The video games industry has enjoyed tremendous growth in the past couple of years.
The figures are astonishing and according to a report by Nielsen research company SuperData; the video games industry was worth $139.9 billion in 2020.
This represented a growth of 12% year over year and in terms of home entertainment, the video game industry surpassed Hollywood and sports combined.
However, this massive growth was and still is being driven by the global pandemic and worldwide lockdowns. Despite this recent pandemic-driven surge, many investors have flocked to invest in the video game industry.
Everything associated with the video game industry is not gold at the moment. Investors can invest in the industry in three possible ways; video game publishers (Valve, Activision, EA, etc.), Esports organizations (Astralis, Fnatic, etc.), and infrastructure companies that assist in video game streaming like Discord and others.
Esports and Investment
There are plenty of unfamiliar investors in the market that are following the suit. They are impressed by top numbers and bullish growth projection. However, this is true when it comes to gaming culture but not when it is about esports.
Esports sure is a part of the soaring industry but it is still in nascent form and is yet to find stable footings.
Though the video games industry has witnessed extreme growth during the pandemic period, Esports’ growth depends solely on holding competitions. Activision Blizzard had plans to capitalize in the esports industry via Overwatch and Call of Duty Leagues but couldn’t do so due to the pandemic.
Likewise, COVID also derailed many other esports plans and many postponed and some altogether canceled their events. So investing in esports is a bit risky prospect at the time.
Moreover, video games also carry a lot of risk being a highly competitive niche. Moreover, many big companies and esports teams are overvalued with linear business models.
Another reason which allures investors in the video game industry is the practice of SPAC. SPAC is a Special Purpose Acquisition Company. This type of company is created for the sole purpose to go public and offer IPO.
As for Esports, it sure is popular and looks pretty attractive at the moment. However, given the circumstances, it is a high-risk investment with several questions that need answers.
Inside Gaming News is a project of Game-Consultant.com, Your Video Gaming Consulting Firm. Reinout te Brake is fully dedicated video games consultant. His focus is to incorporate solutions to trending issues that gaming developers face in today’s world.
Next to that he is hands on with the following consultancy and services; strategy, business development , fundraising, M&A and user acquisition, basicly everything that game studios have to deal with on a 24/7 basis.