eSports — a niche that will grow to $1.5 billion by 2020
We all like sports — basketball, football or cricket, in some cases these sports hold titles like “national religion” in some countries. These days, young athletes switch up their basketballs for computer mouse’s and keyboards to play a computer game professionally. In a tournament. Sounds about right, don’t you think?
These multiplayer video game competitions would determine League of Legends champions, the greatest shooters in Call of Duty, the cream of the crop of Street Fighter players, the elite Dota 2 competitors, and more.
But today, as the history of eSports continue to unfold, media giants such as ESPN and Turner are broadcasting eSports tournaments and competitions. And in 2014, Amazon acquired Twitch, the live streaming video platform that has been and continues to be the leader in online gaming broadcasts. And YouTube also wanted to jump on the live streaming gaming community with the creation of YouTube Gaming.
Today we would like to start our weekly eSports analysis were we will talk about different topics related to eSports, its growth and different titles. Follow us on Medium to get updated everytime we publish our weekly eSports article!
eSports are a form of competition using video games. Most commonly, eSports take the form of organized, multiplayer video game competitions, particularly between professional players. The most common video game genres associated with eSports are real-time strategy (RTS), first-person shooter (FPS), fighting, and multiplayer online battle arena (MOBA). Tournaments such as The International, the League of Legends World Championship, the Evolution Championship Series and the Intel Extreme Masters provide live broadcasts of the competition, and prize money to competitors.
Although organized online and offline competitions have long been a part of video game culture, these were largely between amateurs until the late 2000s when participation by professional gamers and spectatorship in these events saw a large surge in popularity. Many game developers now actively design toward a professional eSport subculture.
The earliest known video game competition took place on 19 October 1972 at Stanford University for the game Spacewar. Stanford students were invited to an “Intergalactic spacewar olympics” whose grand prize was a year’s subscription for Rolling Stone, with Bruce Baumgart winning the five-man-free-for-all tournament and Tovar and Robert E. Maas winning the Team Competition. The Space Invaders Championship held by Atari in 1980 was the earliest large scale video game competition, attracting more than 10,000 participants across the United States, establishing competitive gaming as a mainstream hobby.
The eSports market is experiencing a rapid growth, despite being in its formative stage. In 2016, worldwide revenues generated in the eSports market amounted to 492.7 million U.S. dollars. By 2020, the market is expected to generate over 1.48 billion U.S. dollars in revenues, which indicates a compound annual growth rate of 32 percent. These revenues came from betting, prize pools and tournaments, but overwhelmingly from sponsorship and advertising, which brought in almost 661 million U.S. dollars in 2016. In terms of revenue, Asia was the biggest eSports market overall, followed by North America and Europe.
The coming year will see the Esports Economy grow to $696 million, a year-on-year growth of 41.3%. Brands are expected to spend $517 million, broken down into $155 million on advertising, $266 million on sponsorship, and a further $95 million on media rights. Brand investment will double by 2020, pushing the total market to $1.5 billion. Consumer spending this year on tickets and merchandise will amount to $64 million. Another $116 million is invested by game publishers into the esports industry through partnership deals with white-label organizers. As esports is becoming engrained in the DNA of successful competitive games, publishers are actively looking to grow their franchises as spectator sports with the aim to engage their current fans, and reach new ones. Often lacking the experience and resources to do so, publishers turn to these white-label organizers to help them set up leagues and events around their franchises. For most game publishers, esports is currently not a profitable business. However, their investment is justified by the positive impact on game revenues and the future potential of their esports activities as a stand-alone business.
There are a lot of different game titles in the eSports arena, but only can hold the title of being the biggest eSports by Tournament Prize Money — Dota 2 with its annual The International (TI) tournament.
The International, often abbreviated as TI, is an annual tournament organized by Valve. In 2015 Valve increased their number of hosted events, founding the Dota Major Championships which incorporates The International into its structure. The International remains the biggest and most prestigious event on the Major Championship circuit.
The first International was held in Cologne, Germany, during the trade show Gamescom, in order to unveil Dota 2 to worldwide audiences. It drew attention due to its staggering $1.6 million USD prize pool (with $1 million for the champion). 16 teams were invited to play for the title.
In 2012 The International moved to Seattle, Washington. The prize pool remained at $1.6 million USD. Only 14 teams were invited; two additional slots were awarded to the winners of regional qualifiers.
Since 2013, the Dota 2 community has been able to contribute to the prize pool. The total prize of The International 2013 grew to $2.8 million USD. In 2014, the prize pool surpassed $10 million. In 2016, it eclipsed $20 million, making The International the biggest esports tournament in terms of prize pool.
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