Forget Liverpool and Man United, investors should focus on e-sports

E-sports is now worth over US$1 billion, and the majority of devotees in the world are in the Asia-Pacific, says DBS CIO

The daily grind to work, which was for decades tolerated thanks to newspapers, was then followed by the original iPod. Chances are these days however, your train or bus is now packed with zombie-like travelers locked to their phone screens playing League of Legends or CS:GO.

Underpinned by the ubiquitous smartphone, gaming is thriving across Asia. And for a growing number of players, it is also a source of revenue. Investors should also take note, according to Hou Wey Fook, chief investment officer at DBS Bank. 

For some, the gaming industry is no longer just a pastime but a full-time career. Professional gamers are earning substantial sums that are as much as or more than those earned by athletes in traditional sports. According to the website “Esports Earnings”, the current highest earner is Denmark’s Johan Sundstein with earnings of just under US$7 million.

Indoor stadiums throughout Asian capitals are now regularly hosting sold out e-sports events with hundreds of thousands of online viewers streaming the action live.

Speaking at his bank’s New Year presentation to its private banking customers, Hou rolled off a string of numbers supporting his belief that the burgeoning electronic sports sector is now a serious investment option.

According to Hou, worldwide e-sports revenue is now US$1.1 billion and the global e-sports audience is expected to reach 645 million by 2022. Asia is also home to the majority of e-sports devotees with 57% based in the Asia-Pacific region.

The sector is being monetized by global brands such as Samsung, Budweiser and Adidas grasping the opportunities to sponsor events, leagues or players. Prize money for e-sports events is also now getting weighty, challenging established sports like tennis and golf, which along with football, are falling out of favour with millennials and Generation Z.  

Despite the rise of e-sports, Hou does not see the total demise of regular sports just yet. “Traditional sports will unlikely be negatively impacted by e-sports as the two are not mutually exclusive,” Hou said to The Asset.

For investors, the beneficiaries of this wave include major game companies. Game developers are involved in almost every facet of e-sports from games publishing to the creation of leagues and the hosting of tournaments. This vertical involvement allows them to benefit from sponsorships, media rights, and merchandising/ticketing.

Hou also says investors should look to streaming platforms and hardware manufacturers together with the stocks of global semiconductor and semiconductor equipment companies to take advantage of the e-sports momentum.   

Date

10 Jan 2020

Channel

Capital Markets

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