Esports – How the industry is growing and making money?
What Is Esports?
Esports stands for “electronic sports,” transforms online gaming into a viewer sport. The experience is identical to watching a professional sporting event, except that instead of watching a physical event, viewers watch video gamers battle against each other in a virtual environment.
Just as conventional sports fans enjoy watching top athletes perform at the top of their craft, the same is true of those who watch top video gamers compete.
Growth and making money in Esports
- Esports is a flourishing global industry where skilled video gamers play competitively. In the same way that conventional sports have competitions in baseball, basketball, and football, esports encompasses competitions across a diversification of video games.
- In reality, contrary to usual perception, esports is not a simple phenomenon happening in the underground room of unemployed people at the age of 20.
- The industry is actual and is growing globally. The industry is also investable.
- If to lay down the facts over 380 million people watch esports worldwide both online and in person. 43 million viewers watched the 2016 world finals of popular esports game League of Legends as compared to NBA Finals Game 7 which was watched by 31 million viewers.
- With its exploded landscape and digital platform, the esports sector holds promise for a mass of monetization opportunities.
- The year 2019 marks a major milestone for the global esports market, which will for the 1st time exceed the billion-dollar revenue mark.
- As per actual fact, revenues will reach an impressive $1.1 billion in 2019, a year-on-year growth of +26.7%.
- Around 82% of the total market ($897.2 million), will come from endemic and non-endemic brand investments which include media rights, advertising, and sponsorship.
- The highest-grossing individual esports revenue stream worldwide is sponsorship, generating $456.7 million in 2019.
- The fastest-growing esports revenue stream by far goes to media rights.
- They are online jerseys and streams at events and photo shoots. Sponsors make up the largest portion of that $1.1 billion.
- Major non-endemic brands are entering esports every month. Brands in every sector from fast food to athletics apparel are tangled in esports. Some brands are focused on the events and leagues such as Nike’s massive 4-year deal with the League of Legends Pro League.
- Other brands are focused on individual players. Red Bull’s immeasurable partnership with Ninja is a great example as the brand has done well to maximize on his massive audience.
- Advertising consist of the revenue generated from the advertisements targeting esports viewers which include advertisements shown during live streams on online platforms, on video-on-demand content of esports matches, or on esports TV.
- Brands such as Intel and Samsung to Coca-Cola, Arby’s, and Redbull are already targeting the esports audience, especially bearing in mind their significant buying power.
- As of now,advertising across esports,there are many platforms that remain much cheaper than doing so on more traditional sports.
- If the esports viewership and impact continues to expand, exhibitions to this fanbase will get more expensive. It comprises 22% of the industry right now, advertising is one of the largest streams and is expected to grow to $224 million by the year 2020.
Game publisher fees
As in the current situation,game publisher fees constitute a large portion of the industry. Much of this money has been an investment in marketing by game creators in order to extend the shelf life and relevancy of their games.
ESports viewership is growing
- Since the year 2016, there has been a notable increase in eSports viewers on both occasional viewers and viewers who watch it regularly. Between 2016 and 2017, there was a 19.3% increase year over year.
- In 2017, there were 192 million informal viewers and 143 million viewers who watch it regularly which makes the total audience 335 million.
- In 2018, the year-over-year growth rate had moderately dropped by 13.8%, although that’s still a sizable increase. In 2018, there were 215 million periodic viewers and 165 million viewers who watched it regularly. So the total spectators size grew to 380 million.
- By 2021, it is estimated that the annual growth rate will be approximately 14%. They also predicted that the number of natural viewers will grow to 307 million and that there will be 250 million eSports enthusiasts which made the total audience to 557 million.
- Global Esports Viewers will be 453.8 Million in2019. The global esports audience will grow to 453.8 million worldwide in 2019, a year-on-year growth of +15.0% which is high. This audience will consist of 201.2 million Esports Enthusiasts(+16.3% year-on-year growth) and 252.6 million Occasional Viewers (+14.0% year-on-year growth). As the esports market develops and the number of local events, leagues, and media rights deals increases, it is predicted that the average revenue per fan will grow to $6.02 by 2022.
ESports awareness is increasing
- One of the main reasons why there has been growth in eSports viewership is because more and more people are learning about it. There has been an enormous rise in awareness of the eSports industry since 2015. Before 2015, there were a bit somewhat more than 800,000 people who had heard about it. These numbers have soon changed and by the next year more than a billion people had learnt about eSports.
- These numbers without any break continue to increase in the following years, by a few hundred thousand annually. By 2017, eSports acknowledgement had risen to 1.28 billion, and it reached 1.43 billion by 2018.
- In 2019 an estimated 1.57 billion people are probably to learn about it. It actually meant that viewership will likely increase as well and with that and the industry will further see revenue growth.
Start your own stream and host esport games. One of today’s most evident income sources within esport is made through media channels like streaming on Twitch. The insistence for watching games is amassing bigger every day and the experience as a viewer is as well getting better all along.
It is an opportunity to build command and get some eyeballs within your own esports media channel. If you start streaming and commentating on live games of full-time teams and deliver an entertaining experience for the viewer you can build up a good income source from sponsors like esport betting companies and other esport businesses that need more and more exposure.
Investing in Esports
Although now is a great time to invest in esports, many investors understandably find it challenging to navigate its complications. Still, these complications translate to a huge, wide range of investment opportunities. Exciting times no doubt lies ahead as these various verticals continue to develop monetization strategies for the large viewers base.
One way to gain exposure to the esports sector is through public markets. Below is a list of publicly traded companies that have various connections to and investments in esports:-
- Tencent owns Riot Games, creator of the most-played game League of Legends, while Activision Blizzard develops the popular game World of Warcraft, Overwatch, and Hearthstone.
- YouTube has made its biggest investment into esports to date, signing an exclusive multi-year broadcasting deal with gaming platform Faceit to stream the Faceit’s Esports Championship Series (ECS) pro gaming leagues.
- Sony is partnering with gaming tournament organizer ESL to power Sony Playstation Vue, a 24-hour TV network dedicated to esports.
At this point, esports revenues only comprise a small percentage of the overall revenues of these public companies, so at this stage, public market investing is not the primary way to gain exposure to this space.