What to expect from the Esports sector in 2020
The esports sector is one of the hottest sectors right now with esports popularity rising fast. For the first time, the global esports revenue surpassed US$1 billion in 2019, up 27% from 2018, due to ballooning revenue from advertising, sponsorship and media rights to competitive video gaming. Newzoo forecasts that by 2021, esports will generate more than US$1.6 billion in total revenue (US$1.3 billion coming from brand investments), and have a total audience of 557 million people.
In this article, I take a look at the big events that shaped 2019, as well as what’s ahead in 2020.
A brief esports summary of 2019
- June 2019 – Canada’s first esports ETF was launched, namely the Evolve E-Gaming Index ETF (TSX: HERO).
- July 2019 – At the Fortnite World Cup a 16 year old US teenager nicknamed Bugha (real name Kyle Giersdorf) beat 99 other players to win US$3 million.
- August 2019 – The 2019 Dota 2 International tournament offered a massive esports prize pool of US$34.3 million. The winners (the five-person team OG), earned a record US$15.6 million. That worked out to be about US$3.2 million each, or more than the winning prize money at Wimbledon. The tournament recorded over 66 million viewers.
- September 2019 – Enthusiast Gaming completes merger with Aquilini GameCo and Luminosity to form global esports and gaming leader. The merged group includes seven esports teams (including management of the Vancouver Titans Overwatch League franchise), 40 esports influencers, 80+ gaming media websites, 900+ YouTube and Twitch channels. The combination creates leading publicly traded esports and gaming organization with $22 million in 2018 pro forma revenue on the closing of the merger backed by $55 million in financing, with a combined global audience reach of approximately 200 million.
Team OG wins an incredible US$3.2 million each at the Dota 2 International in 2019
What’s ahead for esports in 2020
Get our daily investorintel update
So far in 2020, the biggest news is the US based Simplicity deal with Flamengo announced only yesterday. According to a report by ESPN Esports Brasil, Flamengo’s esports will be administered by Simplicity Esports, both in Brazil and in the USA. In other 2020 news, Esports entertainment company Allied Esports will receive a $5 million equity investment from real estate giant Brookfield Property Partners. The JV will build eSports venues in retail destinations.
In 2020 expect more live streaming, larger audiences, bigger tournaments, with even bigger prize money. This is also attracting more and more professional gamers to the sector, thereby increasing competition. As audiences continue to grow, advertising revenues also grow.
The Fortnite World Cup (Epic Games) and the International DOTA 2 Championships (Valve Corporation) will be the biggest events for 2020, with tournament prize money likely to break new records.
Given the rapid growth of esports, I think 2020 will see more investments from the retail and institutional clients, as previously this was dominated by venture capital and private equity firms.
Enthusiast Gaming Holdings Inc. (TSXV: EGLX | OTCQB: ENGMF) is one of the fastest-growing esports companies globally, and one of only a few publicly traded, pure-play esports and gaming companies.
Enthusiast Gaming has the largest gaming network in North America and the English speaking gaming regions. The long term vision for the Company is to build the largest, vertically integrated esports and gaming company in the world.
The Company reaches more gamers than Twitch, IGN, Gamespot in the US, which makes them a huge name in esports and gaming. In fact, Enthusiast Gaming reaches over 200 million gamers on a monthly basis, with 1 billion page views. Those are significant numbers.
2020 revenue is estimated to be C$40 million, with 2020 operating profit forecast to be C$5 million. Market cap is C$142 million. Analyst’s consensus is a ‘buy’ with a price target of C$3.68 representing 85% upside.
Enthusiast Gaming – Company overview and platform of assets
Matthew Bohlsen is a Senior Editor for InvestorIntel.com. With a Graduate Diploma in Applied Finance and Investment, and a Graduate Diploma in Financial Planning. He ... <Read more about Matthew Bohlsen>