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Join the eSports Craze With These Stocks

Sanghamitra Saha

The eSports industry is on a tear as very few modes of entertainment are as popular as video games. The video game industry is stealing the thunder of traditional media and entertainment. Per nerdetf.com, the video gaming market of $138 billion in 2018 is expected to grow at an estimated 10% per year till 2021.

Notably, eSports is a form of video game competition in front of an audience. There are 454 million eSports viewers globally, which is estimated to rise to 645 million by 2022, per Newzoo 2019 Global Esports Market Report. More people prefer watching video games over Netflix, HBO, ESPN, and Hulu combined, if we go by the data provided by Superdata Gaming Video Content.

While eSports is currently a small part of the huge video-game industry, it is growing exponentially. Agreed, most gamers play video games as a hobby, but professional gamers also participate in international tournaments which involve sponsorships and huge prize money.

Overwatch League, the competitive video-game venture that Activision Blizzard launched last year, named Coca-Cola Co KO as its official global beverage sponsor for non-alcoholic drinks. The game developer, which runs the professional eSports league, also signed sponsorship deals with carmaker Toyota Motor Corp TM, wireless provider T-Mobile US Inc TMUS and computing companies HP Inc. HPQ and Intel Corp. INTC.

Goldman estimates the monthly competitive eSports gamer count of 167 million as of 2018-end to hit 276 million by 2022. The forecast was based on the NewZoo survey. In 2018, about $4.5 billion was invested in eSports via private markets, according to the article Rise of Esports Investments.

Being one of the fastest growing categories in online gambling, eSports betting is on its way to hit a $8-billion mark in total wagers this year. Growth estimates hint at more than $16 billion of annual wagers in the years to come. This is against an estimated $1 billion in revenues to be earned in 2019 from the rest of eSports.

North America is poised to generate $409 million of eSports revenues in 2019, the maximum by any region, per Newzoo’s report. China and South Korea will follow the U.S. lead with a respective 19% and 6% exposure. The rest of the world will make up the remaining 38%, per Reuters. While the main revenue source is advertising, merchandise and ticket sales are expected to increase 22% to nearly $104 million, if we go by the Reuters article.

Investors can tap this burgeoning market by keeping a track of the following stocks.

Electronic Arts Inc. EA

The Zacks Rank #2 (Buy) global interactive entertainment software company delivers games, content and online services for Internet-connected consoles, personal computers, mobile phones and tablets. It has a VGM Scoreof B. It comes from a top-ranked Zacks industry (top 19%).

HUYA Inc. Sponsored ADR HUYA

The Zacks Rank #3 (Hold) company provides online services. The company offers interactive video broadcast service which includes eSports, music, reality show and more. HUYA is based in Guangzhou, China. It has a VGM Score of C and belongs to a top-ranked Zacks industry (top 13%).

Activision Blizzard Inc ATVI

Activision Blizzard is the world's most successful standalone interactive entertainment company. The stock has a Zacks Rank #3. It has a VGM Score of C. It belongs to a top-ranked Zacks industry (top 19%).

Take-Two Interactive Software Inc. TTWO

The Zacks Rank #3 company is a leading developer, publisher and marketer of interactive entertainment for consumers around the globe.It belongs to a top-ranked Zacks industry (top 19%). It has a VGM Score of D.

Sea Limited Sponsored ADR SE

Sea Limited is an Internet service provider. It offers Digital Entertainment, e-Commerce and Digital Financial Services known as Garena, Shopee and AirPay. Though it has a VGM Score of D, the stock comes from a top-ranked Zacks industry (top 40%) and Zacks sector (44%).

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