NEW YORK: Esports have officially gone mainstream. With 243 million dedicated viewers, major arenas across the globe selling out, and a market expected to grow to $3 billion by 2022, Wall Street is starting to take note.
In fact, some of the top companies in this burgeoning sector have seen unprecedented growth in just a few short years. Like EA which has shot up 147%, Nintendo which has soared by 276%, and Take-Two Interactive Software, Inc which exploded by 411%. As surprising as it sounds, the industry has the potential to go head-to-head with the NFL, NBA and even the English Premier League, according to Goldman Sachs.
The top ten teams in the business are already pulling in over $160 million every year, while the stars of the industry are earning as much as some of the biggest names in traditional sports. But that’s just the tip of the iceberg. The real potential lies in the web of revenue streams hiding just outside of the spotlight.
“As the esports industry continues to explode, new opportunities to generate profit are arising every day and being able to identify trends before the markets is one of our biggest strengths,” notes Millennial CEO Darren Cox. And it’s true. From streaming deals and digital ads to game development, there is a lot of money on the line. The best part? The industry is still in its early days, which means savvy investors stand to make some serious cash.
Here are three trends to watch as the esports revolution kicks into high gear:
#1 – The Secret Weapon In The Streaming Wars
Just last year, viewers spent over 6.6 billion hours watching their favorite players online. That’s why Amazon paid nearly $1 billion to acquire streaming giant Twitch. And why Microsoft-owned Mixer paid a rumored $100 million to get superstar Tyler “Ninja” Blevins on its platform.
Amazon’s Twitch.tv, as the de facto leader in the space, with over 15 million unique visitors per day, has become so engrained in the industry that new video game consoles even have the platform’s streaming functionality built in. It’s so dominant, in fact, that it accounts for 1.8 percent of peak internet traffic.
Looking to follow in Twitch’s footsteps, however, Chinese streaming giant Huya (NYSE:HUYA) is looking to carve out its place in the esports industry. As a part of its ambitious and aggressive plan to dive into Western markets, Huya is looking to partner with some of the top teams in the business, and it’s got a significant war chest to help its cause.
While Twitch and Huya face off, however, another company is operating in the shadows of the streaming boom and positioning itself to fill a key role in the industry.
Millennial E-Sports (GAME, MLLLF) has already made a name for itself in the esports world with its involvement in events, development and hardware production, but thanks to its acquisition of Stream Hatchet, it’s now taking the lead in analytics. A necessity to any business looking to take advantage of the streaming trend.
With Stream Hatchet under Millennial’s brand, the company is now with some of the biggest names in the business, including Activision Blizzard and Xbox Game Studios. Gathering viewer data from platforms like Twitch, Huya, YouTube and more, Millennial is able to create in-depth reports that help companies improve engagement, and in turn, profits.
The best way to make serious cash in this burgeoning new industry is to know exactly what viewers are doing and why they are doing it, and no one knows how to take advantage of this information better than Millennial (GAME, MLLLF).
And the best part is that not only are companies paying Millennial to harvest their data, they’re actually buying it back, giving Millennial double the upside. It is seeking to corner the market in what might just be the most lucrative niche in the esports industry. But it’s clear to see why companies are willing to dish out the big bucks for these insights. It helps them create better games, sell more products, and keep players on board for longer.
#2 – Video Games Are Bigger Than Hollywood
In 2019, the video game industry is expected to generate $151 billion in revenue. By comparison, the film industry is expected to pull in only $43 billion. That means that video games are already bigger than Hollywood.
And thanks to the growth of mobile gaming, esports, and new gaming technology, the industry is expected to become a $300 billion industry by 2025. Gaming giants know this well and utilize every weapon in their arsenal to stay ahead.
That’s exactly the niche Millennial (GAME, MLLLF) is hoping to capitalize on. Millennial’s innovative edge has helped it become a veritable one stop shop for branding, advertising, media rights and sponsorship in the video game industry. And its tools are helping fuel the development trend bigger companies are building on.
That’s because today’s gamers are smart, flighty and demanding. Keeping them on board has never been more difficult.
Understanding how players interact with the games helps developers create hits like Take-Two’s (NASDAQ:TTWO) Grand Theft Auto V, which clocks as the third highest selling video game of all time, generating over $6 billion in revenue.
Thanks to the data they’ve collected, they have been able to create entire universes for their player bases, packed with compelling stories and interfaces that truly transport gamers into the worlds they’ve created.
While Take-Two has generated a number of hits, no other company stands above Nintendo (OTC:NTDOY). With two of the highest-grossing media franchises of all time, Mario and Pokémon, under its belt, Nintendo has been a leader of the gaming revolution since its inception.
From hardware to game development, Nintendo has taken an innovative approach to keep its fans on board. And it’s not letting the esports revolution pass it by, either. Super Smash Brothers, a multi-player fighting game, has become a staple in the competitive gaming world.
While video game producers take up much of the spotlight in the gaming boom, they wouldn’t have much to work with without hardware producers and chipmakers like NVIDIA (NASDAQ:NVDA). As one of the leaders in the industry, NVIDIA has been an unsung hero in the gaming revolution. With its chimps, it has been able to help gamers dive into lush new worlds with mind-blowing graphics and a seamless player experience. It’s clear that video games aren’t going anywhere anytime soon, but the industry is still in its infancy and smart companies are already diving in head first.
#3 – Deals And Deals And Deals
With the video game industry set to continue its explosive growth for years to come, strategic investments, partnerships and acquisitions have become a key part of the business. And no one is doing that better than Tencent Holdings (OTC:TCEHY). The Chinese tech giant responsible for WeChat and QQ has not ignored the video game boom.
Not only is its subsidiary Riot Games responsible for one of the world’s most played esports, League of Legends, boasting over 89 million players, it has also taken significant stakes in other game developers. Tencent’s portfolio includes shares in Activision, Ubisoft, and even a 40 percent stake in Epic Games, producer of Fortnite.
Though Tencent might be the leader in the field, smaller companies like Millennial Esports (GAME, MLLLF) are making major moves, as well.
Millennial, for its part, has made headlines with its acquisitions of Eden Games, a developer whose hit mobile game Gear Club has over 6 million downloads to date, and Allinsports, a motorsport simulator manufacturer founded by ex-Formula 1 engineer Anton Stipinovich.
Millennial’s focus on the motorsports niche in esports allowed it to create one of the sector’s most popular racing events: The World’s Fastest Gamer. In just the first season of the competitive racing league, with a prize pool of $1million, World’s Fastest Gamer became a global hit.
It was broadcast in 48 countries through 86 global broadcasters, including ESPN, CNBC and Fox Sports. The show, sponsored by McLaren F1, reached an estimated 400 million households. And it’s wheeling and dealing doesn’t end there. It’s also secured major agreements with Nintendo and Porsche.
