Breaking Down The Incredible Rise Of Esports

Video games have expanded beyond the console, and esports are one of the fastest-growing spectator sports in the world. The massive size of the global esports audience has provided plenty of opportunities for companies and investors to capitalize on the craze.

By The Numbers recently compiled numbers that tell the story of the rise of esports.

The total number of esports viewers has more than tripled from 124 million in 2012 to 335 million in 2017, according to NJ Games. The number could surpass 550 million by 2021, the firm said. While those unfamiliar with esports may assume that only gamers watch, at least 40 percent of spectators haven’t even played the video games they watch.

"This sole fact already makes esports a spectator sport just like football, baseball or basketball," NJ Games said. 

The most recent major esports tournament had a prize pool of more than $25 million; considering the revenue the business is generating, $25 million is just a drop in the bucket.

In 2018, esports generated $906 million in total revenue, including $360 million in team sponsorship deals.

The Rise Of Streaming

Part of the rise in popularity of professional esports has been a surge in gaming streamers on Alphabet, Inc GOOG GOOGL's YouTube platform and, Inc. AMZN's platform Twitch.

So far in 2019, Twitch has averaged 1.25 million concurrent viewers, up 17 percent from 2018 levels. In 2018, Twitch logged 560 billion total minutes of viewership on its platform, up 58 percent from 2017 levels.

Amazon purchased Twitch for $940 million in 2014. Its value has since grown to an estimated $3.79 billion.

How To Play It

Not surprisingly, video game companies and traditional sports leagues have gotten in on the esports craze. Publisher Take-Two Interactive Software, Inc. TTWO has a deal with the NBA, and Electronic Arts Inc. EA has partnerships with the NFL and ESPN.

Activision Blizzard, Inc. ATVI created an entire Activision Blizzard Esports Leagues division last year, hiring three traditional sports and entertainment executives to run the show.

For investors looking to get in on the esports boom, these three publishers are likely the best pure-play angle unless Amazon or Google decide to spin-off their streaming businesses.

Other potential esports winners include Riot Games owner Tencent Holdings TCEHY and gaming semiconductor stocks such as NVIDIA Corporation NVDA and Advanced Micro Devices, Inc. AMD. The ETF MANAGERS TR/ETFMG VIDEO GAME TE GAMR invests exclusively in stocks with exposure to the video game industry.

The full NJ Games infographic on esports can be found at this link. 

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