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Piece of the Esports Action?

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Can Investors Get a Piece of the Esports Action?

There's huge potential in this subsection of the video game world.

If you're looking for an industry with a ton of rapid growth behind it and plenty of room for more ahead, you could do worse than to consider video games. The amount of time we spend on them is increasing at a ridiculous clip, as is the amount of money, and the global trends appear promising, which adds up to an opportunity for investors. If you don't feel ready to take advantage, Motley Fool Answers co-hosts Robert Brokamp and Alison Southwick want to help.

For this podcast, they've invited senior analyst Jason Moser back into the studio, this time to talk about the current situation in the world of video games and esports from an investor's perspective: which companies look strongest, how this particular business might move the needle for some more diversified companies, and more. In this segment, they focus specifically on the world of esports. So if you can't quite imagine how watching other people play video games could evolve into the next breakout spectator sport, allow them to walk you through it.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks.

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How Much Do eSports Players Make in 2019?

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"eSports gaming professionals are starting to earn millions of dollars competing professionally." Here's how much the best players earn in 2019, and how you can get in on the action.

There's no doubt about it - global eSports revenues are rising dramatically in 2019, up 27% compared to 2018, according to Newzoo, a gaming industry analysis company.

Popular leagues are taking the industry by storm like League of Legends, Counter-Strike: Global Offensive and Fortnite leading the way. Additionally, major global brands like Coca-Cola (KO - Get Report) , T-Mobile (TMUS - Get Report) and Toyota (TM - Get Report) , among others, are investing hundreds of millions of dollars in sponsorship money.

With plenty of cash flowing into the picture, how do eSports teams and players earn money? Primarily, through capitalistic means that any American would recognize:

  • Cash prizes. There is no shortage of prize money available to eSports gaming participants, with single-game cash earnings up to $200,000. Some high-level competitions, like Dota 2 International, earns $10 million to the competition's winning team.
  • Team salarieseSports offers regular salaries to team participants, with average salaries in the $3,000-to-$5,000 monthly in gaming hotbeds like China and the U.S. Top echelon players can earn much more, up to $15,000 for a single competition plus bonuses. Some teams even offer their players perks like health insurance and retirement plans.
  • Sponsorship money. With major global brands in the picture, eSports is raking in the sponsorship cash. Some of that money goes into competition and cash prizes, and some go directly to team ownership, as is the case with Audi and its sponsorship of Astralis Counter Strike franchise. Sponsors comprise $456 million of the overall $1.1 billion in eSports revenues this year, Newzoo reports.
  • Digital streaming. Online competition has also spawned a highly effective and organized network of digital streamers who can earn $4.99 per month per viewer and show eSports competitions via platforms like Twitch. Advertising and investment dollars are also starting to flow into the eSports arena.
  • Media rights. According to industry statistics, media rights encompass one-fifth of revenues earned by eSports companies and players. Mostly, media rights money is paid out to event organizers and game developers, who pass on some of the cash to teams and players in the form of prize money and bonuses. According to Newzoo, media rights comprise $251 million of the $1.1 billion total eSports revenue in 2019.
  • Merchandising and tickets. At $103 million in revenues in 2019, merchandising and tickets are among the top tier leaders in eSports payouts. That said, merchandising usually follows the ascension of a sport, as it historically has on the PGA tour, in the NFL and NBA, and in other popular professional sports leagues. Expect both merchandising and ticket revenues to climb as gaming continues to flourish on a global stage.

Merchandising companies like 100 Thieves have already translated the popularity of eSports to the masses - its signature shirts are already a common site around the world and are reportedly often worn by other professional athletes. That's a sure sign merchandising should be a cash cow for organized eSports for years to come.

How Much Do eSports Players Make?

With sponsorship cash and gamer salaries stacking up, it's worth noting the big financial winners in the eSports market - the players.

These players are the highest income earners in the gaming realm, making millions in the process.

Johan Sundstein. Sundstein, also known as NTtail, to gaming fans, is a highly popular and successful "Defense of the Ancients 2," (more commonly known as "Dota 2") game player. The 26-year-old has earned almost $7 million playing in 108 tournaments to date, making him king of the hill in the eSports earning game.

Jesse Vainikka. Also known as HerAx in the Sports world, the 27-year-old Finland native has earned $6.47 million competing in 64 eSports tournaments. Like Sundstein, Vainikka is one of the most accomplished "Dota 2" players in the world.

Anathan Pham. Known simply as "ana" by gaming enthusiasts, Pham has earned $6 million. At 19 (Pham turns 20 on Oct. 26) Pham is one of the youngest players on the eSports tour. He's also earned $3.14 million so far in 2019 alone.

Sebastien Debs. At $5.5 million in career earnings, "Ceb" Debs clocks in as the fourth-highest income earned in the eSports arena. Competing as both a coach and a player, the Frenchman won the prestigious International "Dota 2" event in 2018 and 2019, as a member of team OG.

Topias Taavitsainen. Known as "Topson" on the eSports tout, Taavitsainen has earned $5.4 million in professional gaming income. The Finland native began playing "Dota 2" at age 8, and is now considered a franchise player for team OG, widely recognized as one of the most dominant teams in all of eSports.

Other Ways to Make Money in Gaming

Players aren't the only earners in the eSports world. Other gaming participants are cashing in, too:

  • Broadcasters. Like any entertainment sporting event, announcers and color commenters are needed to call the action. Those who do so can earn up to $1,000 per broadcast.
  • Coaches and managers. Gaming teams need strategic help that eSports coaches provide. The best coaches can earn over $80,000 annually.
  • Media and writers. No eSporting contest is complete without coverage of the game that's read by gaming fans all over the world. The money's not great, but if you love eSports and want to write about it, you can earn about $35,000 annually doing so.
  • Marketing specialists. To expertly sell eSports to the global masses, marketing specialists plugged into the gaming world can earn an annual salary of about $90,000.
  • Social media experts. To get people talking about eSports online, social media experts can earn about $25,000 annually.
  • Event manager. Gaming event specialists, who set up and run the actual contests, can make up to $40,000 every year.

Tips on Becoming an eSports Player

Now that the secret is out and people see that eSports players are earning big money, is there a millionaire's future in gaming for you?

It's not easy, as gamers frequently bring up the lack of sleep and hours of practice it takes to become a major league gamer. But if you put in the work and catch a break or two, fame and fortune await those who make it to the top of the eSports world.

Chances are, those who did so followed some or all of the following steps:

They Chose to Specialize In One Game

Players who've made it to the various eSports gaming circuits say the key was to find one prominent game they were good at and keep playing and grinding until they were beating all challengers. Subscribing to a gaming service like on Xbox Live makes it easy to play a variety of popular games against competitors all over the world. That's the training it takes to get a reputation and become a professional gamer.

Don't Be Afraid to Lose

When you're online training to become a gamer, don't be afraid to lose. Gamers who have made it to the professional level say they learned a lot through losing at games like "Call of Duty" or "Fortnite." By studying the best tactics, the best gamers accumulate the knowledge needed to eventually upgrade their own skills and start winning more games.

Play Fair and Emphasize Character

The best gamers say a big step for them was joining an online community and learning to become a part of a team. That helped them learn (and abide by) the rules, develop an "us" and not "me" attitude, and becoming a team player - all traits needed to make it in the eSports world.

Start Entering Tournaments

Like a professional golfer who gets off the practice range and starts teeing it up against his peers for real, entering tournaments will allow you to test your skills among premier players. You won't know for sure if you have what it takes to become a professional gamer if you don't compete in online or local tournament play. Start signing up and see where you stand as a gamer among your peers.

Get Sponsors

When you do start to break through and win marquee tournaments, you'll start to get noticed. A good sponsor can provide the financial assistance and computing equipment needed to play with the best on the professional level. By networking and getting word of mouth advice on sponsors, great players can get the help they needed to reach the professional eSports level.

Five Vectors Seed Round

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Five Vectors Closes $1M Seed Round Led by BITKRAFT Esports Ventures

  • Music startup Five Vectors raised a $1M USD seed round led by BITKRAFT Esports Ventures.
  • The company was co-founded by former Universal Music Group executive Andrés Lauer and former ESL executive Wasae Imran.
  • Five Vectors created music for Rainbow Six Siege esports, SK Gaming’s League of Legends team and PlayBrain’s Japanese esports initiatives.

Today, Five Vectors Inc., a music startup that works with up-and-coming artists and produces music tracks that are tailor-made for gaming audiences, announced a $1M seed round led by BITKRAFT Esports Ventures. Based in L.A. and Berlin, the company currently operates two brands: 2DEX, a gaming-focused music label brand; and Players Republik, a consumer-facing gaming brand creating apps and outlets for audio products.

Since its establishment in 2019, Five Vectors has signed several artists and producers,  resulting in over 80 audio tracks produced to date. Additionally, the company has partnered with esports and gaming companies to create music for Rainbow Six Siege esports, anthems for the SK Gaming’s League of Legends team, and soundtracks for PlayBrain’s esports initiatives in Japan.

The music startup was co-founded by Andrés Lauer and Wasae Imran, who have merged their music and esports experience as former executives at Universal Music Group and ESL, respectively, to create a company that aims to enable upcoming artists to gain exposure to an ever-growing audience of gamers and game publishers.

“Music and games are coming together in new ways, and what we see happening in this crossover are really magical and powerful new entertainment experiences. With our investment in Five Vectors, we are supporting an incredibly ambitious team that has subscribed itself entirely to music experiences and technology in gaming and esports,” said Jens Hilgers, BITKRAFT founder and managing partner, in a release. “Simply speaking, Five Vectors is bringing new music for gamers and gaming. The technology that Five Vectors is developing under the hood is true innovation in the music space.”

Esports Self-Sufficiency Impressive

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Sports isn’t necessarily what it used to be.

That’s not a knock at the Pirates. A losing season is nothing new there. It’s not a crack about the Steelers’ struggles or the Penguins’ pains.

It’s a reality of a major change in the sports world — whether you pay attention to it or not. It’s esports, a deadly serious, high-stakes world of video games where games are big business.

How big? A report from Reuters put the 2018 revenue for esports at $1.1 billion.

That might seem like nothing compared to Major League Baseball’s $10.3 billion for that same year, or the NFL’s $8.78 billion or the NHL’s $4.54 billion.

But the big deal is that $1.1 billion is only about the people playing on pro teams. The minors in this case are every family room with an Xbox, every kid’s bedroom with a PlayStation and every pocket with a smartphone. Overall, the video game industry was a $43 billion cash cow in 2018 — dwarfing revenue from every major sport combined — and it’s preparing for a boss battle.

According to Variety, the industry could realistically top $300 billion in six years. That doesn’t seem like hyperbole when you look at the growth. Esports blossomed by 27% in 2018 and brand investment has tripled in three years.

For comparison, it has taken the NFL 100 years to get where it is, hockey 102 years and the MLB 150 years at bat. Esports are barely kindergarten- aged.

In North America alone, esports are pulling in more money than anywhere else, about $409 million, and part of that money is calling Allegheny County home as the Pittsburgh Knights have taken up residence. The “team” has, at least. The players, because of the global and virtual nature of play, can be anywhere.

Schools like Gateway are fielding esports clubs, and local kids like Kiski Area junior Nick McGuire are the esports version of star quarterbacks. McGuire scored $50,000 with a 61st place finish in the Fortnite World Cup.

But all of that is just evolving technology.

If you want to know the big difference between the big boys of professional physical sports and their digital little brother, it might be a lack of entitlement.

Philadelphia just saw ground broken for Fusion Arena, one of the first venues to watch the big tournaments, like the recent Overwatch global event, live.

Comcast Spectator, which owns Philly’s Fusion Overwatch team, didn’t hold out for a deal where the city or the state paid for the 65,000-square-foot arena. The company is ponying up the $50 million itself.

Esports might be new, but that kind of self- sufficiency is something the older sports don’t seem able to muster.

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nation buying

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The pieces and behind the scenes corporate movements continue to shift almost imperceptibly fast; 

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"Simplicity Esports and Gaming Company Closes Acquisition of PLAYlive Nation, Inc.

Boca Raton, Florida, July 31, 2019 (GLOBE NEWSWIRE) -- Simplicity Esports and Gaming Company (WINR) (“Simplicity Esports”) announced today that it has closed the previously announced acquisition ofPLAYlive Nation, Inc. (“PLAYlive”).PLAYlive has a network of 44 franchised Gaming Centers across 11 states, including but not limited to, California, Washington, Arizona, and Texas, serving over 150,000 unique gamers annually. PLAYlive Centers are highly complimentary to Simplicity Esports Gaming Centers, that offer gamers a specialized entertainment gaming experience within a social setting.

Jed Kaplan, CEO of Simplicity Esports, stated, “I look forward to increasing the focus of current and future PLAYlive Gaming Centers on esports, as we integrate the Simplicity Esports brand.We expect that competitive tournaments, grass roots community leagues, and special events centered around esports will attract a broadened population of gamers, from diverse backgrounds, to our Gaming Centers.Having a nationwide footprint of esports Gaming Centers gives us the opportunity to allow our fan base to meet, engage, and play against our professional players, as they tour the country and stop in for unique promotional events.”

The equity owners of PLAYlive received 750,000 shares of Simplicity Esports restricted common stock as full consideration for the acquisition, demonstrating the former PLAYlive owners’ confidence in Simplicity Esports and its management.

Members of PLAYlive’s management team, including Duncan Wood, its CEO, will remain in their current roles after the closing and have entered into three-year employment agreements with Simplicity Esports.Mr. Wood will also be nominated by Simplicity Esports for a seat on the Board of Directors at its next annual shareholder meeting.

Duncan Wood, CEO of PLAYlive stated, “We continue to discover new and attractive projects to undertake with Simplicity Esports.I am confident the merger of PLAYlive Nation and Simplicity Esports will create shareholder value, and honored the board of directors desired for me to maintain my position with PLAYlive Nation, as well as be nominated to join the board.I will strive to progress our organization in the best manner possible while honoring my belief in core leadership and continue my commitment to providing the best environment for our customers and staff.”

Interested franchisees are encouraged to contact the company at the number listed below.

About Simplicity Esports and Gaming Company:

Simplicity Esports and Gaming Company (WINR) is an established brand in the esports industry with an engaged fan base competing in popular games across different genres, including PUBG, Gears of War, Smite, and multiple EA Sports titles. Additionally, the Simplicity Esports stream team encompasses a unique group of casters, influencers, and personalities, all of whom connect to Simplicity Esports’ dedicated fan base. Simplicity Esports also operates Esports Gaming Centers that provide the public an opportunity to experience and enjoy gaming and esports in a social setting, regardless of skill or experience.

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FORWARD-LOOKING STATEMENTS

This press release contains statements that constitute “forward-looking statements,” including statements regarding the closing of the PLAYlive acquisition and anticipated benefits of the acquisition. Forward-looking statements are subject to numerous conditions, many of which are beyond Simplicity Esports’ control, including those set forth in the Risk Factors section of Simplicity Esports’ Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on July 24, 2018 and in Simplicity Esports’ registration statement on Form S-1 originally filed with the SEC on December 19, 2018, as amended or updated from time to time. Copies are available on the SEC’s website at www.sec.gov. Simplicity Esports undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

CONTACT: Simplicity Esports and Gaming Company | Roman Franklin | Roman@SimplicityEsports.com | 561-819-8586"