There's not a major sports league in the world today that wouldn't love to undergo 138% growth in just four years.
We're talking a total of 238 million viewers around the world for a new kind of "sport" that didn't really hit its stride until 2010.
To cash in on this fast-growing trend, a group of owners from the National Football League, National Basketball Association, and Major League Baseball recently invested more than $140 million to start their own teams.
And if the players look more like computer geeks than athletes, it's because that's just what they are. In the new field of “e-sports,” teams duel it out over computer games while fans watch online or, believe it or not, at major arena-type venues like Madison Square Garden.
Here's the thing. Though the field is new, it's already ripe for disruption due to the richly immersive experience of virtual reality (VR).
Today, I'm going to reveal a VR firm that offers us a rare “Convergence Economy” play on the emerging lucrative mix of sports and digital tech.
Let's get started…
From the Arcade to Madison Square Garden
If you're a baby boomer like me, you no doubt recall the early days of video games. My friends and I often played “Asteroids,” “Space Invaders,” or “Pac-Man” over cocktails at our favorite watering hole.
By comparison to today's deeply immersive, graphics-rich games, those titles seem to have come from the Stone Age.
That's why modern hits like “Call of Duty” and “World of Warcraft” go after the desirable demographic group of millennials. These young people live online, stream movies rather than watch television, and seem to have their smartphones attached to their hands.
And the money is rolling in…
SuperData Research valued the e-sports market at $748 million in 2015. The figure includes sponsorships, advertising, team prizes, fantasy sites, and ticket sales. By the end of 2018, SuperData says that figure will climb 154% – to $1.9 billion.
Roughly 52% of those sales will come from the United States and Canada. In other words, unlike most American pro sports, e-sports already is a global field with a lot of growth ahead.
Most viewers follow the field online, but live events also do very well.
Back in 2015, an e-sports multiplayer battle sold out New York's Madison Square Garden, which has more than 18,000 seats. Fans paid between $46 and $61 to attend.
No wonder all three major computer game publishers have launched competing e-sports leagues.
Computer game firm Activision Blizzard Inc. (Nasdaq: ATVI) recently drew attention from The Wall Street Journal. The paper reported that Activision's Overwatch League has so far signed up seven owner groups that have put up $20 million each to start their own teams.
The paper said Blizzard expects the Overwatch League to field 28 teams. The company will share sales for advertising, merchandising, ticket sales, and broadcast rights with team owners.
So is Riot Games, the firm behind “League of Legends” and the event that sold out Madison Square Garden. Chinese web giant Tencent Holdings Ltd. (OTCMKTS: TCEHY) bought a majority of Riot Games in 2011.
The move gave Tencent a big play on e-sports growth in China. With China in the lead, the video game analysts at Newzoo estimate that Asian Pacific countries will be home to 44% of the global e-sports audience.
In a case like this, where many tech leaders are racing to get in on the action, I believe we can make more money by finding a great back-end stock.
Even better, if the firm just happens to have the type of breakout tech that can disrupt a new field like e-sports…
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.