Despite the COVID-19 pandemic forcing businesses to close and cancelling or postponing events from concerts to Olympic games, consumers still demand entertainment.
In the case of sports, major leagues worldwide have been idling since mid-March, and networks and entertainers have to fill up the time with something. Luckily, there was a type of sporting event waiting for its chance to shine: esports.
Many expected the developments when coronavirus pandemic started leading to quarantines and lockdowns, but everything together has led to an interesting, unexpected, and rewarding rise for the esports market. In the place of nationally televised football matches or F1 grand prix, athletes have been competing on their respective sports’ video games instead.
And fully functional esports leagues and tournaments, like those of massive games like Counter-Strike and League of Legends, have attracted new consumers as a result. While live studio matches had to be cancelled, the leagues and tournaments have continued to be broadcast online and offered enthusiasts the chance to watch competition, cheer, and even gamble.
It’s no surprise that esports viewership has risen when you look at the increased engagement for other digital ventures. Game marketplace Steam has continued to see a record-breaking number of players, streaming website Twitch.tv has seen massively increased viewership, and new channels are popping up from chefs, DJs, anyone who is looking to reach an audience.
(Three-month price chart showing the steady rise of Evolve E-Gaming Index ETF)
So far, as esports has risen, so have many esports and gaming stocks that are able to benefit. Looking at the stock charts for game makers like Activision Blizzard Inc. (NASDAQ:ATVI) and Electronic Arts Inc. (NASDAQ:EA) shows the impressive rise after the initial market downturn in March.
Indirectly related companies are up as well, including hardware and peripheral makers that are seeing increased brand awareness and demand for products. Companies like Logitech International S.A. (NADSAQ:LOGI), Turtle Beach Corp. (NASDAQ:HEAR), and NVIDIA Corp. (NASDAQ:NVDA) have matched the rise of video-game makers despite the market difficulties still gripping tech production.
Most importantly to enterprising esports investors, pure-play esports plays have benefited as well. These include ETFs like Evolve E-Gaming Index ETF (TSX:HERO) and VanEck Vectors Video Gaming & eSports ETF (NYSE:ESPO), companies that own pro esports franchise like Enthusiast Gaming Holdings Inc. (TSX:EGLX) and ESE Entertainment Inc., gambling and fandom providers like Fandom Sports Media Corp. (CSE:FDM), and capital investors like New Wave Esports Corp. (CSE:NWES).
Will the rise be short-lived and outdone by the eventual recovery of traditional sports? Likely, but sports leagues are having a tough time figuring out how to return, and when. And experts expected the esports market to have the legs and growth potential beyond any boost from a pandemic-ridden world, which has only served to strengthen their long-term resolve. It's even caused companies like Media Central Corporation Inc. (CSE:FLYY) to add esports coverage to capitalize on the market's growth.
For now, the rise is expected to continue. Eventually, it will peak and recede as traditional sports come back online, but the damage will have been done. Just as the 2007-2008 Writers Guild of America strike changed the world of television and led to a rise in web series and consumption long after the strike had wrapped up, the esports, streaming, and gaming markets will likely grow far beyond the pandemic.
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FULL DISCLOSURE: Media Central Corporation Inc. is a client of Stockhouse Publishing