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.

Strict anti-gambling laws had prevented paid competitions for years, but the industry’s move this month to issue professional gamer licenses is allowing them to sidestep the regulations.

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 in an interview. “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, almost as much as the world’s biggest soccer league today, 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. U.S. publisher Activision Blizzard Inc. launched a 12-team league for science-fantasy shooter “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,” CEO 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 existing 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.”

Fisher 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.

“The question is whether Japan can adopt this culture of watching esports and enjoying it,” said Hideki Yasuda, an analyst at Ace Research Institute. “The pillar for commercialization, both here and overseas, is secondary usage like broadcasting rights. That’s why the real key is if society accepts watching esports like they do now with baseball.”

Two weeks ago, game companies including Sony Corp. and Konami Holdings Corp. paid out about $260,000 in total prize money at the industry’s first official esports tournament, attracting 72,000 visitors and 5.1 million viewers online, according to data from event organizers.

The following week, Capcom announced it was launching a domestic esports business division. Fischer said that’s just the beginning and the market has yet to recognize the trend in Japan.

“Japan esports names are much cheaper than those in the States,” said Fischer. The future potential “is not priced in Japan.”

Fischer, an activist investor, made a name for himself by challenging Japanese companies to improve corporate governance and give more money back to shareholders, including a recent stake in GMO Internet Inc.

In 2013, he accumulated a position in Nintendo Co. and then prodded management to begin releasing games for smartphones, which it eventually did.

Nintendo, Capcom and Square Enix declined to comment.

He says Nintendo can also benefit from competitive gaming by encouraging spectators to bring Switch consoles to esports arenas to use them as social and interactive tools, which he says would boost sales of the device.

The company already hosts esports events globally for games like “Super Smash Brothers” and “Splatoon 2,” but it does not pay cash prizes, saying that would clash with its family-friendly approach.

“Nintendo should be thinking about this much more aggressively than just as a family event,” said Fischer. “That’s how you get massive potential advertising, massive potential in-game sales, and possibly sell multiple Switches per household.”

He says not all of Japan’s publishers will benefit and that Oasis conducts social media surveys and tracks viewer metrics to determine the winners. While he doesn’t expect esports to send stocks surging in the near-term, he says it will become a “significant” earnings driver in the next several years.

“I’m a little bit out there on that. When I sit down with the analysts, they’re not getting the full guidance from the companies yet, and they’re not talking about it that much,” he said . “But this is how you drive real returns: by having a differentiated view and not being in the consensus.”

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