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Study Breaks Magazine

College is expensive, and tuition rates are rising year by year. Lots of students turn to academic or sports-based scholarships to help cover the cost, and over the past few years, some students are even getting scholarships through online gaming. It's no surprise that the rapidly growing videogame space is making its way into academic institutions, given that esports are expected to be a $1.5 billion market by 2020.

That means that, just as many people ritualistically sink into their couch for Sunday football, more and more fans are going to be logging onto various sites — like twitch, the massively popular streaming service bought by Amazon in 2014 for $1.1 billion — to watch their favorite players compete in games like Fortnite or DOTA. According to the New York Times, "Over the past two years, the National Association of Collegiate Esports, which is engaged with 98 varsity programs across the United States and Canada, has helped to facilitate $16 million in scholarships, according to the executive director, Michael Brooks."

An esports tournament

Those lucky students who qualify for these video game scholarships earn money towards tuition by joining an esports team at their prospective school. For example, at Robert Morris University Illinois, there are currently 80 students on the esports team, 70 of which are receiving some scholarship money. At the University of California Irvine, there are 23 students on esports scholarships, and the team is only expected to grow in coming years. Brooks says that he expects esports to grow at an extremely rapid pace, "Certainly within five years I hope to see varsity esports be a common sight on college campuses across North America."

Other scholarships available for video game fanatics focus more on the intention to study game design in college. For example, NYU offers $24,000 in partnership with the Evo gaming tournament to a student, "who best demonstrates an active participation in the fighting game community, an interest in game design with a focus on innovating in the field of competitive games, and a legitimate financial need."

So how do you go about receiving an esports scholarship? Brooks told

Forbes that students earn esports scholarships just as they would earn a more traditional sports scholarship, "based off of three characteristics; academics, merit, and athletic. Our member institutions award esports scholarships (which we would relate to athletic scholarships) based off a number of different traits including; player skill, academics, ability to communicate, available positions open on the team, etc." So next time you start to tell off your child for playing too many video games, consider the possibility that they may just be helping pay their college tuition.

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As the digital realm and technology advances, new investment arenas and spaces open up. One of these spaces currently growing is eSports — essentially, video game competitions and tournaments. eSports have been around since the advent of online multiplayer gaming. However, it's only in recent years that the community has inched closer and closer to mainstream. It's still has a pretty niche audience, but it's growing. About 22 percent of male millennials watch eSports. This category even prefers to watch gaming tournaments over traditional sports. It's estimated that by 2020, 500 million people will be watching eSports tournaments. So how can investors cash in?

One example of an investment is the University of California, Irvine's eSports scholarship program. Just like traditional sports teams, the University is offering scholarships to students who will play on an eSports team representing the school. The school has also opened the first ever public college eSports arena.

However, the main avenues for investment will be outside of higher education. Currently, the main avenues for investors are in streaming, teams, and game development.

YouTube, Twitch, and even ESPN are getting in on the streaming game. ESPN has an eSports hub offering the latest coverage of leagues, tournaments, and standings. The largest prize pool ever in eSports was for Dota 2 league tournament play in 2017. Prizes totaled nearly $25 million. The most popular game streaming service Twitch was bought by Amazon for nearly $1 billion and now hosts more than 100 million users. YouTube has also launched YouTube Gaming in an effort to create a one-stop shop for gaming content — supported by advertising dollars. YouTube already hosts many, many hours of gaming content, but committing further to game streams positions the platform as a direct competitor to Twitch.

However, buying stock in these companies won't necessarily reap dividends strictly from eSports. The money they are making from gaming will likely be a very small portion of revenue for their parent companies. And forget trying to start a streaming platform of your own. Competing with these giants is not a smart play.

Leagues are a possible avenue. Just like physical sports, eSports form their own leagues to create regional, national, and worldwide championships. The two biggest leagues, in terms of prize money, are Dota 2 and Counter-Strike: Global Offensive. But these are both privately held by the Valve Corporation.

But there are plenty of publicly traded companies that you can buy stock in. This includes Riot Games, a division of Tencent Holdings, the world's largest video game publisher by revenue. It also created League of Legends, which paid over $5 million in prizes for play in its 2016 World Championship. (This is also the same league that UC Irvine offers scholarships for students to play in.) In 2017, Activision Blizzard launched a new league in Overwatch. Several big sports team owners as well as industry veterans had purchased the rights for its teams. A total of 14 teams were created. The teams sold for $20 million each. Revenue streams from eSports leagues are similar to traditional sports: advertising, media rights, ticket sales, and sponsorships.

Finally, there's game development and publishers. You can't have an eSports league without a game. As such, publishers and developers have the most to gain from this new arena. Publishers make money off of individual game sales as well as micro-transactions and extra downloadable content. Revenues will likely increase along with the increased interest in eSports. And as owners of the games and intellectual property they represent, publishers can generate revenue from their own eSports leagues.

According to a report from Juniper Research, revenue from eSports in 2017 was expected to total $1.8 billion. By 2021, that number is expected to reach $3.5 billion. With this looming opportunity, investors would be smart to get involved in some way, shape, or form.

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Gaming is one of the most expensive hobbies out there. Not only do you have to drop hundreds of dollars on a console or a quality PC, you also need to pay up to $60 for any top tier games. Even with membership discounts and sales, those numbers can add up quickly. But the sad truth is, economically, video games should cost way more than they already do.

Let's get some perspective here. In 1990, NES cartridges were selling for $50. And in 1998, N64 games went for $70. If we adjust these prices for inflation, you would pay about $100 for these games today. One-hundred dollars. This means that your current games are underpriced by at least $40. However, the shortage is probably much more than that.

In the '90s, video games had very basic graphics and simple gameplay. Producing one of those games today probably wouldn't cost quite as much. However, as our technology has advanced, the gaming industry has had to keep up. Gamers expect more content, HD (and even 4K) graphics, involved storylines, voice acting and high-quality animations. Not to mention support and updates after launch. That's not even touching marketing budgets. It costs more to produce a game now than it ever has in the past.

But if games should cost more, why are they still $60 a pop? The market is keeping the price artificially low. Customers aren't likely to pay more than $60 for a game, even if it actually costs more money to produce one. This situation is why pre-order bonuses, DLC, and micro-transactions have become so popular and widespread. It is becoming increasingly harder to make a profit in the gaming industry. Developers have had to supplement their base game purchases with add-on content just to scrape by.

Pre-order bonuses give gamers a little something extra in-game on day one when they buy ahead of time. This often boosts profits slightly ahead of launch. They also lock in a certain percentage of sales. It gives publishers an indication of how many copies to manufacture and how many people will be downloading a digital copy.

Nowadays, almost every AAA game features some kind of extra downloadable content. Sometimes this is new weapons or maps for a shooter. Other times, it's an extended story piece. Creating DLC takes much less investment and allows developers to earn more cash on an existing property.

However, what is relatively new and unsettled territory is micro-transactions in a full-priced retail game. In the mobile market, free-to-play games that feature some kind of in-game shop are a dime a dozen. But this kind of model in a $60 game is still pretty controversial.

One example of a successful AAA game with micro-transactions is Overwatch. Players can enjoy the full cast of vibrant characters and maps with no additional charge. But to support future updates and server loads, players can purchase loot crates full of goodies. These goodies ultimately have no real impact on gameplay. They are mostly aesthetic skins and items for bragging rights. You can also slowly earn enough in-game currency to open loot crates by playing normally.

The gaming industry is struggling to keep up with constantly evolving technology and consumer purchasing habits. Developers and publishers have to sell more and more of each new title just to make a profit. This situation might explain why so many publishers re-cycle franchises into sequels so often, rather than taking the time and effort to develop new titles.