Over the last 10 years, the eSports sector has been subject to a stratospheric rise. We are a far cry away from the days when competitive gaming was perceived to be a group of teenage guys connecting their PCs over a LAN network in their living room. Today, organisers of competitions involving leading platforms are filling stadiums with fans watching their favourite team play their favourite game (with millions more watching over streaming services such as Twitch and prize pools of $20m+). What has fuelled this growth and what does the future hold for this buoyant sector?
With a value of $109bn in 2017 after sustained year-on-year growth of 6% during 2012 – 2016, the video gaming market is currently the fastest growing entertainment industry in the world. Players are spending more time and more money, across more devices than ever before. One of the biggest factors for growth is eSports (competitive gaming) which has become the micro-economy spawning growth in the games industry.
Whilst the eSports industry experienced growth of 38% during 2017 and is estimated to be worth $5bn by 2020, given its ongoing growth trajectory this valuation is likely to be the tip of the iceberg. This revenue and audience growth is driven by a number of factors including mass media investment (from the likes of ESPN, BT Sport and YouTube), the development of professional eSports leagues (notably the Overwatch League, Intel Extreme Masters and League of Legends Masters Series) and, perhaps the biggest factor, non-endemic sponsorship from heavy-weights Adidas, VISA and Pepsi.
Regarding sponsorship and advertising in particular, brands and mass media seem to be embracing this high value and hard to reach audience. Whilst millennials are often regarded as a challenging demographic to target, for men in the US aged between 21 – 35 eSports is as popular as baseball and hockey with 22% of this demographic watching eSports frequently. Video games have also become a global spectator sport – of the 200m+ occasional viewers and eSports enthusiasts, 40% do not play the games they watch and all this at a time when traditional sports audiences are declining.
Whilst the eSports opportunity for publishers and intellectual property (IP) owners looks very positive, continued growth is not without its risks and substantive hurdles. For example, balancing the various interests and potentially conflicting IP rights of all the parties involved in live eSports events (being teams, individual players, sponsors, publishers, investors, and accessory and hardware providers) can often prove problematic. Arguable the greatest challenge to overcome is both the lack of a recognised governance system and the absence of industry assurance models across all areas of eSports from league structure, rules and player/team contracts, to marketing and promotion, prize pool funds and live streaming.
Despite the relative infancy of eSports as an industry, it continues to attract sizeable investment. Sustained growth and the protection of the industry, its players, brand sponsors, IP owners and audience is vital. The implementation of structured regulation along with an acceptance that every tournament, league and team operates to the highest possible standards, will play a significant role in the industry’s efforts to be ever more prevalent.