Minicast: The evolution of gaming

Boutique investment manager PAC Capital, is investing in companies that are pioneering the way for esports and gaming.

The gaming industry has become one of the largest forms of entertainment with more than 3 billion consumers worldwide and total revenues of over $184 billion. Clayton Larcombe, chief investment officer at PAC Capital, spoke to Digital Nation Australia about the evolution of the sector.

According to Larcombe, the gaming industry has evolved significantly over the last five years, with major companies such as Microsoft, Sony and Tencent investing heavily to acquire and grow their companies.

"You've seen the big names such as Microsoft and Tencent coming in and spending a huge amount of money to acquire and grow their companies, but it's also becoming a big part of their businesses now," Larcombe said.

"In 2022, Sony's business model saw $28 billion of their revenue coming from gaming. Microsoft saw $16.2 billion of its revenue coming from gaming, and Tencent saw $13 billion of its revenue coming from gaming. These are mega-cap companies that are now trying to own the space, which is pretty new."

Larcombe said the gaming ecosystem is made up of software and hardware providers, teams, and esports tournaments, with different verticals evolving in the sector.

"Esports and sports are becoming very much more the same, and then esports is just a facet of the bigger broad set, which is gaming," he explained.

While Asia dominates the esports industry with 70 percent of global esports revenue coming from the region, North America is also making significant inroads into the sector, according to Larcombe.

As for Australia, Larcombe believes there is a lot of potential for growth in the industry.

"We have a lot of programs that are evolving, a lot of talented people that are going offshore to join teams and other sorts of organisations," he said.

"I'm trying to push for Australia to have more of a presence here and have some sort of development program that keeps all the talent on shore."

PAC Capital is looking to capitalise on this growing trend by investing in companies that are driving innovation and growth in the gaming industry. As more and more players flock to the world of gaming and esports, it's clear that this industry is here to stay and has the potential for significant growth in the years to come.