Guild Esports, a company co-founded by former Manchester United and England footballer David Beckham, is set to go public and list its shares on the London Stock Exchange. Investors will get a chance to invest in the esports company through an initial public offering (IPO) which will take place next month.
Guild Esports hopes to raise £20m to be used in recruiting players and investing further in the business.
With esports becoming one of the fastest-growing and most exciting industries in the world, investing in the scene may seem like a no-brainer. If you are wondering how you can get into this budding industry, keep reading.
What is esports?
Esports refers to organized competitive gaming open to spectators (online or in person) whereby teams or individuals compete in tournaments or leagues for prizes or money. Popular games that competitors play include Call of Duty, Counter-Strike, Fortnite, FIFA and many others.
The global esports industry has grown exponentially in the last decade, with a current audience of hundreds of millions. Newzoo, a leading provider of market intelligence on esports, estimates that by 2023, global viewership for esports will reach 646 million.
Technological advancements such as video streaming and social networking have been the main drivers of the esports industry. The recent lockdown also led to a substantial increase in the number esports viewers as traditional sport competitions were cancelled because of the coronavirus pandemic.
With such a large viewership comes an opportunity to make money through sponsorship, ticket and merchandise sales, and online advertisements.
Not surprisingly, prudent investors like Beckham have realized the great potential in esports. Banking on their celebrity status to help drive the industry even further, they have invested heavily.
How to invest in esports
Here are the main ways you can invest in the growing esports industry.
1. Buying stock directly in esports companies and teams
This is one of the easiest ways to invest in esports. You can buy shares in an esports company using an online share dealing account.
If you’d prefer to buy shares in a UK-based esports company, the only one currently available is Gfinity, which is listed on the London Stock Exchange Alternative Investment Market (AIM). The company develops and delivers various esports experiences and strategies for different esports stakeholders.
Beckham’s Guild Esports presents an additional option for UK esports investors who want to invest locally.
You can, of course, also invest in non-UK esports entities and teams. There is Astralis, for example, a popular Danish company that runs several esports teams and was the first esports organization ever to go public in Europe.
2. Buying ETFs
Rather than buying esports companies’ shares directly, another way to invest in esports is through an exchange-traded fund (ETF). An ETF can include shares from different companies across many industries or just shares from various companies in one industry (such as the esports industry).
The main advantage of an ETF is that it allows you to access and benefit from the growth of an industry without having to choose just one company to invest in. It is therefore a less risky strategy than buying shares from a single esports company.
An example of an esports-related ETF that is available to UK investors is the VanEck Vectors Video Gaming and eSports UCITS ETF. The company has a diversified portfolio of stocks from different video game and esports companies.
You can invest in this ETF using a share dealing account for a small annual fee.
3. Buying stocks in companies indirectly involved in esports
One way to way invest indirectly in esports is through big companies that own or operate esports brands.
For example, the two biggest streaming platforms for esports competitions are Youtube and Twitch (which is a subsidiary of Amazon). By buying shares in these companies, that is, Youtube and Amazon (since you can’t buy Twitch shares), you will be indirectly investing in the biggest esports brands in the world. In the long run, you can benefit financially from the growth of the esports industry through these companies.
Yet another way to invest indirectly in this industry is by buying shares in other esports-associated companies like game developers.
You can, for example, go for local publicly-traded video game developers, such as Frontier Developments, Sumo Group and Codemasters. Alternatively, you can buy shares in international game developers like Electronic Arts and Activision Blizzard.
Gaming hardware brands, like Nvidia and Logitech, also provide an avenue to indirectly invest in esports.
Although esports is a fast growing industry, it is useful to exercise caution when investing. After all, the industry is still young and is likely to witness some volatility before it stabilises.
Before you put your money into this industry, evaluate the risks and decide whether you can bear them.
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