As the saying goes,”History has a way of repeating itself.”
It would appear that the current circumstances surrounding COVID19 and its impact on the economy, has once again slapped investors in the face with the cold hard truth that all BULL markets must come to an end. It’s also a bitter reminder of how quick sentiment can turn and how even the most sound investments can fall prey to an economic meltdown at the hands of a yet another defining moment in our history.
While most sectors have fallen victim to the unfortunate circumstances surrounding the global pandemic we have been faced with, as witnessed during the 2008 recession the esports industry is once again defying the odds and proving to be an extremely resilient industry during these challenging times. As data would suggest, not only has the esports industry been able to survive the recent onslaught of economic havoc but in many case it has thrived. To say viewership and user engagement is up would be an understatement to say the least. No matter what metric you look at, gaming has experienced unprecedented growth over the last few months and is showing no signs of slowing down. The numbers are simply OFF THE CHARTS!
At a time when social platforms are defining the way in which we communicate, it only makes sense that new mandates for social distancing would create the perfect environment for gamers and content creators alike to become the most sought after ticket in town. There is no other industry on the planet which benefits more from this environment. As such the esports industry is once again making a strong case for being one of the few recession-proof sectors in the market. Quite remarkable when one considers that the industry is still considered to be in its infancy relative its traditional sport counterparts. Not only has esports been able to “weather the storm” but it has created an environment of unprecedented growth opportunities at a time when most sectors are contracting.
The resilience we are witnessing throughout the industry during such a tumultuous macro-environment, further validates the investment opportunities that exist within the sector. While most investors seek safety in their investment portfolios during these times, based on the evidence, the esports industry makes a compelling case for investors to deploy capital. The good news for investors is that since the last recession, the esports industry has had 12 years to mature which is why we are seeing a slightly different narrative play out this time around. Unlike 2008, instead of market participants simply remaining status quo during this recessionary period of volatility, many of the top esports organizations are seizing the opportunity to scale their businesses during this time.
Enthusiast Gaming (T.EGLX) is one of those organizations that seems to be forging ahead in this environment and taking advantage of its 200+ M monthly users. Just last month Enthusiast Gaming leveraged its massive community and partnered with Twitch to host a Global Celebrity Streaming Charity Marathon. With what appears to be a well-thought out and strategic strategy, EG has quietly become N.A. largest gaming community in both the U.S and U.K. Their organic growth, coupled with their aggressive acquisition strategy, has enabled them to double their revenue in each of the last four consecutive years which is impressive in its own right. As their community continues to grow, the entire industry is beginning to take notice of their impressive collection of assets which is sure to garner more attention as streaming-wars begin to take hold throughout the gaming industry. It also appears their expansive business model is paying dividends during this recessionary period, as it continues to grow and expand its global footprint.
In the current market, there’s no better opportunity that exists, as esports continues to experience massive growth during this period. The current events we have been faced with will forever change the way we interact with others, and esports is well on its way of forever changing the sports and entertainment industry. Even as the fears of COVID19 subside, I feel the long-term economic impacts on many sectors will be felt for months, and in most cases years afterwards. Esports on the other hand will transcend all of the social barriers we will be faced with as we move forward, and will allow people an authentic platform in which they can express themselves and engage with others. As such, its hard to ignore the incredible transformation that is happening and the inherent investment opportunities it presents. No other sector is more well-positioned to experience growth in both the short and long-term. These events will not only create an influx of institutional money to flow into the industry but it will also create a flurry of M&A as new participants look to enter the proverbial ring. As such, the current landscape offers investors an incredible opportunity at a time when there aren’t many places to invest. Early data would suggest that like 2008, the esports industry is poised to write a similar script, by once again offering investors a recession-proof investment opportunity in 2020!