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Wednesday, April 24, 2024

eSports increase the value of gaming companies

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It’s undeniable that video games are one of the great mainstays of digital entertainment. Together with content streaming platforms and social media, among others, their value has risen notably thanks to a phenomenon that has increased exponentially in the last decade: eSports. Electronic sports are a professionalized version of these video games and their events are attracting audience numbers in the area of 500 million spectators annually. According to some analysts and based on a marked upward trend, this number could increase to 600 million in approximately two or three years.

Annual revenue from this industry is calculated at upward of $1 billion and again, projections are quite optimistic in this regard. This massive following translates into two main trends: on the one hand, brands are choosing to invest in eSports advertising more and more, whether through sponsorships or advertisements during events. In the same vein, gaming companies are seeing their value increase as their games grow in popularity, in number of players and consequently, in revenue. For many of them, it’s an investment in the future seeing as this phenomenon doesn’t seem to have a near ceiling. It’s not only game developers, either. According to GME live chart, companies like GameStop, a video game distributor, seem to be progressively recovering their value after a fall in the first semester that affected most tech companies.

Perhaps the industry’s most significant recent news is Microsoft’s purchase of the company Activision Blizzard for almost $70 billion. Activision is known for popular games such as World of Warcraft and Candy Crush, as well as Call of Duty, one of the leading video games in the eSports universe with its PC, console and mobile versions. In fact, Activision’s market price, after the acquisition by Bill Gates’ company, showed a strong increase that allowed it to recover the value it lost a couple months ago. According to chief Fintech investment portals such as NAGA, with some fluctuation, Activision is currently remaining steady, although the last month hasn’t been especially favorable on this point.

Microsoft evidently doesn’t make decisions lightly. They’veseen the potential of this industry and they don’t want to miss the train. This initiative has obviously led other giants to consider similar strategies. So much so that now Amazon is seemingly interested in acquiring another of the great game developers: Electronic Arts. This California company is behind some of the great successes in the history of gaming, like The Sims and Command and Conquer. But in the last few years, they have come to the forefront with sports-related titles like NBA Live, NHL, and especially FIFA, another eSports standard. These rumors have benefited their stock value which is in line with a rally that began in May and June of this year.

In the world of electronic sports, League of Legends is a leader when it comes to hours consumed by spectators in the last year and second in number of simultaneous viewers during its “LOL Worlds 2021” final. LOL is part of Riot Games and is its star title. It’s gained popularity thanks to its audiovisual products like the award-winning “Arcane.” Riot is owned by Tencent Holdings, which has considered increasing its dominance and has showed interest in Ubisoft, creator of the popular video game Assassin’s Creed. This interest was again reflected in its stock and resulted in an increase in Ubisoft stock prices, although Tencent’s final decision to reject the purchase has resulted in a recent drop in its market value.

In short, as the big names look to these developersto strengthen their position in this growing market of digital entertainment, the phenomenon of eSports, rather than stagnating, seems to have a promising future ahead.

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