What if you could combine the rabid fandom and viewership of professional sports teams with the explosive consumption of video games, which is a $134 billion industry and rising? Today, eSports has done just that and is set to continue dynamic growth in value, viewership, and investment. Just what are eSports? The field covers professional video game players, typically organized into competitive teams and playing for game-sponsored tournaments with prizes that run into the millions of dollars globally.
Add to that the potential for advertising revenue, technology deals, sponsorships, and exclusive broadcast rights when the viewership for events can reach the millions—and you can quickly see why eSports is poised to be one of the most important entertainment industries in the next decade. Here’s a closer look at eSports by the numbers and some of the most interesting predictions about where the industry is headed.
An Overall Look at the eSports Industry
eSports is big business. Newzoo projects that the industry will rise to more than $1 billion in revenues for the first time in 2019. The BBC reports that eSports is under consideration for a spot in the 2024 Olympics. A number of forces have coalesced to drive the growth in the industry, from the release of several popular games to the advancement of streaming technologies that enable wide audience access without the grueling broadcast terms other sports face from traditional television networks. In that sense, eSports has used digital platforms to do an end run around other sports.
In fact, Goldman Sachs writes of the opportunities in the field: “We believe eSports are at the cross-section of some powerful trends: social connections being formed and maintained online, digital consumption of video, and global growth in the gaming audience. Looking ahead, we see numerous public and private investment opportunities that we believe will benefit from the structural growth of eSports, both in terms of audience and, increasingly, monetization, as the requisite infrastructure is built to transition eSports from the ‘Wild West’ of sports to a full-fledged professional sport.”
The Audience: How Big Is the Potential?
eSports viewership is currently on par with that of some of today’s most popular professional sports. Goldman Sachs estimates that by 2022, the audience for eSports will reach nearly 300 million viewers. To put that into perspective, that’s equivalent to the audience for the NFL. Deloitte predicts that the eSports market will grow 35% in North America alone in 2019.
NewZoo’s audience assessment focuses on two segments: enthusiasts and occasional viewers. They predict there will be as many as 250 million rabid eSports enthusiasts by 2021, a total audience of 454 million in the same year, and total market growth across all segments of 14% per year. The opportunities are global, with the biggest audiences in the U.S. and Asia, and significant potential growth remaining in these hot zones and other less-developed markets.
Advertising Revenue: eSports Strikes Gold
With an audience this size, one of the biggest financial opportunities in eSports is advertising. A number of major brands, from Monster Energy to AT&T and Coca-Cola, have cultivated sponsorships with competitive eSports teams. eMarketer predicts that advertising revenue from eSports will surpass $200 million in 2020—and that’s just part of the picture.
Related revenues include media rights, broadcasting deals, sponsorship revenue, and influencer deals. Much of the revenue generated comes in the form of a variety of brand investments, to the tune of about $827 million. There’s significant movement in the media and entertainment space to secure the broadcast rights that lead to the advertising opportunities. For example, according to Newzoo the streaming platform Twitch TV and the Overwatch League struck a deal worth $45 million in 2018 alone. Digiday reports that advertising accounts for just 19% of revenues; the sponsorships league owners sell account for 40%.
The Teams: A Cornerstone of Growth
The strategic monetization of leagues is a cornerstone of growth. As eSports grows its fan base and engagement, viewership—and monetization opportunities—will continue to scale. There are a number of professional eSports organizations across the globe. Each team competes for tournament prizes and brings in additional revenue through partnerships, sponsorship deals, advertising, merchandising, and more.
A look at the top winning teams’ tournament revenues provides a window into the financial side of competitive gaming. Esports Earnings reports that the top teams, as of this writing, include: Team Liquid, with over $29 million in winnings across 1578 tournaments; The Evil Geniuses, with over $21 million across 787 tournaments; and OG, with nearly $18 million in winnings from 61 tournaments.
Another dynamic to consider is that tournament purses are increasing. For example, the game developer Epic just helped enshrine the popular game Fortnite as an eSports staple with a staggering $100 million in prize money, notes CNBC. Raising the stakes and increasing the potential rewards for players creates a bigger profile for the industry. As the possibility of big wins draws more players to eSports, there’s a compounding effect that increases media attention—and, therefore, awareness and viewership as well.
High School and Colleges: The Next Generation of eSports Players
The emergence of eSports is due in part to younger audiences and their interest in gaming. Cultivating the next generation of talent and a strong school-based presence has been key for growth. Colleges are typically training grounds and recruitment opportunities for the big sports leagues to scout skilled players. The same dynamic is emerging within eSports. According to one estimate, more than 60 colleges and universities had varsity eSports teams in 2018.
Today, the National Association of Collegiate Esports represents more than 130 schools and over 3,000 student athletes, and offers over $15 million in eSports scholarships and aid. Wired recently reported that PlayVS, a Silicon Valley startup that organizes eSports leagues in high schools, has raised $46 million from investors. Increasingly, individual colleges are investing in eSports arenas for their athletes to train and to host games. The University of Akron announced they are building the world’s largest university-based eSports facility. With university teams competing for prizes that can range into the millions, eSports provides a way for smaller schools to compete—as building a football stadium can cost anywhere from 10 to 100 times the cost of a state-of-the-art eSports facility.
The Future of eSports
The future of eSports is bright. Big names from Hollywood and Silicon Valley are investing. Real estate deals are on the rise, such as the Forbes-reported $50 million facility that Comcast’s Spectacor division is building for their Fusion team. And since 2013, $3.3 billion in venture capital has been put into eSports startups.
Another area where there are fewer numbers, but significant promise, is the technology market. The sales of computers, gaming consoles, monitors, headsets, and specialized peripherals—in addition to games, sound equipment, and ergonomic gaming furniture—is staggering.
While the projections vary slightly from analyst to analyst, the net outlook for the eSports industry is the same: It’s bright, it’s lucrative, and the audience and monetization opportunities are growing. Whether you’re thinking about developing the next popular game, finding a career within the space as an individual, or looking at the investment possibilities, eSports is an industry worth keeping an eye on.