ESports: A Billion Dollar Industry Bigger Than Super Bowl

ATLANTA, GEORGIA - January 21, 2019: Superbowl LIII will be played at Atlantas Mercedes-Benz Stadium on Sunday, February 3, 2019 against the New England Patriots and the Los Angeles Rams.

Electronic sports is one of the fastest-growing facets in the multi-billion gaming industry. Commonly referred to as eSports, the segment are increasingly rivaling traditional sports leagues in terms of revenues and opportunities.

For those still in the dark, eSports is a booming industry whereby skilled video game players congregate to compete against each other. eSports encompasses competitions from varying sporting events right from basketball to baseball as well as football. Professional gamers compete against each other, either online or in large arenas whereby fans come out in numbers to watch live actions in big screens.

eSports captured the attention of 400 million viewers in 2018. While most of the people watching their favorite gamers battle it out online, live tournaments also brought thousands of people into arenas around the world.

Electronic sports phenomenon has taken off in part because of big deals from mainstream broadcasting networks. Online platforms such as YouTube and Twitch have also played a big role in ensuring the spectacle reaches massive audiences around the world.

Sponsorship deals are making it easy for gamers to consider eSports a career. While sponsorships have contributed to more than half of the revenue, they have also given rise to millionaires at a tender age. Revenue from sponsorships should continue to rise as brands rush to gain access to the eSports target market, mostly made up of Millennials.

Revenue Growth in eSports

An influx in advertising campaigns, ticket sales, as well as licensing sponsorships, saw the total revenue from eSports activities skyrocket to $869 million, according to eMarketer, in 2018. According to PriceWaterhouseCoopers, sponsorships accounted for $277 million in revenues generated. Consumer tickets sales brought in about $55 million while media rights generated $181 million. Streaming advertising, on the other hand, generated $163 million while consumer contribution generated as much as $129 million.

Backed by a growth of about 25%, eSports revenue is expected to clock the $1 billion in 2019. eSports revenues could hit record highs of $2.96 billion as early as 2022. PwC, on its part, estimates that media rights will be a key driver of revenues in the eSports by 2022. A growth of 11.5% could see revenues from media rights clock highs of $449 million. Advertising and sponsorship revenues, on the other hand, is expected to grow by 5.5% each

Revenue growth in eSports has everything to do with an influx in the number of people embracing the electronic sports spectacle. A spike in eSports viewers looking for ways to watch their favorite teams, as well as players and tournaments, is one of the factors that should continue to drive revenues leading to increased profitability.

While there were roughly 400 million eSports viewers in 2018, the figure looks set to clock highs of $557 million by 2021. Data by Newzoo indicates that, as many 250 million could consider themselves as ardent supporters of the eSports spectacle. The remaining $307 million could turn out to be occasional viewers

ESports growth by region

The U.S boasts of the biggest growth opportunity for exports given the country’s strong gaming culture. Strong ties between gaming and sports should see the country emerge as a force to reckon with. Data by Newzoo indicates that North America will boast of $409.1 million in eSports revenues in 2019, making it the biggest in the world.

Accelerated growth should see the market size reach $691 million by 2022. Sponsorship deals will account for the largest share of revenues at about $196 million. However, media rights remain the fastest-growing segment when it comes to revenue generation.

China a hub for video games also continues to experience rapid growth when it comes to electronic sports. The country could generate revenues of as much as $210.3 million in 2019, placing it in second behind the U.S.

However, a slowdown in the issuance of game licenses threatens to take a toll on the Chinese gaming industry. A lack of licenses could affect gamer’s exposure to eSports titles, something that could affect revenue generation. ESports is also increasingly gaining traction in Western European markets. Latin America is another market on course to offer impressive opportunities for eSports.

Taking into consideration the amount of revenues eSports continues to amass, it goes without saying that the spectacle is transforming the gaming industry. Unlike in the past, whereby online gaming was purely the domain of twenty-something year olds who did not have anything to do with their lives, things are slowly changing.

More people are increasingly taking eSports seriously and making a living by either playing or hosting tournaments. Big brands are also streaming into the sector and sponsoring gamers with the best skills to act as brand ambassadors for their products.

Diversification of the sector has seen gamers compete in games such as League of Legends Dota and Counter-strike in addition to traditional sports. Companies are increasingly flooding into the sector in pursuit of the best of the best when it comes to gaming skills to market their brands through sponsorship deals.

While big brands have already entered the industry, non-endemic brands are likely to present the biggest opportunity going forward. In addition, digital broadcasters, as well as TV media companies, are increasingly competing for content a development that continues to accelerate growth.

The most popular eSports

While eSports encompasses almost all sporting events, the most popular are not traditional games. The rankings of the most popular eSport games also tend to vary from time to time. However, League of Legends continues to top the charts as the most played eSports game.

Dota and Counter Stroke also continue to attract huge audiences. Other notable mentions include Heroes of the Storm as well as Overwatch and World of tanks.

eSportsGamers

To become a force to reckon with in eSports, is no easy feat for gamers. Hours of extensive training to finesse gaming skills are necessary for players who wish to command a fortune in eSports tournaments.  It is no secret, the best gamers horn their skills up to 14 hours a day.

As an eSports, gamer, one can make a living by live-streaming themselves while playing various games. As a streamer, one has to decide whether they wish to stream eSports for living or play the games professionally.

Streamers tend to make a lot of money in part because most of them have strong personalities that some viewers find quite entertaining to follow. By running streaming channels, such gamers can make money on the side through running ads on their channels or receiving donations from members who subscribe to the channel.

However, some gamers have made a fortune by rising up the ranks to become reputable professional eSports gamers. Such gamers compete in tournaments around the world, be it online or in tournaments where viewers congregate. Successful pro gamers stand to walk away with six-figure salaries or even millions. Some of the reputable eSports professional gamers started playing at the age of 16, and most of them tend to retire at the age of 24.

ESports players might play the games solo or join teams to compete for cash prizes. Teams specialize and compete against other teams in popular games such as League of Legends or Counter-Strike. The best teams many at times get signed up by some of the big brands. For instance, video game developers can select a team to represent their respective video games.

ESports Audience

The worldwide eSports audience is likely to reach 600 million by 2023, a 70% plus increase from 2017 levels. A majority of the gaming fans are Millennials that big brands are increasingly targeting.  In the U.S for instance, 62% of eSports viewers are aged between 18 to 34 years.

ESports audience should continue to rise, driven by many factors key among them being increased investments from traditional sports leagues. An increase in the number of broadcast deals should result in the eSports spectacle finding its way into many households. Growth in the mobile-based eSports scene should also continue to attract more people into the business.

Data Business Insider indicates that 58% of the audience is open to brands involvement in the business. An upsurge in eSports audience explains increased brand activity. Celebrities, as well as renowned athletes, are also getting involved in the industry to take advantage of the big audience.  For instance, basketball legend Michael Jordan and hip-hop artist Drake have all made investments in eSports ventures.

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