How to Invest in Gaming: 3 Ways

How to Invest in Gaming: 3 Ways

recently, I’ve spoken with quite a few investment groups who have asked me what their options are around exposure to gaming. While there are ETFs (GAMR, NERD) and public equities (ATVI, EA, ZNGA, TTWO), I’ve noticed that investment interest is most concentrated right now in the private markets (higher alpha). To that end, we decided to write a high-level primer for the private markets. There are 3 primary ways to invest in this space:

1) Video game studios

2) Esports teams

3) Infrastructure and technology

Our firm is entirely focused on that 3rd category, specifically on scalable tech companies. This is playing out in our portfolio thus far:

1) Game of Whales (game developer tool)

2) Askott Entertainment (esports betting platform)

3) Opera Event (programmatic influencer monetization)

4) Upcomer (esports media)  

Active M&A market - in the past few weeks, there have been quite a few acquisitions. Interestingly, the acquirers of gaming companies seem to bucket into the following:  

> Tech companies (Amazon, Google, Microsoft, etc)

> Game publishers (Riot, Activision, Epic Games, etc)

> Media companies (Disney, Fox, Comcast, etc)

> Esports holding companies (IGC, Overactive, Axiomatic, etc)

In the past 2 weeks, here are a few gaming acquisitions that have a variety of buyers (showcasing an active M&A market in this space):

> Twitch acquired Bebo for $25M (buyer = tech company, link)

> Epic Games acquired Houseparty (buyer = game publisher, link)

> IGC acquired Infinite Esports for $100M (buyer = esports hold co, link)

> ReKTGlobal acquired Greenlit Content (buyer = esports hold co, link)

Overwatch League (talent flight) - while I’m very optimistic about the continued growth of esports & the competitive scene, I’ve been quite vocal about my concerns around the Overwatch League (OWL) specifically. It seems that the OWL’s leadership shares a few concerns of their own as the OWL is continuing to see talent flight.

This week, Kim Phan, global esports director for Blizzard, stepped down from her role. This is less than a month after the Overwatch League Commissioner, Nate Nanzer, left for Epic Games to help bolster their esports endeavors for Fortnite.

When Overwatch (Activision Blizzard) launched, it was a brand new game, chaotic to watch, and it has mimicked a traditional sports model with localized franchises in various cities. Conversely, League of Legends (Riot Games) is doing much better, is a well established game, is easy to watch, and has not pursued a localized franchise model. Coming up next is Call of Duty (Activision Blizzard), which is a well established game, easy to watch, yet they are likely to pursue a localized franchise model.