The popularity of esports – a billion dollar industry where players of computer games pit themselves against on another – has grown significantly in the past five years, attracting interest from some well known real sports stars. But does this mean the space could be lucrative for investors?
Football star, husband to a Spice Girl and all round famous figure David Beckham has put his own money into Guild eSports, a training firm that teaches gamers to become professionals and build gaming teams much like a football club’s academy.
This may sound ludicrous but audiences for esports are growing as are the competitions.
Shoot-em-up game Fortnite has an annual world cup with a £24m prize fund. Gaming streaming channel Twitch, owned by Amazon, has over one million people watch live gaming events. Last year’s FA Cup final had a live audience of 7.4 million but has been going since 1872.
So, should you follow David Beckham and put your money into the esports sector?
Joe Healey, of broker The Share Centre, said Covid-19 and the associated lockdowns have given esports a big boost as consumers looked for alternative forms of entertainment with traditional sports all but shut down.
China’s largest streaming platform, Huya, has seen record monthly active users while Twitch saw average viewership increase by 80pc since January.
Prior to the pandemic, accountancy firm PwC forecast esports revenues to increase by 83pc by 2023, reaching £1.4bn. However, given the rise in gaming activity this original is now too low, according to Mr Healey.
A simple way to invest is via an exchange-traded fund, or ETF, which tracks a basket of stocks specifically involved in esports.
Sam Dickens, of stock broker IG Group, said the VanEck Vectors Video Gaming and eSports ETF, which has the stock ticker ESPO, is a good option.
It charges 0.55pc and has large holdings in companies that make computer chips used in gaming, such as Nvidia and Advanced Micro Devices. It also owns games-makers including Nintendo and Tencent. Since it launched a year ago the ETF has returned 60pc versus 6pc for global stocks.
The fund has $320m (£255m) in assets from investors around the world, but only $70m from British buyers. This means it may be expensive or difficult to buy or sell shares as there may not be enough traders on the secondary market.