Considering that eSports is still in its formative stage, it’s amazing when you realize just how big it has already become. And all the signs point to even bigger growth. Market research company Newzoo recognizes eSports as a professional sport and form of entertainment. Their Global eSports Market Report details both the global and local eSports markets and uses traditional sports as a reference. It also establishes key factors that determine the eSports market’s pace of growth.
North America Leads in Projected Revenues
The 80-page report is based on an in-depth analysis of the most recent data on 2015 numbers. Last year’s worldwide revenues amounted to $325 million. The report predicts that the eSports economy will grow to $463 million in 2016, which is a growth of 43% year-on-year. Considering that we saw a 67% year-on-year growth in 2015, it seems that the eSports boom is slowing down a bit. Looking beyond that, the eSports market is expected to generate $1.1 billion in 2019, which indicates a continued stable yearly growth of 40%.
These revenues come from the sales of merchandise, event tickets, sponsorships, online advertising, and media rights. Most of this money finds its way back to game publishers, but it’s interesting to note that publishers invest more money into the eSports economy than they get back through their eSports activities. In terms of revenues, North America is the clear leader of the eSports world. The region is expected to bring in $175 million in 2016. China and Korea combined are projected to earn $106 million, which would represent 23% of global eSports revenues.
Audience Growth Largest in Asia
The report also provides a breakdown of the eSports audience. It identifies 131 million eSports enthusiasts who regularly follow the industry. There are another 125 million occasional viewers who mainly tune in to watch the biggest international events. The largest audience growth can be seen in Asia, particularly in Southeast Asia. Almost half (or to be precise, 44%) of the entire global eSports audience is located in Asia. Europe is the second largest region in terms of audience share with 25%, whereas North America accounts to only 19%. However, the revenue numbers indicate that those 19% are the biggest spenders of the bunch.
This makes sense because the report claims that the eSports audience boasts a “very valuable demographic”. Most eSports viewers have a full-time job and plenty of disposable income, and the report implies that they also don’t shy away from spending a lot of money on digital media subscriptions, hardware and mobile content. It is predicted that the ratio of eSports enthusiasts and occasional viewers will remain roughly the same, with an overall increase of 13% in 2016. By 2019, there will be 180 million eSports enthusiasts and 165 million occasional viewers.
When it comes to average annual revenue per fan, eSports still has a long way to catch up with traditional sports. In 2015, the average eSports fan spent $2.83. This number is expected to grow to $3.53 in 2016. However, that is still significantly lower than the numbers in established traditional sports. For example, the average annual revenue per fan in basketball amounts to $15.
It should also be pointed out that the report includes an alternative optimistic scenario. This scenario suggests a much larger growth. Total revenues could reach $1 billion in 2016 and a massive $2 billion by 2019. Whatever scenario proves to be true in the end, one thing is for sure – the future of eSports is looking bright indeed.
The eSports Landscape in 2015
- 112 major eSports events, which generated an estimated $20.6 million in ticket revenues
- $61 million total prize money of all eSports events, a 70% year-on-year increase
- Global eSports audience amounted to 226 million gamers, a year-on-year growth of 27.7%
- Global revenues rose to $325 million, a year-on-year growth of 67%
- Online advertising saw a growth of 99.6% year-on-year
Methodology and Industry Insider Comments
According to Newzoo, the market research firm continually tracks and analyses company revenues, live event audience figures, prize money, and video content viewer data. They also carry out extensive worldwide primary consumer research that sizes and profiles eSports awareness and engagement. Result validation is executed through additional research as well as by discussing findings with game publishers, eSports teams, global streaming companies, and local media companies.
It should be noted that Newzoo does not take eSports betting into account. According to Peter Warman, Newzoo’s CEO, “betting on eSports should not be mixed into direct eSports revenues as the money does not flow into the eSports economy”. Warman justifies this approach by the fact that sports betting isn’t reported in traditional sports market reports.
The validity of the report is established by the fact that the eSports industry itself uses these findings. Fnatic’s CEO, Wouter Sleijffers, sees a bright future for eSports: “eSports remains an industry with great potential for the years to come”.
There is no doubt that the eSports scene will continue to grow. ESPN has started to take eSports very seriously, which isn’t all that surprising considering that there is a lot of money in media rights. Juggernauts such as Riot, Valve and Blizzard are going to be continually contested by the likes of Epic and Crytek as well as other newcomers to the eSports scene. Activision’s recent purchase of Major League Gaming in a deal worth $46 million could lead to a more prominent resurgence of the brand.
Things are definitely looking very promising both for the eSports industry and community.