Investing in online gaming / eSports

As Fortnight’s recent tournament with $30m of prizes highlighted, online gaming looks like it will be a big area for growth over the next few years.

I’ve been hearing a lot about this recently, a16z did a great podcast episode on it recently, for example and the numbers are pretty mind blowing. Fortnight now has 250 million users & streaming platform Twitch has up to 4 million monthly streamers / viewers. It looks like the next Facebook might not be a conventional social network, it’ll be built around a game instead. Games like Roblox (the new Minecraft), are a sign of that, with a lot the behaviour looking more like socialising than gaming.

Obviously games don’t have to rely on advertising for revenue either, unlike Facebook etc whose business models look like they’ll come under more and more pressure if privacy issues continue.

This seems like a great opportunity for investors too, as so many of the companies that’re building these games are already public.

I’ll definitely be keeping an eye out for companies to invest in to tap into the trend. Does anyone think there’s particular companies that’re well positioned to capitalise on / drive the growth of online gaming? Let me know if you see more about this too & if there’s any info out there which suggests that some of the hype is unjustified..

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The difficult thing about things like Robolx is children are fickle. It’s the game of choice in the local primary school but before that it was Fortnite and before that it was Minecraft and before that etc etc. They fall out of fashion quickly when the next big thing appears

The good thing is Roblox have better parental controls than a lot of other sites which helps keep parents happy

The Christmas list has already been started with Roblox figures firmly at the top, and looking at the prices, they should definitely continue to make a profit :see_no_evil:

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As a big gamer myself eSports is a funny one. When it’s big it’s huge, however a lot of games didn’t start by aiming at the eSports market and ended up pivoting towards it.

There is a massive range of eSports out there, the majority are fairly small but have a cult following and deep communities. The fighting/smash games is an area with an incredibly passionate following, but the money and public viewing isn’t there.

I do worry about investing in a company because they have the latest hit game, Apex Legends is a fantastic example of this. They wanted to get this into the eSports scene howeveroutside factors delayed this. Not to mention the dropping user numbers, they aren’t winning as much share of the free to play market as they hoped.

As someone who holds EA the game having a big hit was decent, but their issues with monitisation and explanation of “surprise mechanics” has undone most of the initial benefits (thus investing for the long term!)

There are a lot of examples of games that focused on creating an eSports scene which ended up as small time flops. Personally I’m more interested in the streaming services around eSports as they move and adapt with game of the month rather than taking a pun on which game will have a massive splash and for how long.

Streaming services and add-ons are becoming more popular, with new competitors entering the market. We’ve now gotten to the point of buying exclusivity with streaming stars!

Rather than predicting the next big game (eSport or not) I’m interested in the providers, the platforms selling the games digitally, the streaming services, or investing directly into eSports teams.

All in all it’s a super exciting space. As an old boss told me “I own Activition Blizzard because my wife kept playing World of Warcraft, so I figured I might as well make it profitable for me.”

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there is even an ETF for this vertical!

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Interesting to see Bumble making eSports their first(?) sponsorship. There’s some parallels with the type of advertising that Nike does but unlike most sports, Nike haven’t got into this space in a big way yet -

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Just a small thing but perhaps a sign of how competitive this space is going to get, here’s a preview of the trophy for the League of Legends world championship, which Louis Vuitton has created the trophy case for, just like the football world cup.

That is truly hideous

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