Electronic sports or Esports is set to become one of the biggest markets in the world. It can easily be called as the next big thing for the investors. However, the one question that still remains is probably the most important. Is it beneficial to invest in the market or not? Even though the Esports market offers several investment opportunities. Still, answering this question is of utmost importance. Let’s get an in-depth insight:
Which Companies Are The Major Investors?
Most people still share the stereotype of Esports being kid’s stuff. However, several businesses are now taking a keen interest in investing in the market. For starters, automobile companies like BMW that has already invested in the Motorsports market is one of the main investing parties in the Esports market.
In addition, drink companies such as Coca Cola, Red Bull, etc. find this market worth investing in. These companies use the marketing edge of their brand. Showing people that many professional gamers use their brand to rejuvenate their energy is a way of promoting their name. For this purpose, the companies invest huge amounts that in the end reap good profits.
Apart from that, tech companies, including Intel, Razer, Logitech, Steel Series, etc. are some of the leading investors of the Esports market. It is easier for tech companies to invest since they already are part of this market.
From powerful gaming systems to peripherals, they provide the tools for the establishment of Esports tournaments. It is far easier for these companies to channel their investment in the market since they are the ones that make it possible in the first place.
Most recently, online casinos and gambling administrators are taking a keen interest in the market. online casinos and betting operators allow people to place their bets on matches. Their approach is quite expanded, including sports like football, basketball, motorsports, horse racing, etc. However, it seems the expansion of the Esports market has attracted them too.
Lastly, media channels are becoming more and more interested in the market too. ESPN is one of the names of such channels that was seen hosting as well as promoting Esports tournaments. Keeping the increase of the market, FC Barcelona is now making its way into the Esports market by making their own team.
Why Is the Market Attractive?
The answer to it is simple. Like all the other sports markets, Esports provides a great opportunity for marketing and profits. Not only major companies but gamers around the world are investing in the market. One of the most competitive ways to invest is via streaming.
Many gamers stream opt for streaming because it helps them not only to play the game but also to promote themselves online. Promoting your channel on various platforms can earn you a decent amount. It’s not that streamers are not close to pro-gamers. However, many don’t want to invest in pro-gaming as it can lessen the chances of making more money.
Apart from that, people opt for pro-gaming as their career. When playing professionally, it is their skills as well as personalities that make them famous not only in the market but in investors too. Several brands would approach the gamers with a proposal of becoming their brand ambassadors. In this way, both the gamers and investors earn a decent amount and promotion via marketing.
While playing, not only a player gets to play in teams but their skills can earn them a space in major organizations. Organizations are like head companies that have different rosters for several games. Evil Geniuses, Fnatic, OG, NAVI, etc. are some of the leading gaming organizations.
Furthermore, major league tournaments are a great investment source. From thousands of fans attending the tournaments to several teams competing, it gives an effective source of investment. Moreover, these tournaments feature high states with prize money going as high as $20 million (The International Dota 2). The compiled prize money for the year 2016 was $93.3 million.
Publishing companies also take part in the investment phase. Brands such as Riot Games, Valve, etc. have the rights for hosting tournaments, granting broadcasting access, and participation. These companies often sponsor franchises as well as organizations, improving their chances of investment returns.
What Are The Opportunities?
The prime opportunity that can benefit the investors is via marketing campaigns. Broadcasting and media rights are the key drivers of this industry. Competitions can be conducted; however, without broadcast, these won’t be able to acquire sponsors. The media rights sector is projected to grow more than $340 million.
Teams that get featured in the tournaments need sponsors to meet the expenses. Winning major leagues, as well as smaller tournaments, help generate revenue. However, sponsors need to have a solid backup regarding the performance since they are investing double. One part of the investment goes in for the team, and the other goes for the brand’s marketing campaigns.
Streaming individuals also get sponsored if they have quite a following. Pro-players are invited as ambassadors for the brands. Broadcasting rights earn a lot of revenue as it helps capitalize on the audience, allowing shared profit yield.
Are These Investments Paying Off?
As highlighted earlier, the primary revenue generation comes from the success of the team that the investors have invested in. The entire industry has been estimated to be $138 billion, which is increasing every day. Moreover, the ongoing pandemic has caused delays in all physical competitions. However, the Esports market is the one benefiting from it with more people now focusing on gaming.
Organizations need to generate effective revenue to pay back the expenses. From the marketing of the team to merchandise and affording techs, gaming organizations and investors need to regulate everything to ensure profit.