eSports, short for electronic sports, is characterized as a form of competitive, organized video gaming, primarily between professional players, as teams or individually. Participants from various leagues participate in games that are widely popular among at-home gamers, such as League of Legends, Call of Duty, Fortnite, and Counter-Strike. eSports gamers are followed and watched by millions of fans globally, who tune in online and via televisions or attend live events.
As a thriving arena, the fragmented landscape and digital platform of the eSports market result in a significant potential for monetization opportunities. According to the estimations put forth by Inkwood Research, the global eSports market is set to grow with a CAGR of 22.18% over the forecasted years of 2022 to 2030. This growth is mainly attributed to the improvement of internet speed and accessibility and the live streaming of e-sports events, along with its the rapidly growing knowledge.
But, how did eSports develop from the earliest known video game competitions in the 1970s to a multi-million-dollar industry over the years? And what are some of the most notable eSports market trends? Let’s find out –
Emergence of the eSports Market
The golden era of arcade video games was presaged in 1978 by Taito’s Space Invaders, which propagated the use of a persistent high score for players. During the next several years, numerous video games followed suit, incorporating various means of tracking high scores. This includes the high score tables comprising players’ initials in games such as Asteroids in 1979.
Organized competitions have since then continued to be an integral part of video game culture. However, these events were mostly between amateurs until the late 2000s, before spectatorship through real-time streaming and participation of professional gamers surged in popularity. Subsequently, over the next decade, eSports emerged as a significant element in the video game industry. With game developers actively designing and funding tournaments, the eSports market continued evolving into a lucrative avenue for players, brands, and video game producers, as well. Therefore, the avenue of competitive video gaming is a rapidly growing sensation spanning globally, with innumerable fans and billions of dollars up for grabs.
The Age of (Regional) Empires
Once considered a high-niche online culture, the Asia-Pacific eSports market and video games industry has developed into an international phenomenon worth more than $71 billion, annually. Over 33% of multinational firms in the Asia-Pacific have invested in eSports, with 78% planning to strategize likewise. Advertisers are also rapidly capitalizing on the fast-tracking trend, with the principal goal of bagging the new high score in terms of attaining and engaging new target audiences.
On the other hand, as the second-largest eSports market in terms of audience and revenue, around 70% of people in the United States, accounting for nearly 222 million Americans, identify as gamers. However, the country’s players prepared to compete with international gaming experts are inadequate. The talent gap is likely to be problematic for the industry, with a dearth of influential champions destabilizing the mammoth investments made in eSports.
Multiple eSports professionals in the United States now earn salaries, indicating a tremendous improvement from the former era that saw players live off only on prize winnings. However, such developments are already prevalent in Asia-Pacific nations like South Korea, with gamers earning salaries and acquiring living quarters for years.
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How does Revenue in the eSports Market ‘Level Up’?
eSports players, not unlike traditional athletes, can actually generate significant revenue. While tournaments boast millions of dollars’ worth in prize money, the cash is typically divided between the winning team or individual players. This means that the highest-ranking players across the globe, including Kuro KuroKy’ Takhasomi from DOTA 2 and Gorilla, the biggest earner in the history of FIFA, earn up to seven figures annually, in addition to tremendous brand endorsements.
Event organizers, as well as teams, greatly benefit from the sale of tickets, as well. For reference, the popular League of Legends tournament in 2017 generated $5.5 million in ticket sales. Similarly, since its inception approximately three decades ago, the EA Madden Franchise has sold over 130 million units, equalling more than $4 billion in terms of revenue.
With the rise in careers associated with eSports, players also establish a significant margin of earning a large sum of revenue from league salaries, endorsements, and sponsorships. Consequently, brands were estimated to invest approximately $694 million in eSports ventures in the year 2018 alone.
The Clash of Collaborations – A Strategic Market Perspective
In a world where limited millennials consume radio or television, eSports is highly prevalent. The matches can be streamed on Twitch, replayed on YouTube, and watched and widely shared across social media platforms like TikTok, Twitter, and Instagram. Besides, eSports has transitioned from being a subcultural interest to a mainstream cultural force, unfolding a diverse range of opportunities for collaborations and partnerships across the global eSports market.
In this regard, BLAST, an eSports production company as well as tournament organizer, acquired a partnership with Fortnite in order to initiate and deliver all Fortnite Championship Series (FNCS) events in the year 2022. The tournament is scheduled to be played in February and March 2022, with an over $3 million prize pool.
Some of the major companies operating in the global eSports market include Capcom Co Ltd, Nintendo Co Ltd, Electronic Arts, Activision Blizzard, and others. Moreover, various rights holders are also willing to tailor custom solutions to individual clients’ needs instead of sticking to a package-based approach since they require sustainable engagement. As a result, sponsorships, franchises, and collaborations are anticipated to play an integral role in fueling the global eSports market’s growth.
Approximately 1.6 billion people were evaluated to possess a certain degree of understanding about eSports in 2018, representing more than 20% of the global population. In comparison, and at the current growth rate, over 285 million frequent viewers of eSports are expected by the year 2024, with around 291 million occasional viewers worldwide. Therefore, according to projections and the unrelenting cultural momentum, eSports will continue to grow as a market — and a recreational activity — over the foreseeable future.
What does the term eSports enthusiasts mean?
eSports enthusiasts is a term that describes frequent viewers, as opposed to occasional or infrequent viewers. The majority of eSports enthusiasts span across South Korea, China, and North America.
How does eSports differ from conventional sports in terms of viewership?
Young gamers within the 18- to 25-year-old age group watches 34% more eSports than conventional sports. According to statistics, more people watched the 2016 world finals of League of Legends, a popular eSports game, compared to the NBA Finals Game 7 in the same year, which garnered 31 million viewers.