“Since esports is still at its infancy, there are opportunities to ride the wave and make money before everything becomes extremely expensive. For example the Chicago Bulls were purchased for $16.2 million in 1985, today the team is worth $3.2 billion. Now many of us don’t have millions in the bank to buy a sports team, as a result, we performed some brainstorming and reviewed a recent Trends article to develop five lower capital opportunities to make money in the esports industry.”
Esports, “electronic sports”, is the growing business of playing video games competitively in front of a live or online viewing audience. Esports audience size has grown to almost 600 million globally; more people watch gaming more than HBO + Netflix + ESPN + HULU combined.
Source: Abouther.com
Since I don’t play video games, I was pretty late to the esports phenomenon, I first paid attention to esports in January 2020, when Gary Vee spoke about buying a stake in the Minnesota franchise of the Call of Duty League (CDL). Call of Duty is a video game that simulates military combat from the perspective of the soldiers. The players advance through the war in a series of battles by killing their opponent in the battle to determine the winner.
Source: Callofduty.com
The Call of Duty League (CDL) is similar to the NBA, where teams from different cities compete in the game to win the championship. Just like the Chicago Bulls could play the Los Angeles Lakers, the same way in the CDL, the Minnesota Rokkr could play Call of Duty against the Seattle Surge. When the CDL was created, it started with 12 teams in which each team owner paid $25 million to join the league. Given the trends in esports, over the next few decades, the value of the teams is set to shatter the paid price of $25 million.
Source: vice.com
Today, many high schools in America have a esports team to represent the school, even college athletics have considered esports an official sport of the school, where scholarships are offered to students just like traditional sports. A survey, conducted by Limelight Networks, shows that men ages 18 to 25 prefer watching esports as opposed to traditional sports.
In November 2018, esports League of Legends world championship game was held in South Korea, tickets for that match sold out in less than four hours upon their release, prompting the organizers to release an additional 3,000 tickets on top of an initial batch of 23,000. Over 100 million people watched the matches online and the winner of the tournament took home approximately $2.5 million.
Source: IVEN global
The NBA has realized this gaming trend and to take advantage of it, they created the NBA 2K League in 2017, which is an esports league, where each NBA team would have its own NBA 2K League team. They draft players to play the video game just like they would a regular NBA team. All players sign six month contracts and will have their relocation and housing costs covered by the league, as well as benefits such as medical insurance and a retirement plan.
Players drafted in the first round will make $35,000, while the rest of the players will make $32,000. There will be four other opportunities throughout the season to win money as $1 million will be split between three tournaments and the league championship. Players are also allowed to sign endorsement deals to earn extra income.
Since esports is still at its infancy, there are opportunities to ride the wave before everything becomes extremely expensive. For example the Chicago Bulls were purchased for $16.2 million in 1985, today the team is worth $3.2 billion; there are advantages to being an early mover.
Now many of us don’t have $25 million in the bank to buy a CDL sports team, as a result, we performed some brainstorming and reviewed a recent Trends article to develop five lower capital opportunities to make money in the esports industry.
- Buy stocks of companies that design games or develop infrastructure that support esports. The assumption is that their value will grow over the years as esports becomes more popular. Here is a link to public companies within the esports ecosystem
- Start a niche recruiting agency focused on gaming: Twitch and Microsoft supposedly have “about a thousand job openings right now,” but lack “candidates for those skill sets.” Computer engineers, database managers, and sound engineers — especially those with a solid background in gaming — are in high demand.
- Sell online snack supplements such as protein bars, quick shakes to support gamers. Since gamers spend up to 12 hours a day playing video games, they need supplements to keep them going. G-Fuel is a popular drink that was created and marketed to gamers to give them energy while playing. The company was created in 2012 and is now on the Inc. 5000 List of Fastest-Growing Private Companies in America for the fifth consecutive year.
- Own a location to host esports events: Players need a space to play their favorite esports games with their competitors. The place can be used to host tournaments as well. There isn’t much competition in this space yet. For example, Chicagoland has a population of 9.5 million, but there a just a handful of gaming arenas.
- Gaming equipment rental business: Since technology performance is a big deal in this space, players want the best video/audio experience. There is opportunity to rent out gaming equipment such as high powered gaming laptops, virtual reality headsets and audio/video accessories.
