How to Invest in Esports: Stocks, ETFs, and Startups

Esports, or electronic sports, represent organized competitive video gaming that has evolved into a global phenomenon. It involves professional players and teams competing in video games for prize money and large audiences. This industry encompasses professional leagues, tournaments, and events, mirroring traditional sports.

The esports industry has experienced substantial growth, driven by increasing viewership, technological advancements, and rising investment. Its economic significance stems from revenue streams like media rights, sponsorships, advertising, merchandise, and ticket sales. This expansion has positioned esports as a notable sector within entertainment and technology.

Investing in Publicly Traded Companies

Investing in publicly traded companies offers a direct method to gain exposure to the esports industry. This approach involves purchasing shares of companies listed on stock exchanges that derive significant revenue or value from esports activities. These companies span various segments of the esports ecosystem, providing diverse opportunities.

Game publishers form a core component of the esports landscape, as they develop and own the intellectual property for the games that are competitively played. Companies like Electronic Arts (EA) and Take-Two Interactive Software (TTWO) publish popular esports titles, generating revenue through game sales, in-game purchases, and licensing for competitive play. Activision Blizzard, now part of Microsoft (MSFT), is another significant publisher known for major esports franchises such as Call of Duty and Overwatch. Their control over game ecosystems allows them to establish official leagues and tournaments, integrating them into the esports economy.

Hardware manufacturers also play a foundational role by producing the equipment necessary for professional gaming. This includes high-performance computers, graphics processing units (GPUs), and peripherals like specialized keyboards and mice. NVIDIA, a GPU manufacturer, is an example of a company whose products are essential for competitive gaming, making them an indirect but important investment avenue. Their financial performance is often tied to gaming and technology markets, which benefit from esports growth.

Media and broadcasting companies facilitate the widespread viewing of esports content, connecting teams and players with their global fanbase. Platforms like Twitch, owned by Amazon, and YouTube Gaming, a division of Alphabet, serve as primary hubs for live-streamed matches and esports commentary. While Amazon and Alphabet are diversified technology companies, their ownership of these streaming platforms provides exposure to the esports media sector. Other publicly traded entities, such as HUYA, specialize in game live-streaming, offering direct exposure to this segment.

Esports event organizers and team owners are involved in the competitive side of the industry. Companies like Modern Times Group (MTG), through its ownership of ESL and DreamHack, organize major esports tournaments and festivals. Similarly, publicly traded esports organizations such as GameSquare Holdings, OverActive Media, and Enthusiast Gaming Holdings own and manage professional esports teams that compete in various leagues. Investing in these entities provides a stake in the operational and competitive aspects of esports, including sponsorships, prize money, and media rights.

Investing in Esports-Focused Exchange Traded Funds

Exchange Traded Funds (ETFs) offer another way to invest in the esports industry, providing a diversified approach compared to individual stocks. An ETF is an investment fund that holds a collection of securities, such as stocks, and trades on stock exchanges throughout the day, similar to a single stock. When investing in an esports-focused ETF, you are buying a small piece of many companies involved in the esports and gaming sectors.

A primary advantage of investing in an ETF is diversification. Instead of researching individual companies, an ETF provides exposure to a basket of companies within the industry, which can help mitigate the risk associated with the performance of any single company. If one company performs poorly, the impact on the overall ETF is lessened because its holdings are spread across multiple entities. This diversification can simplify the investment process for those new to the market.

Esports and gaming ETFs are designed to track the performance of an index composed of companies that derive significant revenue from video game development, esports events, streaming, or related hardware and software. These funds are managed by professionals who select and rebalance holdings according to the fund’s stated objectives. Professional management means investors do not need to continuously monitor individual company news or financial reports to maintain a diversified portfolio.

To research and find esports ETFs, investors can utilize online brokerage platforms or financial news websites that provide detailed fund information. Key metrics to evaluate include the fund’s expense ratio, the annual fee charged as a percentage of assets managed. Examples include the VanEck Video Gaming and eSports ETF (ESPO), Global X Video Games & Esports ETF (HERO), Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD), and Wedbush ETFMG Video Game Tech ETF (GAMR).

These ETFs typically include companies such as game publishers like Electronic Arts and Take-Two Interactive, hardware manufacturers like NVIDIA, and other firms involved in the esports ecosystem. Investing in an ETF provides a convenient way to access the growth potential of the esports industry without extensive individual stock analysis or the capital required to purchase shares in numerous companies directly.

Exploring Direct and Early-Stage Investment Avenues

Beyond public markets, direct and early-stage investment avenues offer opportunities to engage with the esports industry, often with higher risk and greater returns. These methods allow investors to support emerging companies, teams, or ventures, contributing to their initial growth. While some avenues are accessible to the public, others are typically reserved for specific investor categories.

Crowdfunding platforms provide a mechanism for individuals to invest smaller amounts into esports startups, teams, or projects. Platforms like Crowdcube and StartEngine have facilitated equity crowdfunding campaigns for esports organizations, allowing fans and smaller investors to become co-owners. For instance, esports team Fnatic has utilized crowdfunding to raise capital, offering community members a chance to own a stake. Other platforms such as Matcherino focus on enabling fan donations and prize pool contributions for tournaments, creating financial support channels for players and events.

General crowdfunding sites like Kickstarter and Indiegogo also feature gaming-related projects, including new game development or peripheral creation. These platforms typically operate on a rewards-based model, where contributors receive exclusive items or early access rather than equity. However, dedicated esports crowdfunding platforms are emerging, tailored to the needs of teams and content creators, facilitating direct engagement and fundraising.

Private equity and venture capital represent substantial, less accessible investment avenues, typically targeting accredited investors. An accredited investor, as defined by the U.S. Securities and Exchange Commission (SEC), generally includes individuals with an annual income exceeding $200,000 ($300,000 jointly) for the past two years, or a net worth exceeding $1 million, excluding their primary residence. These criteria ensure investors in unregistered securities possess the financial sophistication and capacity to absorb potential losses.

Venture capital firms and private equity funds invest in early to growth-stage esports companies, including game developers, technology providers, and esports organizations. Firms like BITKRAFT Ventures and Griffin Gaming Partners specialize in the gaming and esports sector, deploying significant capital to scale promising ventures. These investments are typically long-term and illiquid, reflecting higher risk and extended time horizons associated with private market opportunities. While direct participation in these funds is limited to accredited investors, their activity underscores institutional confidence in the industry’s long-term growth.