Judging by the amped-up energy inside Brooklyn’s Barclays Center for the premier Overwatch League finals, esports is here to stay — and it’s going to be a big, sustainable consumer trend that should have a place in your investment portfolio[1].
I’m not an esports fan, at least not yet. But I went to last weekend’s finals as an investor to see what all the fuss is about. The atmosphere was electric, especially considering that fans basically watched two teams lined up behind tables on stage, playing games on a big screen above them.
London Fusion played Philadelphia Fusion in a sold-out 20,000-seat arena, and London won. It wasn’t quite up there with a Beatles show. No second British Invasion. But it was close. And a lot more electric than most major league sports finals.
This enthusiasm is one reason Baird analyst Colin Sebastian thinks interactive entertainment will become the biggest piece of the media and entertainment sector, hitting $145 billion in annual sales by 2020. That makes it a “must own” area for investors, he says.
But how? Sebastian highlights content providers Activision Blizzard ATVI, +0.92%[2] Electronic Arts EA, +2.01%[3] and Take-Two Interactive TTWO, -0.08%[4] Here’s a look at these companies and six others that should be good plays on this trend.
The league owners
Videogame publishers benefit directly because they own the esports leagues. This brings in revenue via ticket sales, merchandising, media rights, advertising and sponsorships. They also benefit indirectly because esports will bring in more fans and help boost product sales.
Here are the four main companies in esports leagues so far.
• Tencent Holdings TCEHY, -0.65%[5] 0700, -0.45%[6] owns Riot Games, whose League of Legends is one of the world’s most popular games and the basis for the League of Legends Championship Series esports league. Tencent is a key esports holding because it offers exposure to the popularity of esports in China, its home turf. China has the largest gamer base in the world, with about 442 million gamers as of 2017 and a 57% penetration rate of Chinese internet users, according to the China Internet Network Information Center. This year, China will...