Industry revenues are on track to exceed $900m this year and poised to break the billion-dollar mark in 2020, according to a new industry report from Futuresource Consulting.
“Esports has been around for a while, but is now really starting to enter the mainstream,” says Adam Cox, Senior Analyst – Imaging & Pro Video at Futuresource Consulting. “It’s riding a rising wave of consumer awareness, as celebrities and traditional sports teams get involved, household brand names take a piece of the sponsorship pie, and the likes of Turner, BBC and Sky invest in content acquisition and production.
“Key events such as Dota 2 are now enjoying viewing figures comparable to major conventional sporting events. As a result, securing exclusivity of major esports tournaments will become increasingly strategically important for both traditional sports broadcasters and established esports platforms such as Amazon-owned Twitch.”
Traditionally, the largest esports audience has been based in Asia, with hotbeds of esports interest existing in South Korea and China. However, high levels of growth have been tracked in regions such as North America and Europe, which due to high levels of consumer spending power, have seen significant increases in esports revenue. The esports industry has also been aiming to diversify the traditional fanbase, which is currently primarily males between the age of 16 to 35 years old.
“Esports currently caters for a global audience of approximately 410 million fans,” says Cox. “As organisers seek to attract older demographics and more females to the sector, we expect global audiences to almost double by 2023. This will result from a rise in popularity in emerging regions, as well as wider appeal in established markets.
“Sponsorship accounts for the majority share of industry income, contributing to over 40% of total revenues. With all the buzz around the sector and the promise of mainstream success, established esports sponsors such as Intel, Razer and HyperX are now being joined by non-incumbent brands such as Coca Cola, McDonalds and Mercedes Benz. This is triggering significant tournament prize pools, with global prizes totalling $205 million for the 4,000 plus events hosted last year. In comparison, men’s tennis ATP Tour’s prize pool for 2018 totalled $135 million. We’re seeing a virtuous circle that can only increase the exposure and profitability of esports.”
Despite its relatively recent arrival in the mainstream, the AV and broadcast element of esports is well-developed. Video coverage uses traditional workflows and techniques that are similar to broadcast coverage of a major concert or sporting event. Spend per event on pro video and AV equipment can reach $1 million for the largest arena-based events and slide down to as little as a few thousand at the lower end. Futuresource research indicates an approximate 50/50 split between pro video and AV equipment, with the large LED screens used at events being the single largest equipment outlay.
“With rumours in the IOC suggesting that esports could be an official Olympic sport as early as 2024, the social acceptance and resulting industry returns are very much heading in the right direction,” adds Cox. “It’s a great time to be involved in esports, with plenty of opportunities making themselves known across a range of tech and creative industries.”