How to invest in gaming & eSports companies

TL;DR

  • Gaming and eSports are billion-dollar industries.
  • Companies like EA Sports and Tencent are some of the world’s most valuable companies.
  • This year about $2.5 billion gamers around the world will spend $152.1 billion on gaming and eSports, according to Newzoo.

There is a facility opening in Los Angeles in 2020 that will be the largest training facility in North America and will house studios, streaming rooms, gaming rooms, coaching rooms as well as a fitness studio and wellness center. The main focus of this facility: video games. Gaming and eSports (aka competitive gaming) have taken off in a big way.

ESports is a billion-dollar industry. More than one-third of its revenue comes from US-based players. It’s a small part of the enormous gaming industry, and it is growing exponentially. Most gamers play video games as a hobby, but professional gamers also participate in international tournaments which involve sponsorships and huge prize money.

There are hundreds of publicly-traded gaming and eSports companies in the US, and you can invest in them through Public. With the Public app, you can search for specific companies and discover new ones. You can also browse news articles, earnings reports, and price-to-earnings ratios.

As competitive gaming cements itself in pop culture, global investors, brands, media outlets, and consumers are all paying attention. Total eSports viewership is expected to grow at a 9% compound annual growth rate between now and 2023, with an expected 646 million participants.

For example, Activision Blizzard is a globally-leading developer and publisher of interactive entertainment software. They operate three primary business segments: Activision (console-focused), Blizzard (PC-focused), and King Digital (mobile-focused). They produce games like Call of Duty, World of Warcraft, and Candy Crush—titles that even non-gamers probably recognize given gaming’s growing role in the cultural zeitgeist.

There are a large number of gaming and eSport companies publicly traded in the U.S. stock market, with a great many priced at more than $75 per share.

As these companies ask for a higher cost per share, many people with low investment budgets usually don’t have enough money to invest in these companies flexibly. This leads to the common perception that only the wealthiest can capitalize on long-term investing.

Fractional shares, aka slices, change all of that. Thanks to slices, investors can buy stocks without having to purchase the whole share. Now, you can invest in your dream companies with whatever dollar amount you have. For example, if a company you like is trading at $100, but you have only $20 to invest, you could now buy 20% (or 1/5) of a share of the company. Should the price of that stock rise and you decide to sell, you would earn a return in proportion to your original slice.

This is helpful if you want to buy a stock that is more expensive than what you have budgeted. Buying slices of shares in different companies can help create portfolio diversification, and potentially lower your risk exposure to a single stock. In other words, instead of having all your money tied up with one share of a pricey stock, you can now buy slices of one share in multiple stocks. Buying slices of shares in different stocks helps diversify your investments, thus reducing your risk and maximizing potential returns.

What qualifies as a gaming company?

Gaming has transformed pop culture and redefined the ways that young people consume content. A vintage video game collection carries the same cache as a great vinyl collection and is also considered an essential form of entertainment. A gaming company ideates, designs, engineers, codes, packages, sells, and maintains these games. Companies like EA Sports and Tencent represent some of the world’s most valuable companies.

What’s an eSports company?

While they’re technically gaming companies, eSports companies wear multiple hats within the industry. They concurrently work as competition organizers, owners, and content creators. A single eSports company can be responsible for financing a tournament through brand partnerships, creating streaming broadcasts, and distributing that content sometimes to platforms.

Why do people choose to invest in gaming and eSports?

According to Newzoo, which tracks usage and trends in eSports, video games, and mobile, it’s a growth industry. “The fan base is rabid,” according to the report. “The excitement is there. And it’s all demographics. It’s not just guys. It’s not just girls. It’s not just young folks. It’s old folks.” They say that this year about 2.3 billion gamers around the world will shell out $137.9 billion on games. Notably, media giants like Disney are now getting into eSports by broadcasting tournaments on ESPN.

How do you find gaming and eSports companies to invest in?

Even the most seasoned investors conduct research before purchasing stocks, so you’ll want to poke around and learn a little. It’s helpful to create a watchlist of stocks and ETFs in the gaming and eSports sector. On the Public app, you can start with any stocks and ETFs that interest you, marking them as favorites without investing and keeping an eye on them as part of your daily or weekly routine.

Following news and updates from companies and ETFs you are interested in can help you stay up to date. You can learn a lot about them every day by keeping an eye on relevant market news. For all of the same reasons that a big part of being a good writer involves reading, being a great investor means researching. Learning, tracking, and staying engaged is helpful when you’re building up your knowledge.

The bottom line

Investing in gaming and eSports companies is appealing for many investors given the growing prominence of this industry in culture. The sector has shown huge growth in certain years and expected to experience continued growth. For those who like to game, you can start by researching online or connecting with other enthusiasts in Public’s community to share ideas before deciding which players you believe in for the long-term.

The above content is provided is paid for by Public and is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the article. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss. Historical or hypothetical performance results are presented for illustrative purposes only.

Tweet