Esports Investors: Twenty-Four Things You Need To Know About The Industry

The esports industry is booming. Money is running to the space at record pace. So to lend a hand to people flirting with the idea of adding professional gaming opportunities to their portfolios, we put together (with the help of Forbes)  this list of 24 things that potential esports investors should know about the market.

What Should Potential Esports Investors Know About The Current State Of The Industry?

1. Esports is growing in popularity — rapidly.
2. Large corporations, including Amazon, Alphabet, NFL, and Disney, have all made significant investments in the esports space.
3. Fans use online platforms like Twitch and YouTube to watch streamed events and other game-related programming, including footage of professionals practicing.
4. Activision Blizzard and Walt Disney recently signed a multi-year broadcast deal for the Overwatch League. Events will be run across various Disney networks, including ABC, ESPN, and Disney XD.
5. Gaming companies now operate like professional sports leagues and sell franchises for multiple leagues. For example, you can buy a League of Legends team, from Riot Games, for $10 million. Many large sports franchises, like the New York Yankees and Houston Rockets, have bought in.
6. Bankers are currently valuing League of Legends franchises at $50 million — a five-fold increase over 12 months.
7. Overwatch franchise valuations weigh in between $60 million and $80 million — a three-fold to four-fold increase from last year.
8. According to Newzoo, there will be 165 million esports fans by the end of 2018, which represents a 15% year-over-year growth.
9. The two largest esports markets are the United States and China.
10. Esports revenues are expected to grow 38% over the coming year.
11. Analysts predict that the market will be at $1.65 billion by 2021.
12. Sponsorship is the industry’s primary revenue stream ($359 million in 2018).
13. Advertising is the industry’s second largest revenue stream ($174 million in 2018).
14. Media rights, game publishing fees, merchandising, and ticket sales are the other main industry revenue streams.
15. Media rights are the fastest growing market sector and expected to be the #2 stream by 2021.
16. Tyler “Ninja” Blevins is currently esports biggest star. He purportedly rakes in seven figures monthly.
17. Player costs are the biggest line item on esports companies’ operating budgets.
18. Currently, many teams and companies are cash-flow negative, as the industry is in a growth phase and entities are spending money on brand and roster building.
19. In 2018, angel investors and venture capitalists signed onto 63 esports deals worth $2.34 billion. In 2008, the same demographic only inked six deals worth $34 million.
20. Analysts predict that companies with multiple teams in multiple leagues will prosper. Companies that own arenas also stand to do exceptionally well.
21. Cloud9, currently valued at $310 million, is the most valuable professional esports company at the moment.
22.  In 2019, Cloud9 will be opening a 20,000-to-30,000-square-foot training campus in Los Angeles, California.
23. SoloMid is the second-most-valuable esports company and owner of the most successful North American League of Legends team. Moreover, SoloMid is believed to be the only one to make it to a cash-flow-positive budget.
24. Significant investments into professional players appear to be paying off for many investors.

Speak With An Esports Investor Consultant

Got esports law or finance questions? Our firm regularly works with esports athletes, teams, sponsors, companies, and investors on everything from contract negotiations to tax positioning. We look forward to speaking with you soon.