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 a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.