How to Invest in Esports

Playing video games has become a profession that generates millions of fans. The top gamers and the companies that invest in them get many sponsors and high cash prizes for winning competitions. Video game players can make a full-time income by becoming top esports players, but what about investors? You don't need any experience with video games to make money in the industry. This guide will cover how you can get exposure to the esports industry.

What are Esports?

Playing video games has become a profession that generates millions of fans. The top gamers and the companies that invest in them get many sponsors and high cash prizes for winning competitions. Video game players can make a full-time income by becoming top esports players, but what about investors? You don't need any experience with video games to make money in the industry. This guide will cover how you can get exposure to the esports industry.

What are Esports?

If you asked a friend to name the most successful sports teams in the world, you would expect to hear teams like the New England Patriots or FC Barcelona. You might be shocked to hear your friend mention a professional gaming team such as Team Liquid or Fnatic. In recent years, electronic sports, or esports, have experienced explosive growth in popularity, with an estimated 380 million viewers worldwide.

Far from sitting on the couch at home playing against a few friends, esports gamers are organized professionals who compete in teams at high-level tournaments for cash prizes. Major brands recruit and draft gamers to represent them as a team and successful gamers can make millions in prize money and endorsements.

Traditional sports require competitors and fans to be in one location. In esports, gamers from around the world can compete against each other while fans around the world stream live. As the access to streaming services grows, investors are looking toward esports as a virtually untapped, multibillion-dollar industry with the potential for huge growth. Read on to learn about investing in esports.

Best Ways to Invest in Esports

If you're looking to capitalize on esports' growing popularity with investment opportunities, you have many options. The simplest way is to invest either in publicly traded stocks or with an online broker. Another option is to invest directly in an esports startup company, where you can find more below.

Publicly traded stocks are a more traditional approach. You can purchase shares from a variety of public companies within the esports industry. You may want to consider investing in the hardware side of the industry with companies like Logitech (NASDAQ:LOGI) which specializes in computer accessories and hardware or NVIDIA (NASDAQ:NVDA) which specializes in chip making. Alternatively, you could buy stock in a gaming publisher such as Microsoft (NASDAQ:MSFT) or Nintendo (OTCMKTS:NTDOY). Another option is to invest in streaming services by buying stocks from a company like Amazon (NASDAQ:AMZN) which owns the live streaming platform Twitch.

Investors can also get exposure to ETFs that focus on esports. The Video Games & Esports ETF (NASDAQ:HERO) is one of the many ETFs that simplifies your entry into the industry. You won't have to worry about picking individual stocks or monitoring their performances.

Consider an online broker if you want more control and direction over your investments than traditional methods. Using an online broker allows you to react quickly to changes in the market rather than waiting for a broker or advisor to complete your request. As a result, you can be more flexible with your investments. Online brokers also have a different fee structure than financial advisors, which can lower the costs of trading. Online brokers typically charge a per-trade cost versus a fixed-management fee, reducing your costs if you do not trade often.

How to Use a Broker to Invest in Esports

If the flexibility and control offered by an online broker appeal to you, then follow these steps to buy shares through an online broker.

Open a Brokerage Account

A brokerage account is an investment account that you open with an online broker to trade stocks. Online brokerage firms act as an intermediary between you and the company, allowing you to trade stocks from your home. You can open a brokerage account online from any location and be ready to trade in a matter of minutes.

Research Potential Investment Opportunities

Online brokers offer analytical tools to help you make informed decisions about potential investments but it is important to do your own research. Looking at a company's annual report is a good place to start researching esports investment opportunities. Annual reports provide a glimpse into a company's performance and can help you determine whether a company fits your investment goals.

Determine How Much You Want to Invest

Make sure to consider both the current price of the stock as well as the amount of money you are willing to invest to determine how many shares you can purchase.

Place a Trade

To buy shares, find the ticker symbol under your brokerage account and fill out an order ticket. You need to include the symbol of the stock, the number of shares you want to purchase, your order type and the order expiration on your order ticket.

Can You Invest in Esports Teams Directly?

When you think of 'teams,' you often think of one team with specific players. In the esports world, this is not always the case. Organizations recruit esports teams to be part of their operations and often have several teams playing under 1 team name. Fnatic and OG are two successful esports teams that are examples of this model.

If you want to invest in an esports team, you need to invest in the organizations that manage them. One of the biggest ways that organizations or teams make money is through sponsorships. If you're considering investing in an esports team or organization directly, it's a good idea to look at an organization's current sponsorships and plans to expand sponsors.

Getting Started with the Esports Industry

Most game publishers like Logitech and Tencent (OTCMKTS:TCEHY) are successful companies with esports as a component of their bigger business. As the esports industry grows, startups with a greater focus on esports are entering the market. The emerging esports startups offer you an opportunity to get in at the ground level and invest with a company focused solely on esports. While ground-floor investments have the potential for major investment returns, investing with an early-stage company also leaves you open to greater risks.

Esports is the hot new term among investors and investment firms. Global esports revenues have been rising steadily each year alongside a passionate, growing fan base. Some investors believe esports can outperform traditional sports in just a few years.

Investing in the early stages of the esports industry has the potential for great growth and significant returns. Options for investment seem limitless. You can invest in publicly traded stocks, through an online broker or in teams and esports startups themselves. The only question is whether the industry will grow as predicted and if you can get in on time.

Frequently Asked Questions