Video games are quietly winning the entertainment war. And these aren't just fun ways to kill time anymore. The reality is it's a booming industry, and a top esports stock could make a 100% return for those who buy soon.
You see, since the first commercially successful video game came out in 1972, people were hooked.
Pong was just a simple tennis-like game where players use paddles to hit a ball back and forth. But it was more than that – it was a huge technological step and an escape for kids and adults across the world.
Then in 1978 Atari released Space Invaders, an arcade game where a pilot would shoot descending aliens, preventing them from reaching the bottom of the screen. That year, Atari would lay what would be the cornerstone in one of the hottest sectors of gaming: esports. In 1980, 10,000 gamers would compete against each other in the "Space Invaders Championship."
And the industry changed forever.
As the video game industry grew, so did esports. In 2000, South Korea held the first World Cyber Games, and games like StarCraft allowed people to compete against each other across the globe online.
Today, video games have clearly won the screen-time war and have been growing their share of consumers' attention and income for years. In fact, in 2019, video games brought in $120 billion. That's more than 10 times all box office movies in the United States combined. That includes blockbuster hits like Avengers, Star Wars, and Frozen.
Just to give you an idea of how big the industry is, just look at these numbers:
- 350 million – The number of registered accounts with Fortnite.
- 164 million – The peak number of monthly players for Roblox.
- 200 million – The number of hours streamed on Twitch in a single quarter.
- 500+ million – Sony PlayStation devices sold.
With this rise of live-streaming, multi-player games like Fortnite, and a growing prize pool for tournaments, esports and competitive gaming have gone mainstream.
The gaming audience on YouTube and Twitch is over 400 million, an audience larger than Netflix and larger than the viewership of the NHL and MLB.
WARNING: It's one of the most traded stocks on the market every day – make sure it's nowhere near your portfolio. WATCH NOW.
The opportunity is huge, and with the average millennial gamer spending $112 a month, this one small company I'm looking at could profit as the industry grows.
It's an opportunity to book gains upwards of 100%…
Get in Early with the Best Esports Stock
The company is Super League Gaming Inc. (NASDAQ: SLGG). It is an esports company that hosts recreational esports video game league events and has developed a cloud-based platform that connects its network of gamers, venues, and brand partners.
It targets the competitive amateur player market, and if just 10% of gamers participated in the amateur esports economy at $5/month, it's a $15 billion-plus new market category.
In Q3 this year, it has already reached close to 2.5 million users on the platform, almost three times the number of users at the end of 2019. It has also grown its number of monthly active users from about 275,000 to 400,000-500,000.
Additionally, it has pushed nearly 50 million hours of gameplay through the platform in the first nine months of the year versus 15 million hours for the full year of 2019.
The most important metric for the company is its audience. It has grown from virtually zero at the start of 2019 to 120 million by the end of that year. In the first nine months of 2020, it has now hit 1.4 billion views, 15x the prior year level.
Even with most of its revenue coming from sponsorship and advertising, which was hit hard across the board during the pandemic, it still managed to double revenue quarter over quarter.
One aspect of its business that I am very happy about is that it has stepped more into premium programmatic advertising inventory since last quarter. It has made investment in video ad units, and the initial pilot is showing CPMs in the $10-$15 range. This should help it to grow profitability.
If Super League Gaming continues on the track it is on and grows into the massive ecosystem of esports, it could easily grow into the sell-side price targets that are up 100% from its current stock price.
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About the Author
Alex Kagin is the Director of Technology Investing Research at Money Map Press. He has spent the last decade working in equity research, most recently with Energy Capital Research Group (ECRG), where he led technology stock research along with working as part of a team developing a customizable financial data platform for securities analysis.
Prior to joining ECRG, Alex spent 8 years at DeMatteo Research, a boutique primary research firm and broker-dealer servicing the institutional investment community. He managed the Tech, Media, and Telecom vertical where he spent time connecting with hundreds of tech executives and hedge funds to get the pulse of the market.
Alex has a B.S. in Economics from American University and previously held Series 7 and 63 security licenses.