Competitive gaming in Japan has found a champion: hedge fund boss Seth Fischer.
The chief investment officer of Hong Kong-based Oasis Management Co., which owns more than $1 billion in Japanese securities, said esports is now among his top five investment themes for Japan. He has started buying stocks of game publishers like Capcom Co. and Square Enix Holdings Co., looking to cash in as the country that practically invented video games begins a long-delayed embrace of professional gaming.
Fischer is among a few early believers that competitive gaming can become big business in Japan.
Fischer says that lays the groundwork for publishers to grow audiences, sell more games, and begin generating new revenue from broadcasting rights and advertising.
“I own Capcom today on the back of esports, and it’s my biggest bet on esports in Japan. I have also been buying Square Enix recently,” Fischer said. “The numbers speak for themselves and the viewership speaks for itself. This is both real and significant.”
Worldwide esports revenue including media rights, advertising, ticket sales, and merchandising will reach about $5 billion annually by 2020, according to market researcher Activate. The total audience for competitive gaming will grow to 557 million people by 2021 from 380 million this year, according to researcher Newzoo.
That’s beginning to translate into real earnings for global companies. US publisher Activision Blizzard Inc. launched a 12-team league for fantasy shooting game Overwatch, selling team franchises at $20 million a piece. France’s Ubisoft Entertainment SA stands to create “lots of revenue” from esports titles including Rainbow Six Siege, Chief Executive Officer Yves Guillemot told investors on a conference call this month.
But in Japan, that wasn’t possible due to unique laws that prevent cash prizes in competitions, making it illegal to hold the kind of large, paid tournaments that attract big audiences. The industry’s solution, unveiled this month, is to issue licenses to exempt professional video game players from the laws, similar to Japan’s approach to professional golf, baseball and tennis.
“The legal changes make it possible for more people to become engaged and for it to become a bigger phenomenon,” said Fischer, who has asked some of his analysts to win licenses as part of their research.
“The demographic for that in Japan is big.”
Fischer is making his call very early. Only 46 professional gaming licenses were doled out at the inaugural competition and it may be years before esports reaches critical mass.