Investment In eSports
Updated: Dec 2, 2022
You may have seen a headline or two about well-known names in the sports world investing in the eSports industry. What is it about eSports that has caught their attention? Keep reading to find out why some of the biggest names in sports are turning their attention to this rapidly growing industry.
Esports has been one of the biggest sources of entertainment for fans during the recent global lockdown. It became the focus of everyone's attention since there were so few sports to watch. So, it was a win-win for everyone-players, teams, industry.
Esports has come a long way in the last ten years, from a primarily underground culture to a mainstream business. The industry has drawn well-known global investors such as Mark Cuban, Alexis Ohanian, and Ashton Kutcher as a result of its global phenomenon. Even established athletes like David Beckham, Steph Curry, Rick Fox, and Shaq, as well as singers like Drake, Wiz Khalifa, and Steve Aoki, to mention a few, are investing in eSports. As the industry's infrastructure, professional players, and teams continue to grow, it offers a wide range of opportunities. The eSports industry has been an investment target for traditional sports leadership for multiple years. Many athletes have recently started their own eSports organizations. In June 2020, David Beckham founded Guild eSports, which has already raised $52.3 million and gone public on the London Stock Exchange.
The eSports industry is only getting bigger and bigger, with more people tuning in to watch competitive gaming every year. And it is not just teens and young adults who are watching; according to a report from Nielsen, 42% of eSports viewers are actually between the ages of 21 and 35. With such a large and dedicated audience, it is no wonder that so many brands and businesses are clamoring to get involved.
Nielsen Releases Unprecedented Insights on Esports Fan Attitudes and Behaviors Leveraging Twitch Data
But why are big names in sports specifically interested in investing in eSports? For one thing, there is a lot of crossover between the two industries. Many of the same qualities that make someone a good athlete—dedication, hand-eye coordination, teamwork, etc.— also make them a good gamer. In fact, some of the most successful eSports athletes actually started out as traditional athletes; for example, NBA star Shaquille O'Neal is an investor in NRG ESports, while retired football player Jerry Rice is an investor in Gen.G ESports.
In addition, the eSports industry presents a unique opportunity for sports figures to get involved in a relatively new and untapped market. While the traditional sports industry is well established, eSports is still very much in its infancy. This gives investors the chance to get in on the ground floor of what could be a very lucrative industry. And with so many different games and tournaments to choose from, there is something for everyone— whether you are into first-person shooters, real-time strategy games, or anything in between professional gaming, or eSports, is going through a gold rush. The total number of eSports watchers is predicted to increase between 2019 and 2023 at a CAGR of 9%, according to Business Insider. This increase is due to the audience for eSports nearly doubling in the past six years; in 2017, there were about 335 million watchers. According to Business Insider, 646 million people will watch eSports in 2023.
Ronaldo investing in eSports:
Brazilian football legend Ronaldo Nazário de Lima has invested in eSports organization CNB, the team announced on its Facebook page over the weekend.
Together with Brazilian poker player Andre Akkari, Ronaldo, as he is better known, purchased 50% of the Brazilian club. He is thought to be the more well-known football player—retired or still active—to publicly enter the eSports world. The remaining 50% will be retained by the company's founders, Cleber "Fuzi" Fonseca and Carlos "Furia" Junior, as well as investor Igor Federal.
Ronaldo is following a well-traveled path because a number of other prominent sports figures have invested in eSports during the past year.
MLB players Alex Rodriguez and Jimmy Rollins, as well as NBA star Shaquille O'Neal, have invested in Team NRG. The team just acquired Team Mixup, an Overwatch team, in a purchase that is said to have been inspired by Shaq's passion for the game.
It is a very profitable sector of the economy.
The eSports market has steadily expanded over the last few years. The prize pools increase yearly, the fan base expands, and more and more people are interested in pursuing careers in eSports. By 2023, the eSports business is projected to increase from its current $973.9 million in revenue to roughly $1.6 billion. In addition to being one of the best performing sectors during the financial crisis, it has also maintained growth over time.
Why invest in eSports?
The COVID-19 impact of the sector was recently examined in a report produced by FNATIC, one of the biggest eSports entertainment companies in the world. Many intriguing ramifications for businesses operating in this field were disclosed by this informative report. Event Flexibility and Online Safety
From January 2020 to May 2020:
23.5% of offline events were cancelled, while 44.9% were postponed and 31.6% were able to switch to an online mode.
These figures highlight eSport's distinct edge over traditional sports in terms of event organizer flexibility. The financial model for tournament organizers is de-risked by the substantially more flexibility that eSports events provide for event reorganization.
It's Not Necessary to Have Physical Revenue
The pandemic has undoubtedly been the worst for tournament and eSport organizers that depend on live events for the related revenue from merchandise and ticket sales. Despite the epidemic, all other revenue streams are still growing significantly year over year. For instance, the global sponsorship revenue estimate for 2020 is $614.9 million, which would indicate a 13.1% increase year over year. Additionally, the predicted year-over-year growth rates for streaming and digital revenue streams are astounding at 60.9% and 44.9%, respectively. With the use of technology to generate income streams without the expenses associated with traditional sports, it is obvious that there is money to be earned in eSports in a genuinely modern fashion.
· eSports' gaining of legitimacy
During the pandemic, eSports have received more mainstream media attention than ever before. Beginning in June, the BBC began covering the League of Legends UK Championship, which has been prominently promoted on their homepage. Over the past ten years, one of the main obstacles to the sector's growth has been how people view eSports. A change in attitudes about eSports will allow for the possibility of new audiences and opportunities as this barrier gradually disappears.
As you can see, there are plenty of reasons why big names in sports are investing in eSports. From the crossover between athletes and gamers to the opportunity to get involved in a new and growing industry, there are plenty of reasons to get involved in eSports. So, if you're a sports fan who's looking for something new to watch, don't be afraid to give competitive gaming a try— you just might find your new favorite pastime.