How to Make Money Investing in eSports Stock
It is 2020, the eSports industry is booming, and 380 million people worldwide sit down to watch the latest professional video gaming tournaments. That figure is only on the up. With the COVID-19 pandemic forcing sporting events to be canceled and postponed, even more people are turning to eSports for entertainment.
This means that now is the perfect time to invest in eSports.
Not sure exactly what eSports is or how much money the industry is worth? In 2020, the eSports market was valued at $1.1 billion and set to reach $3 billion in 2022. Take a look here to learn about what eSports is and how competitive gaming is on the rise.
Already up to speed on the emerging field of competitive video gaming and know its huge monetary potential? Continue reading for the low down on how to start making investments in eSports stock and earn real money.
Understand Investors Lingo
The first step when looking to make investments is to get used to the technical jargon used. Here are some of the words you need to understand the meanings of so that you can make wise investments.
- Broker – A person or company that buys and sells stocks on behalf of you, the investor. They basically arrange the transactions for you and take a small commission.
- Brokerage Account – An account that you, the investor, makes with the broker. You can add money to your account and get your broker to buy and sell stocks using these funds.
- Stocks – Stocks allow people to invest in companies and signify ownership of a portion of the corporation, representing a claim on their earnings. A stock is interchangeable with the word ‘share’ and ‘equity’.
- Publicly-Traded Company – Companies that issue stocks to the public and allow investors to trade their shares on exchanges or over-the-counter, as opposed to only allowing stocks to be held privately.
- Privately-Held Company – Companies that are owned by only their founders, managers, or private investors. Their stocks are not available to the public.
- Liquidity – How easy it is for a stock to be sold for and converted into cash without affecting the stock price.
- Revenue – The amount of money you make from investing your funds.
Choose Your Type of Investment
When first starting out investing in eSports (or anything for that matter), you need to decide which type of investment you wish to make.
Publicly-traded stocks are the simplest form of eSports investment. These are the stocks of publicly-traded companies and many eSports organizations allow for public trading.
You can buy and sell publicly-traded stocks through a broker who will complete the transactions on your behalf. Online brokers are an excellent choice if you want more control over your investments. You can react quickly to changes in the eSports markets and become more flexible in the public stocks you purchase.
To start using an online broker, you need to create a brokerage account online. After considering the type of company you wish to invest in (more on this later), you can then deposit funds into your account and place the trade online.
- Easy to understand so best for beginner investors
- Safer investments and unlikely to lose all your money
- Higher liquidity as can be sold through a public exchange
- Unlikely to find a publicly-traded company that is solely an eSports organization
Private Market Investments
If you are looking to invest privately, you will need to invest directly in an eSports startup company. As startups are new companies, there is a larger risk of buying into these corporations as it is more difficult to predict whether the company will be a success.
That being said, as eSports is gaining momentum worldwide, many startups are popping up so there are lots of options for investment. Moreover, whereas many publicly-traded companies often have eSports as a part of a larger business, many startup companies focus solely on video gaming and competitions.
However, the best private investment opportunities only circulate among the top active eSports investors. To get your foot in the door, you will usually need to have a relationship with a known eSports investor.
- Higher potential return compared to publicly-traded stocks
- Can invest in companies solely focused on eSports
- Hard to navigate withouth a good understanding of investments
- Higher risk investments
- Usually need a relationship with a known investor to get the best opportunities
Choose & Research Your eSports Company
The next question you need to answer is which type of eSports company you want to invest in.
If you have opted to buy publicly-traded stocks, you will find our recommendations on companies to invest in down below. These range from hardware companies, to game publishers and streaming platforms.
If investing in a startup company, you will need to do your own research which is why these types of investments are only advisable for frequent investors who know the industry. There are lots of new and upcoming companies in all different eSports sectors. However, you will find most eSports startups also fall into one of the below categories.
No matter which eSports company you decide to invest your money in, be sure to do your own research. Although the eSports markets are currently going full-speed ahead, it is essential you check the trends yourself prior to making any trades. The brokerage platform you use should give you the most up-to-date information.
Your first option is to buy stocks for gaming hardware companies. These companies produce all computer components such as graphics cards, CPUs, motherboards, and memory. Companies that regularly provide the gaming parts for top eSports players are well worth investing in while the industry is on a rise.
An example of a hardware company NVIDIA who produces gaming chips and specializes in GPUs. The majority of pro eSports players use NVIDIA’s GPUs amongst other hardware.
Gaming Publishers & Developers
The perhaps more obvious investment opportunity is through gaming publishers and developers. These are companies that publish video games that have been developed in house or have been outsourced from an external developer for a fee. Not all gaming publishers deal with games that classify as eSports, so it is essential to know which ones are big in the industry.
Take-Two Interactive (TTWO) is the publisher behind the NBA 2K gaming series. This game is the first eSport to be promoted by a professional sporting team which makes it a great option for investors. Their revenues rose to nearly $1 billion this year.
Another top player is Activision Blizzard (ATVI), the publishers of Overwatch. The company is rapidly growing due to the Overwatch League making it another popular investment. They are also currently working on two new titles that could have be big names: Overwatch 2 and Diablo 4.
Electronic Arts (EA) is one of the largest gaming companies worldwide and is behind the video games FIFA, Battlefield, and Apex Legends. This is a great eSports stock to watch.
Although you can attend eSports events and watch players battle live in an arena, the streaming of eSports has really helped its expansion in recent years. You can, therefore, buy stocks from companies that have streaming platforms.
Alphabet, the parent company of Google is focusing all its eSports energy into YouTube, one of the top streaming platforms worldwide. In 2019, they had 80% of the viewers for the PUBG Mobile Club Open 2019 SEA League and 93% of the Free Fire Pro League.
Place Your Trade
Once you have fully researched your eSports company, it is time to invest your money and place the trade.
With online brokerage accounts, this could not be any easier. Deposit the funds into your account and simply buy the video game stocks online. When deciding which online investment site to use, always check through the site’s policies. The websites will usually take dealing charges which you need to consider when investing.
Of course, investments of any sort do carry risk. Even the best esports stocks can take an unpredicted turn for the worst. However, if you want to turn your gaming knowledge into money, investing is a fantastic way to do it.
For more ways to make money from the global eSports industry, take a look at our guides on joining an eSports team or betting on eSports. Alternatively, you can find other ways to make money from video games on our homepage.
Yes, it is worth investing in eSports. The eSports industry is growing around 20% per year and can yield huge profits if you invest in the right gaming companies.
The best video game stocks to buy are Activision Blizzard, Electronic Arts, and NVIDIA to name a few. Always check the most up-to-date information before investing as the stock markets can change rapidly.
The most commonly traded eSports stock is publicly-traded stocks. You can buy these through an online brokerage account. There is also the option to invest privately in eSports startup companies.
The main eSports stocks are either hardware companies, gaming publishers, or streaming platforms. There is also the option to invest directly into an eSports team, though not all teams have stocks available.
The eSports industry’s global revenue is up to $1.1 billion in 2020. This is expected to rise and reach a net worth of $3 billion by 2022.