The latest teaser ad for The Crow’s Nest ($99) is focused on an area that I find fascinating, so I thought we’d dig into that one for you — Jimmy Mengel is pitching eSports as the next huge opportunity for investors, akin to getting in early as a team owner or investor in the NFL in its infancy, and in that tease he also hints at his favorite few stocks… so we’re going to throw those hints into the Thinkolator and see if we can get some answers today.
Here’s a bit from the ad:
“The time to get in early on eSports mania is right now before the massive growth takes off.
“And I have an opportunity to directly invest in eSports so you can capitalize.
“Meaning, you make money when eSports players and venues make money.
“No other major professional sport gives you this opportunity.
“Think about it.
“With the NFL, NHL, MLB, the NBA, you can’t directly invest in teams, players, venues… really nothing.”
That’s not quite true, there are a few publicly traded sports teams… but we’ll let that slide for the moment. Certainly eSports is growing quickly, with viewership of major events and tournaments that eclipses most regular sporting events (partly because video game streaming doesn’t necessarily have to be watched live, it’s not like you’re going to hear the results on the radio and spoil it, but they do also sell out big arenas for in-person viewing — or at least, they did before the coronavirus shutdown).
If you’re not familiar with eSports, it’s a blanket term that basically means “competitive video gaming” — either in-person or online contests and tournaments in popular video games, whether that’s the video game version of the FIFA World Cup in a soccer video game or a shootout between teams in a battle game, with the important (and surprising to most of us over 40) part being that some video games are extremely popular spectator sports, and spectators eventually bring money and sponsorship and advertising. This has quietly grown into a large business without getting much attention outside of the hardcore fan base, and the best players and teams are now getting million-dollar salaries and huge sponsorship deals that will sound familiar to any fan of traditional sports.
More from Mengel…
“… professional sports team owners are throwing serious money at eSports as we speak. They know how fast sports can make you money… they’ve already lived it once, and they’re looking for that big return again.
“You could invest like them to pursue the same returns as they are.
“Even professional leagues are trying to get in on this.
“23 of 30 NBA teams back an eSports team for professionals competing in NBA 2k, a basketball video game.”
So yes, there are a bunch of fairly high profile eSports teams in various games, and leagues sponsored by a couple of the largest publishers — and in several cases, new facilities are being built for these teams that are really junior high-tech arenas, often in the same complexes as the big NBA and NHL arenas and football or baseball stadiums, like the Fusion Arena in Philadelphia.
And the dream, of course, is “getting in early” so you could be like one of those early NFL or MLB families that turned their money-losing hobby from the 1940s and 50s into a legacy of generational wealth in the television era….
“You couldn’t invest in the NFL before it became the mainstay in American households like it is today…
“Couldn’t with baseball, basketball, or football…
“However, I’m about to show you an investment to give you a direct link to the eSports growth happening right now.
“Meaning, as the industry moves from $1 billion up to potentially $82 billion… you’ll have a chance at making a ton of money.”Are you getting our free Daily Update
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And Mengel knows that the target market for most investment newsletters is ornery old guys, so he makes sure to address that reaction I’m sure some of you are having right now (something along the lines of, “this is stupid! Damn kids and their video games are ruining their lives!”)…
“I wouldn’t blame you if you hated the idea of eSports… or you thought those sitting around watching others play video games are lazy and need a job.
“I honestly thought that at first.
“But then I thought more about it.
“If people will sit around and watch professionals play poker, play pool, bowl, even golf, all slow-paced games to watch…
“Is it really that much of a stretch to think millions and millions of folks would love to watch professionals play highly engaging, well-developed video games?”
And he thinks we’re on the cusp of something huge…
“Today, eSports is where the NFL was in the 80s… right when it claimed the throne as the #1 sport in America.”
I’d say that’s a pretty dramatic exaggeration in terms of money, though perhaps not in terms of viewership and participation hours — eSports is still quite small as a spectator sport compared to the major leagues by most measures, and is smaller still when it comes to sponsorship and advertising revenue, but it is fair to say that it’s growing really fast… and it’s not out of the question that it could grow up to be in the same neighborhood as the major sports someday. A lot of that really depends on how valuable tho