Investing in esports: features of the industry and how to make money

The investment market opens up great opportunities for capital holders to increase money, and they are constantly expanding due to the emergence of new tools. Among which is esports. He gradually moved from the entertainment industry to the financial one, and in a sense began to compete with traditional sports. To make money on esports, you don’t have to be a gamer, you can invest in it profitably.

The concept of esports and features of the investment direction

Under esports, it is customary to understand competitions of esports athletes organized in a virtual environment, where virtual games for computers or game consoles act as sports. As in real sports, winners receive prizes based on the results of the competition, including cash winnings. It is worth noting that in the world, including Russia, esports is recognized as an official sport.

The main feature of this relatively new industry can be considered its dynamism and unpredictability. As the strength of the game character controlled by the player increases, subsequent fights proceed more vividly and harshly. As a result, the price of an insignificant mistake in the later stages of the game can be an instant loss. It is almost impossible to predict the outcome, so the one who was behind everyone may suddenly be among the leaders.

According to the distinguished properties of spaces, game tasks, models, as well as the skills of players, such classes of esports disciplines as real-time strategies, shooters, team role-playing games, fighting games, sports simulators and others are distinguished. According to platforms, the video game industry is usually divided into 4 segments: PC gaming, console, mobile and cloud gaming.

How relevant is it to invest in esports

The relevance of investing in the gaming industry is indicated by the growth of the market volume in recent years. For example, in 2014 its volume was about $ 84 billion, and last year it already reached more than $179 billion. According to analysts’ forecasts, the market volume may exceed 200 billion in the coming years.

The USA and China remain the most playing countries so far. But given the situation with the pandemic, when people are faced with the problem of using their free time, interest in video games will predictably increase in other countries of the world. The number of gamers is growing and, as a result, the demand in the video game market, as well as the profitability indicators of publishers and developers. Experts associate the last factor with the transition to a new generation of consoles and digital content.

With a relatively low growth rate of the cost of creating video games, developers and publishers already have a lot of revenue. In light of all this, the video game industry can be seen as a profitable way to invest.

Investment options in esports

Large Russian and foreign companies are already investing a lot of money in this industry, including acting as sponsors during esports competitions. Among Russian investors, such notable companies as Yandex, MTS and Mail.ru . Good opportunities are also opening up for private investors who can earn in the following ways:

Through the purchase of shares

This option involves investing in securities of companies related to esports. Moreover, it is not necessary that the company is a developer or manufacturer of games. Good dividends can be obtained on shares of companies engaged in the production of equipment for esports.

In order not to lose money, before buying shares, you need to analyze the situation on the market. And everything is important here: from the company’s position in the independent rating to the moment of investment. For example, it is more profitable to purchase securities on the eve of the release of new products.

Through the purchase of funds (ETFs)

This method of profit-making is based on investing in funds traded on the stock exchange and including shares of up to several dozen companies. Among those specializing in the gaming sports industry, you can find funds:

  • targeted at video game makers;
  • tracking the movement of shares of esports companies;
  • specializing in companies that produce hardware for esports.

Through NFT-tokens and cryptocurrency

As an option for the long term, you can use NFT tokens and different types of cryptocurrencies. The essence of investing in this case boils down to the purchase of digital assets: gaming tokens and cryptocurrencies. For example, the SUSIE cryptocurrency, created by esports legend Susie Kim, is available for investors to purchase.

Sector volatility

The variability of this sector is quite high. And although the field of esports is not dependent on macroeconomic indicators, this sector of the market, when demonstrating strong growth, shows dependence on factors such as the number of users and the release of new products. In recent years, the shares of many large companies have repeatedly risen and fallen in price due to failed projects.

In addition, like other market sectors, the esports industry is dependent on the epidemiological situation in the world, although to a lesser extent than other industries.  By the way, because of the latter, not only real, but also virtual sports competitions were canceled or postponed. Also, the lack of clear legal boundaries and infrastructure of the industry has an impact on its development. According to experts, the situation is changing, but very slowly.

All this cannot but affect the state of the sector and increases its volatility. Neither investors, nor game studios, nor investment banks are currently able to predict the development of the industry, which means that investing in the esports industry can bring both profit and loss to the investor. Any investment is accompanied by a certain amount of risk, so you can only invest free funds in such instruments.

Published: 1 December, 2021

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