The idea of sitting and watching others play video games for hours may not sound appealing to some, but you may be surprised to find that this is a growing trend and it's also big business. 

Those looking for stories on esports can turn to ESPN 's esports hub for the latest news or to YouTube for exclusive coverage of competitions. The largest prize pool ever in esports was for Dota 2 league tournament play in 2017, with prizes totaling nearly $25 million. Twitch, the most popular game-streaming service, was bought out for nearly $1 billion in 2014, and it now touts more than 100 million users. 

With those statistics in mind, let's look at three ways investors can capitalize on the emergence of esports.

Young people play a video game as part of an esports tournament.

Esports is experiencing explosive growth. Image source: Getty Images.

Streamers (NASDAQ:AMZN) was ahead of the curve when it purchased Twitch for a reported $970 million three years ago. Twitch is an online service for players to live-stream their games while others watch. More than 22,000 "streamers" earn money on the platform through the Twitch Partner Program. The company boasts 15 million daily active users, with 106 minutes of content watched per person per day, fed by over 2.2 million active streamers. Subscribing to Twitch costs $4.99 per month per channel, with half going to the streamer.

YouTube, a division of Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), is the other major player in video game streaming. The company launched YouTube Gaming to create a one-stop destination for game content, viewers, and streamers, supported by advertising dollars. The site was already the go-to for replays of completed matches, and the platform has recently signed several exclusive streaming deals, putting Twitch on notice that it is a force to be reckoned with. 

Any revenue derived from esports will be a drop in the bucket compared to Amazon's e-commerce and Google's search revenue, so buying those stocks wouldn't be a direct way to make money from esports.

A league of their own

Esports leagues are a growing trend in the digital realm. Similar to their physical sports counterparts, esports leagues are formed to create regional, national, and worldwide competitions that people want to watch. Two of the biggest in terms of prize money, DOTA2 and Counter-Strike: Global Offensive, are owned by privately held Valve Corporation, preventing investors from getting in on the fun.

However, there are several publicly traded companies for those wishing to invest in esports leagues. Riot Games, a division of Tencent Holdings (OTC:TCEHY), is the world's largest video game publisher by revenue  and the creator of League of Legends, which paid out over $5 million in prizes for league play in its 2016 World Championship. 

The popularity of these leagues has not gone unnoticed by other publishers. Activision Blizzard (NASDAQ:ATVI) recently announced that numerous big-name sports team owners and industry veterans had purchased the rights for teams in its soon-to-debut Overwatch League and reportedly ponied up $20 million each for the privilege. Seven teams were originally signed, and now the number has increased to 13, out of 14 total expected in the first season. The league is set to launch later this year.

The National Basketball Association (NBA) has partnered with Take-Two Interactive Software (NASDAQ:TTWO) to develop the NBA 2K eSports League, which will arrive in 2018. The competitive gaming league will find 17 NBA teams participating in the first year. 

The opportunity to generate revenue from esports leagues is similar to those for their traditional sports counterparts, including advertising, media rights, ticket sales, and sponsorships. These leagues are only just beginning and how each will play out remains to be seen.

A man who's watching a video game on his computer covers his eyes.

Image source: Getty Images.

Game publishers

Game publishers have the most to gain from the growing adoption of esports. Companies like Take-Two and Activision primarily make money from the sale of video games. In addition to individual game sales, publishers make money from recurrent spending, which comes in the form of micro-transactions, virtual currency, and downloadable add-on content. In its most recent quarter, Take-Two reported that revenue in the category increased 72% year over year, and grew to 41% of total sales.

Increased interest resulting from esports will likely lead to additional game sales and increased recurrent spending. As the owners of the games and intellectual property they represent, publishers will also generate additional revenue streams from the esports leagues. Activision will pocket an estimated $280 million by selling 14 teams for its Overwatch League for $20 million each. The company will also receive publisher fees, as well as a cut of media rights, advertising, and tickets sales for league play. 

Game makers have only begun to scratch the surface for this fledgling opportunity. For investors looking to profit from esports, game publishers provide the best opportunity. 

Beyond traditional sports

Revenue from esports and streaming will amount to an estimated $1.8 billion in 2017, and that is expected to crest $3.5 billion by 2021, according to a report from Juniper Research.

The report stated that advertisers will be the biggest beneficiaries of the trend. Juniper divided esports into three distinct segments: Those competing in esports for money (esports), those who participate in online commentary and tutorials involving casual gameplay (the "let's play" segment), and the streaming of games by broadcasters as they happen (the "watch play" segment). The report revealed that advertisers will be the biggest beneficiaries of the trend, forecasting that almost 90% of esports and let's play viewers will also watch ad-supported casual games by 2021.     

The report reveals metrics that point to the growing popularity of esports. The final stages of the three biggest esports tournaments in 2016 boasted 90 million unique viewers, which rivals traditional sports competitions. Approximately 300 million people worldwide are expected to tune in to esports this year, and that number is expected to grow to 500 million by 2020.

With the burgeoning opportunity for esports, investors may want to play along.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.