Cheat codes to win at video game investing

With players taking home a record US$15m last weekend, prizes are growing for investors

Andrew Willis 30 August, 2019 | 1:36AM
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Andrew Willis: US$15.6 million dollars! That’s how much the champions of last weekend’s DOTA 2 tournament won. What’s a DOTA, you ask? That.

An online video game that turned the captain of the winning team – 26-year old Johan NoTail Sundstein – into the top prize-winning e-sports player of all time.

You may have missed this year’s tournament, but that doesn’t mean game over. There’s still ways for you to participate in the online multiplayer games universe, that Goldman Sachs says will grow to US$1.1 billion dollars by the end of the year, and reach US$3.3 billion by 2020.

One way is to play – most of these games are actually free. As you become more committed, you’re tempted by microtransactions for new character outfits and customizations. Multiply these little purchases with hundred of millions of players, and you have a very lucrative revenue stream.

But if the thought of spending hours on a video game isn’t appealing, you could always invest in e-sport stocks. Not DOTA though. Valve Corporation – the company behind DOTA – is privately owned. But you do have two other options.

First up is League of Legends, a battle arena game with around 100 million players. Owned by four-star rated Tencent Holdings (TCEHY), the company is based in China – home to a massive influx of new gamers. Tencent also owns Fornite, another battle arena game with around a quarter-billion players online.

Your second option is World of Warcraft. This online role-playing game is subscription based and has around 5 million subscribers paying 15 U-S dollars, every month to play. This company is owned by four-star rated Activision Blizzard (ATVI) – who also owns another blockbuster success, Call of Duty.

For Morningstar, I’m Andrew Willis  

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Activision Blizzard Inc  
Tencent Holdings Ltd291.40 HKD0.90Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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