Science focused on the steering wheel (and console) for a Formula 1 race car. The title noted that such consoles feature “fighter jet components”.
Look at these racing consoles.
(photo courtesy of Ben Sutherland)
The irony here is obvious.
Show most people the image above without telling them that it’s the actual console of an F1 race car and the majority would likely assume they were looking at a component for a video game than the (genuine) component of a race car.
Actual automobile racing requires that the driver manage a 360-degree field of vision, to navigate with the other racers and to pilot the vehicle around the track itself. E-racing (today) uses a two-dimensional screen. But with “VR” (virtual reality) making 360-degree gaming a practical and realistic experience, this difference between “real” gaming and Esports will soon vanish.
When the term “e-sports” was originally coined, the purpose of that term was to distinguish these
game simulations from real sports (and reality, in general). That original thinking is becoming increasingly archaic.
Going forward, as the caliber of competition continues to improve, as the numbers of Esports participants and spectators continues to mushroom higher, and as the total number of dollars being directed into this industry continues to spiral; things will get much simpler. “Esports” will just become the label for a specific category of
sports.
For readers/investors who can’t envision such a reality, this may be much closer than you think. The organizing committee for the 2024 Paris Olympics is
currently deciding whether or not to make Esports a demonstration
sport for that Olympics.
Many sports purists think that the word “sport” is a term that needs to be interpreted very narrowly in terms of activities for which we want to assign that label. That’s a separate debate. What no longer appears to be debatable is that for people who favor a broader definition of the word “sport”, Esports has earned a seat at the table.
Even after reading this article, older investors are unlikely to get the itch to start watching Esports competitions themselves. However, with the quantity of commercial dollars already on the table, and with the stunning growth rate in Esports, these same investors may now start to look at Esports as an
opportunity.
One game development company that is already squarely focused on the Esports marketplace is
YDX Innovation Corp. (
TSX: V.YDX,
OTCQB: YDRMF,
Forum). This Company is familiar to many of Stockhouse’s tech investors, via several previous feature articles.
Most recently (
January 2019), Stockhouse alerted investors to YDX’s three-pronged approach to developing and commercializing immersive products/services that are tailored for Esports. And speaking of “VR”, YDX is already an industry leader in bringing virtual reality to gaming.
Reality and virtual reality. Sports and Esports. With respect to the former, anyone who has had the opportunity to sample VR knows that the gap between reality and virtual reality continues to shrink. Similarly, increasingly sophisticated technology – that is impacting both “real” sports and Esports – is causing the latter gap to steadily shrink as well.
For technology investors looking for the next big opportunity in emerging technology, Esports is worth a second look.
FULL DISCLOSURE: YDX Innovations Corp. is a paid client of Stockhouse Publishing.