There are some things that are painful to admit. The video game business is one that totally passed me by. Even after it was revealed that the business was bigger than the annual box office receipts from feature films, the brain synapses still didn’t fire.
Game of Thrones chalks up billions in revenues and I still don’t understand what’s the big deal. Why would anyone what to sit in front of a computer screen all day long: dah?
And then there is the indisputable evidence provided by game designer and developers like Activision Blizzard and Electronic Arts whose fortunes have been heading north for years. Even so, I always followed the legendary Peter Lynch: get involved with things you like, use frequently and understand.
Little did I appreciate that these two companies were just part of something even bigger.
Being an active sports minded person, I never appreciated the mental challenges and all that gamers got, the thrill of victory, and all the yada, yada. In my mind, if you didn’t run 26.2 miles, you were a couch potato.
Wake Up To eSports
First came video game tournaments and now eSports competitions. According to ESPN, eSports events routinely fill arenas and outdoor stadiums containing tens of thousands of screaming fans cheering for their favorite team. And what are the teams doing? Team competition in video games, what else?
eSports isn’t the NFL, NBA or MLB, but they are getting there. Events held in midweek are drawing more than 100,000 online fans. This is in addition to live audiences. eSports is borrowing the business model of the big guys. There are eSports teams, leagues and there is even a franchise fee to enter certain leagues.
Already big name sponsors like Coke, Logitech, Red Bull and several auto companies are onboard and more will follow as the sport continues to expand globally.
According to independent research, over 200 million people either watch or play eSports. But that study is three years old. The number is far larger today. The popularity is truly global. eSports is huge in Asia especially Korea. Other regions are catching up.
The US, Canada and Europe are estimated to have between 30-35 million members. These markets are still in their infancy so it is understandable if you have overlooked eSports up to now.
Considering there are over 500 million people populating these regions, it is easy to see the massive potential of this market. The research firm of Newzoo was quoted by ESPN placing market growth at more than 20%.
I must not be the only ignorant soul on the planet. Just recently CNBC Mad Money Host Jim Cramer interviewed Logitech CEO Bracken Darrel. What Darrel had to say about eSports even shocked Cramer (another non gamer).
Logitech is fully behind eSports as a designer and manufacturer of electronic peripherals. This gives Logitech a big boost to its revenue line and its image.
Darrel sponsors frequent conferences where gamers get to input their ideas for product features and improvements. We are told that gamers worship Logitech products.
Not only do gamers love Logitech but the stock market has taken notice as well. Just this year, the shares have gained nearly 60% in value.
The company has long been known for add on peripherals like computer keyboards, mice, small speakers and other high quality but less than glamorous products. Their investments in eSports is truly changes the game for Bracken Darrel.
The recently reported June quarter was impressive. Revenues grew 32% to $530 million while fully diluted per share profits gained 70% to $0.22. Not bad for a company that is hardly a high tech company.