Esports is set to become (and, in ways, already is) the “next big thing” – and investors all over the world are starting to take the industry more seriously. Don’t forget, of course, that just years ago it was seen as an industry surrounded by stereotypes; kids playing video games from their parent’s basement – there was no money in the industry, many said.
But things have changed…
And today, esports is gaining more and more momentum. A recent report from Newzoo reveals that millions of dollars of investment and sponsor money has started pouring into the industry – but are investors going to reap the rewards or find themselves wondering where their slice of the pie is?
You Might Also Like to Read: ESPORTS STOCK – INVESTING IN ESPORTS AND ESPORTS ETFS
Who Are The Major Investors?
To begin with, it’s worth taking into account who’s actually investing in the esports market. We’ve already seen some major names, including BMW, Coca-Cola and Red Bull getting involved with the action, but these large, corporate companies make up a small percentage of the overall investment activity.
Hardware companies appear to be channeling their money into the industry; after all, when it comes to gaming, the physical components involved are incredibly important. Everything from mice and keyboards to motherboards and graphics cards are an important part of the industry – and it’s why there are, already, a number of hardware manufacturers investing in the industry.
Online casinos and gambling operators have also taken a keen interest; some esports betting sites, like Betway, have sponsored important esports tournaments, and it’s likely we’ll see this continue – especially when they have the chance of taking bets and profiting in a direct way.
Energy drink companies are also getting involved – and this doesn’t just include major figureheads like Red Bull. Energy drinks have long been a part of gaming culture, so it’s no surprise to see this. Even TV and film companies are joining in, aware of the large viewership numbers these competitions attract, and we’ve already seen sports networks like ESPN hosting events and promoting them. Even renowned sports teams like FC Barcelnoa have hopped on the esports bandwagon – Barcelona now even have their own esports team!
Are These Investments Paying Off?
Like most things in life, this depends on who you ask. However, the esports industry is now worth more than ever – and recent projections value the industry as a whole as worth a whopping $138 billion. And, that was a projection for 2018; two years later (and a global pandemic that stopped virtually all live sporting events) has seen this figure grow into uncharted territories, and esports competitions and tournaments are becoming a part of everyday life for many.
However, many esports organizations – and those that choose to invest in them – continue to lose money. And people want to know why. According to research, negative cash flow looks to be the most likely reason. Esports organizations tend to have high expenses – and even the most proficient, experienced esports organizations look as though they’re struggling to keep a grip on their revenues and expenses.
Paying player salaries is another thing which many fail to take into account; and then, of course, you’ve got to pay the actual salaries of those involved with esports companies.
However, there’s one major reason why – at the time of writing – esports organizations and investors are losing money – and that’s the long-term insecurity surrounding the market. Many still perceive esports as just a craze that will die down after a few years.
Until it’s proven – one way or another – investors are going to continue to be wary, and esports organizations will be taking things one step at a time.
If you’re looking to invest in esports, you’re probably wondering whether it’s a good or bad idea. For us, the answer lies somewhere in the middle. However, the major takeaway for anyone looking to invest in the industry should be to thoroughly research it and use common sense; this goes a long way (not just with investing, but in life as a whole) and doing your research and learning all about the industry should help you decide whether it’s the right investment option for you or not.
Image Credits: Gorodenkoff/Shutterstock