sports

Sports

While watching your favorite team from your couch or in the stands (probably sporting your favorite team hat or player jersey) you may have let yourself daydream a time or two…what would it be like to own a team?

But, for most sports fans, that’s only a dream. The Los Angeles Clippers in 2014 were sold for $2 billion. Most professional sporting organizations have similar sky-high values. 

This huge cost doesn’t mean, however, that less wealthy investors are precluded from investments in the big sports. The elite nature of teams is, in fact, not a barrier to entry at all. Rather, the loyal fan base these teams attract makes for a broad market of investment portfolio possibilities.  

[Is streaming the future of sports?]

More than 16.5 million viewers tune into the average NFL game, according to Sports Illustrated. In 2019, 102 million people tuned in to watch the Super Bowl.  

And, sports are way more than American football. According to FIFA, 3.572 billion people watched the 2018 FIFA World Cup. That’s more than half of the global population aged four and over.

In other words, there is major opportunity to be had in investing and capitalizing on society’s fascination with sports.

In 2019, the sports industry in the United States topped $73 billion. It is anticipated to reach $83 billion by 2023. In part, this is because of the growing number of industry players. 

The sports market has four primary segments: gate receipts (ticket sales for live sporting events), sponsorship, media rights and merchandising. That’s just scratching the surface. 

Outside of the stadiums, technology in sports is helping fans to follow their favorite teams more closely than ever before. Technology is also changing the sports ecosystem in both some expected and some unexpected ways. 

Can You Invest in Sports?

When it comes to investing in sports, opportunity abounds, especially for those who think beyond the playing field. 

Think back to your favorite hat or jersey, and then to the millions of sports lovers wearing something similar that represents the team that they follow.  

For investors, that means money can be well served in merchandising via publicly traded sports apparel manufacturers such as Nike, Under Armour, and Lululemon Athletica, top retailers like Dick’s Sporting Goods, or even equipment manufacturers such as Brunswick Corporation. This type of investing is ideal for those with an interest in investing in physical products. 

Other less tangible opportunities include investing in the broadcasting of sports. ESPN, the world’s largest sports broadcaster, is owned by Walt Disney (NYSE:DIS). The station is a money-maker for Disney, offering live coverage of some of the most-watched sporting events. 

By 1990, The Wall Street Journal ranked ESPN the # 1 channel on cable with 54.8 million subscribers, ahead of CNN & MTV at the time. The channel launched the streaming service ESPN+ in 2018, to provide expanded access to select live MLB, NHL, NBA, and MLS games, in addition to other sports offerings from boxing to cricket.

If ESPN isn’t interesting, there’s also the option of investing in publicly traded companies that own interests in professional sports teams. For example, MSG Networks (NYSE: MSGN), owns the New York Knicks and Madison Square Garden.

Investors can also consider venues. The MGM Grand Casino in Las Vegas, NV (NYSE: MGM) is a tourist hotspot. With its MGM Garden Arena in Las Vegas, it is one of the premier sports venues hosting major events like All Elite Wrestling’s inaugural event, Double or Nothing. According to All Elite Wrestling, the event sold out in four minutes. The Garden Arena also hosts professional boxing matches, UFC mixed martial arts events, amongst many others. 

Why Invest in Sports?

The sports industry is growing and changing. According to Deloitte’s 2020 Sports Industry Outlook, the five trends likely to have the greatest impact on the industry are: (1) The rise of women’s sports, (2) The continued evolution of esports, (3) Legalized sports betting, (4) College athletes maximizing their short-term value, and (5) 5G and sports in the cloud. 

And, perhaps to everyone’s surprise, sports are no longer strictly physical in nature. 

Technology is not only helping fans to connect with their teams, individual athletes, and other forms of sports entertainment more than ever before, it’s allowing sports enthusiasts to attract their own audiences through eSports. 

eSports are described as the world of “competitive, organized video gaming.” According to research firm Newzoo, the number of esports viewers worldwide will grow from 380 million to 589 million by 2020. It’s predicted that eSports viewership will eventually surpass even that of mainstream sports.  

And, big companies are taking notice.

Amazon acquired Twitch streaming service in 2014. Now valued at $3.79 billion, Twitch has an average of 15 million viewers each day who tune in to watch or host live streams.

Sports technology goes beyond even the rise of esports to training and filming. Consider wearables, virtual reality used by athletes to train, and the advancing drone technology that captures live games like never before. These applications of tech are all opening up the market for more investment than ever before.

An investment in sports, with their eager and loyal fanbases and emerging technology applications, includes a world of opportunity beyond the action on the playing field. 

How to Invest in Sports

But sports and its related industries are spread out and difficult for investors to access directly. Investing in the sector via an ETF or mutual fund, however, is a good way to bring these different industries together to gain exposure to this high-potential segment. A search on Magnifi indicates there are a number of ways for investors to access sports this way.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Streaming

Streaming

The rise of streaming services over the past 10 years has radically changed how we consume television and movies. Lest we forget, there was once a time not so long ago when we had to make sure we were in front of our television set at a designated time in order to enjoy an episode of our favorite program. If you were the poor soul who missed the show, you would have to go around with your fingers in your ears as everyone around you discussed it until you had a chance to watch it when it re-aired later in the week.

With the steady increase in internet access and speed over the past 10+ years, we gained the remarkable ability to instantly stream a vast library of television and movies at any time from anywhere and from a variety of devices. Pioneering companies like Netflix recognized the transformative potential of streaming content early on; so early on, in fact, that they were widely mocked by the established entertainment industry not long before they utterly change it.

In one particularly ironic moment from the early 2000s, a former Netflix executive recalled how Blockbuster executives turned down their offer to sell the fledgling startup by laughing them out of the office.

Netflix is undisputedly the biggest name in the streaming game, but their competition is starting to get serious, leading to a showdown that some are calling the “streaming wars.” Heavy hitters in the form of traditional cable companies and content creators have finally caught on that the future of entertainment is streaming, and they have been working furiously to catch up with more established streaming platforms like Netflix, Hulu, and YouTube.

After years of work and months of hype, these heavy hitters are finally ready to debut what they’ve been working on. Apple launched its streaming service, Apple+, on November 1, 2019, Disney launched Disney+ on November 12, 2019, and HBO Max (Warner Media Entertainment) and Peacock (NBCUniversal) are slated for launch in early 2020.

These launches coincide with news from the Motion Picture Association of America that the number of streaming subscribers worldwide (613 million) has surpassed the number of cable subscribers (556 million) for the first time. The new streaming giants are going to slug it out in the coming years, competing for subscribers with archive depth and quality, as well as the allure of original content. Netflix has demonstrated time and again that a winning streaming formula is one in which viewers come to binge-watch old favorites, like The Office, and stay to nibble on attractive new offerings, like The Crown.

Streaming services have already fundamentally changed how we enjoy television and movies, and continued innovation is going to present savvy investors with incredible opportunities as the industry enters a period of extraordinary growth and upheaval.

For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.

What is Streaming?

According to PCMag, a streaming service is defined as: “An online provider of entertainment (music, movies, etc.) that delivers the content via an Internet connection to the subscriber’s computer, TV or mobile device.”

The service that companies like Netflix provide is referred to as Subscription Video on Demand, or SVOD. These companies generate revenue from monthly subscription fees instead of from advertising or pay-per-view transactions. Other companies (such as Hulu) use a tiered pricing structure in which lower monthly fees are offered in exchange for advertising in the form of commercials.

Streaming service companies depend on reliable, high-speed internet performance in order to deliver quality products to their customers — a fact so integral to Netflix’s bottom-line that the company now measures and publishes the internet speeds of internet service providers responsible for streaming Netflix content.

Why Invest in Streaming?

According to a May 2019 eMarketer report, the top U.S. streaming services companies generated about $19.9 billion in subscription revenues in 2018, while subscription revenues in 2017 totaled about $14.9 billion.

For its part, Netflix earned three consecutive 30% year-over-year revenue increases between 2016 and 2018, and looks to be on track for a fourth. The company’s share price hovered around $50 in January 2015, and by November 2019, had soared to about $315 per share.

It is much too soon to tell how things are going to shake out in the streaming wars to come, though some analysts believe that Netflix may be in real trouble as other serious competitors step in to take a bite out of the streaming market. Others point to the fact that Netflix spent $12 billion creating original content in 2019, has 158 million subscribers, and has, by far, the largest content archive of any streaming service.

According to a September 2019 Digital TV Research study, the number of subscriptions to streaming services companies is projected to increase by 91% – or 462 million subscriptions – between 2018 and 2024. It is important to note that much of this growth is expected to occur internationally (i.e., outside of the U.S.), and international growth has been a cornerstone of Netflix’s success thus far (62% of Netflix’s subscribers live outside the U.S.).

Other streaming services have a lot of work ahead of them in order to match Netflix’s international success, which includes overcoming complex regulatory and content requirements.

During the seven-year period between 2018 and 2024, Netflix’s revenue is projected to more than double from $15 billion in 2018 to $35 billion in 2024, while revenue from Disney+ is projected to hit $7.4 billion by 2024.

While it is too soon to say how the streaming wars are going to turn out in the long-run, it does seem likely that streaming services as a sector will remain a dynamic, high-growth space in which well-placed investments are likely to do well.

How to Invest in Streaming

However, as the full landscape of streaming entertainment is still shaking out, investing directly in these companies can be risky. Rather, there are a number of funds and ETFs that give investors access to this asset class with more diversification. A search on Magnifi suggests that there are a number of other ways to profit from streaming as a whole.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]