Today's global e-trends will be the standards of tomorrow. So far, e-sports is still largely flying under the radar of investors, writes Vontobel's Daniel Bruesch
By Daniel Bruesch, Head Vontobel Wealth Management Investment Office, Zurich
Nowadays, a whole generation is growing up in a predominantly digital and networked world in which computers, smartphones and digital social networks are normal.
Their use of technology is something they simply take for granted, as they do their access to mobile communication and desire to maintain their social networks via digital contact with their family, friends and business contacts – all factors that will define how we work and behave as consumers.
E-Commerce is Becoming Increasingly Important
(Daniel Bruesch, Vontobel)
Worldwide, consumers are increasingly using online channels to purchase goods and services of all kinds. Examples of this trend can be observed not only in the U.S., but also in Asia and Europe. Companies such as Alibaba and Zalando, for example, are shaking up the traditional retail sector in China and Germany.
In September, the insolvency of Toys’R’Us, the third-largest insolvency of a U.S. retail store chain in the history of the U.S., was a further signal of the ongoing boom in e-commerce and the growing need for classic retailers to adapt.
E-Commerce Not Only in the Classic Retail Trade
The spread of e-commerce is not limited to the classic retail trade. With the 14 billion dollars acquisition of the grocery chain Whole Foods, Amazon recently penetrated even into the groceries sector, where online retailers have hardly had any market share up to now. To be sure, traditional sales made over the store counter have not come to an end by any means, but the shift to online trade continues unabated.
According to estimates by eMarketer, a leading provider of digital market data, the volume of worldwide e-commerce retail sales is expected to post double-digit growth each year through 2020. E-commerce has numerous advantages. It allows consumers to easily and conveniently access a very comprehensive range of products and services – and around the clock, from anywhere, and at extremely competitive prices.
In addition, as a rule, product availability is greater than in regular outlets thanks to the large inventory levels maintained by online retailers. Other advantages include the excellent transparency making possible the comparison of products and prices, access to product reviews posted by other interested purchasers, as well as delivery right to the doorstep.
E-Sports on the Threshold of Becoming Mainstream
Although the e-sports (electronic sports) sector will shortly go mainstream, becoming the next billion-dollar market, it is still largely flying under the radar of investors. This is mainly because it is the millennials, i.e. the generation born in the 1980s and 1990s, who are particularly active here. However, as «digital natives» – a generation that has grown up entirely in the digital world – and future customers, it is they who are shaping the world of tomorrow.
E-sports are all about sporting competition that takes place in the virtual world. Contrary to conventional video games, in e-sports the competitive concept has to do with one or more players competing against each other via their computers or smartphones. For some time now, this has no longer been a niche occupied only by «geeks»; indeed, in China, the U.S. and Korea it is now recognized as a legitimate type of sport, which is increasingly run by professionals.
Attracting More and More Enthusiasts
Together with the fan base, the number of leagues and professional e-athletes is growing steadily. In light of the fact that there are over 300 million e-sports enthusiasts (according to market research company Newzoo), and given the popularity of football-oriented video games in Europe, it is hardly surprising that in the meantime, not only top clubs like Paris-Saint-German and Manchester City have fielded their own e-sports teams, but also smaller clubs.
Even without elaborate promotional activities aiming to increase its popularity – such as the expansion of the number of participants in the football World Cup to 48 teams – e-sports are attracting more and more enthusiasts. Since the first World Cyber Games in Seoul in 2000, viewership has risen rapidly and is now at a considerable level.
This Success Is Not Limited to Online World
More than 43 million spectators watched the broadcast of the final of the most popular e-sports game «League of Legends» in 2016, about 10 million more than the NBA final in the United States that same year. On YouTube, videos with gaming content account for 15 percent of the videos posted, making it by far the largest category.
And this success is not limited to the online world, either. Venues such as Madison Square Garden in New York or the Olympic stadium in Beijing are easily sold out for major e-sports competitions.
E-sports will be for the first time an official medal sport at the 2022 Asian Games in Hangzhou, China. Also the International Olympic Committee (IOC) will consider e-sports for inclusion as a medal event in the 2024 Olympic Games. The Paris Olympics 2024 program will be finalized after the 2020 Tokyo Olympics.
Where In Particular Can Asian Investors Benefit?
We believe that global e-commerce volume will continue to grow strongly in the future, with the improvements being made in ordering processes on mobile devices contributing to this growth. But the boom in e-commerce will not only boost the sales of online retailers. Among others, e-payment solutions and logistics companies will also benefit from the increasing volume of online orders and transactions.
E-sports are also growing rapidly and, in a similar fashion to online retail, benefiting from the increasing use of smartphones and computers to deal with all sorts of life’s demands. Makers of games and providers of streaming content are gaining momentum through this emerging billion-dollar market.
