With the gaming industry set to hit $260 billion by 2025, there’s never been a better time for investors to jump in on the action. The growth in esports has generated interest for millions around the globe and has the potential for significant profits. Although the gaming sector has recently become the 2nd most targeted industry for Layer 7 DDoS attacks, it has still been largely successful. There’s no shortage of strong cybersecurity or a capable and dedicated server. But how does one go about investing in gaming to begin with? Here’s everything you need to know.
Know Your Stock Options
The global popularity of video games is likely to continue growing in the coming decades, providing the opportunity for game developers to reach new players and expand sales in emerging markets. There are several ways you can benefit from that growth. Here are some types of stocks to consider.
- Game Developers: The most direct way to invest in esports is to own companies involved in the game development of video games. This includes huge companies such as Activision Blizzard, Take-Two Interactive Software (TTWO), and Electronic Arts (EA).
- Gaming Hardware: Another option is to invest in companies that make gaming hardware for video games. In this case, you’ll want to consider Microsoft and Sony, the companies that created the Xbox and the Playstation.
- Esports Teams: Investing directly in the esports teams isn’t always that straightforward, since many are private companies, but public options are also available. Gambling can be a lucrative investment as well. Companies such as DraftKings (DKNG) offer investments in both sports and esports.
A key issue many new investors face is not knowing how much money to invest. There’s no one-size-fits-all answer to this because everyone’s situation is different. Two main factors stand out when determining how much to spend:
Personal finances are different for every investor. There’s not an exact amount that everyone needs to start off with. Consider how much money you need for monthly bills, saving up, etc. and how much you’re prepared to spend.
Your risk tolerance is determined by your current income, expenses, and financial obligations. Once you set those aside, you can focus on your investment horizon.
But in any case, starting small is the wisest choice. A cumulative investment, where you invest a certain amount each month, is ideal if you want to deal in smaller investments over longer periods of time.
Keep Up with the Trends
As an investor, you need to be able to keep track of the current trends as combative video games continue to integrate into popular culture. Many projections believe the esports industry is on track to surpass $1 billion in revenue this year.
Looking out for new, hyped releases, reading esports news, and having an eye out for big video game streamers should keep you well informed.
Two Primary Ways To Invest In eSports
If you want to trade on the market, the best way to do this would be through mutual or exchange-traded funds. Many investors and companies have set up their funds in the eSports world. A strategy many believe in is to keep their funds built up around the various companies that manufacture these games. This fund build-up is usually in software companies that manufacture hardware to power some high-end gaming machines. Some funds invest in companies that they presume would do well in this competitive era of gaming.
Another way to invest in eSports is directly purchasing shares from related companies. For instance, companies that own all of the hardware behind gaming consoles tend to be the ones that profit the most from any related sales. But keep in mind that eSport favors computer games above games played through gaming consoles.