As competitive video games still integrate into popular culture, global investors, brands, media outlets and most importantly consumers are all listening. The 26.6 million expected monthly esports viewers in 2021, up 11.4% from 2020, well summarize this growth trend.
Esports Industry Market Growth Trends
The pop-culturization of the esports industry has helped to power the explosion in esports investment and revenue. Esports has hit this stratosphere in large part due to the social component of live streaming and gaming. In this regard, video gaming-specific streaming platforms like Twitch and YouTube Gaming have given fans an immediate connection to the players and teams, while more mainstream socials have allowed those connections to flourish. To take advantage of this trend, certain esports organizations, like FaZe Clan, are moving aggressively into areas like merchandise, lending their brands more notoriety than if they’d stuck to esports alone.
Rick Yang, partner at NEA—a risk capital firm that invests in esports—underscored this during a conversation with Insider Intelligence: “I actually consider esports because of the mainstreaming of gaming, or the popular culture instantiation of gaming versus the pure idea of those players becoming professionals to compete at the very best levels.” It’s in fact essential to consider the esports industry as a key that could open doors on opportunities well beyond gaming events alone.
Esports Industry Revenue Stream Stats
As a result, the industry has seen an enormous uptick in investment from venture capitalists, and more recently from private equity firms. The amount of investments in esports doubled in 2018, going from 34 in 2017 to 68 in 2018, per Deloitte. That’s reflected within the total dollars invested, too: investments are up to $4.5 billion in 2018 from just $490 million the year before, a staggering YoY rate of growth of 837%, per Deloitte. These investments are distributed across the various players in the Esports ecosystem—including esports organizations, tournament operators or even digital broadcasters—that allow it to function and grow.
Esports Teams and Advertising
Just like traditional professional sports, esports teams have owners, franchises, endorsement deals, cash prizes from tournament winnings, and these various sources all contribute to their annual revenue and total valuation. When the pandemic subsides, esports leagues will likely resume their efforts to expand their audiences by hosting live gameplay with regional esports teams during a way which will more closely mimic traditional sports leagues.
Understanding the Esports Ecosystem
Most projections put the esports ecosystem on target to surpass $1 billion in revenue at the beginning of this year and, according to Newzoo projections, hit $1.8 billion by 2022. Money flows into esports through media rights, live event ticket sales, merchandise sales, and in-game purchases, but most of the revenue (69%) comes from sponsorships and advertising, per Newzoo figures cited by Statista.
That growing revenue stream comes from round the world:
Asia-Pacific (APAC), North America, and Europe are the highest three esports markets, respectively, in terms of audience and revenue. APAC will account for over half (57%) of worldwide esports viewership in 2019, up from 51% in 2017, per Newzoo. Meanwhile, North America is about to hit $300 million in esports revenue this year, while Europe is predicted to succeed in $138 million, per PwC estimates.
The rest of the planet only accounts for about 15% of total esports revenue, but it contains several regions to observe. One among the fastest-rising regions is Latin America, which is predicted to hit $18 million in esports revenue in 2019 before skyrocketing to $42 million by 2023, per PwC estimates.
The future of the esports industry will likely be powered by mobile, which can further reduce barriers to entry and permit even more gamers and fans to pour in.
The mobile gaming segment is indeed predicted to reach about 45% of the global games market, in terms of revenues, by the end of this year. That popularity is already spilling over into some competitive spaces, as China already features a thriving mobile esports scene.