One of the most dramatic shifts I’m seeing within media and entertainment is the rise of eSports: competitive online gaming on both PCs and consoles where athletes compete through leagues and tournaments for cash prizes. Hardcore gamers are the ‘athletes’ and the games played are the ‘sports.’ Some of the more popular games include Dota 2, League of Legends, Counter-Strike: Global Offensive and Overwatch. Leagues and tournaments take place all over the world and are usually streamed, sometimes even televised, with cash prize pools often in the millions. While millions watch on Twitch and other streaming sites, thousands of spectators attend these events in person.
After gaining tremendous momentum in recent years, eSports is at a major inflection point: it’s very much still like The Wild West and the young industry is now attempting to formalize itself. Viewership continues to skyrocket and investment is starting to pour in. With cord-cutting happening faster than expected, professional sports ratings continuing to slide, and streaming content becoming more mainstream, the perfect storm is forming for eSports to be the next big thing.
Total worldwide eSports viewership has quietly experienced tremendous growth and is projected to reach at least 589 million by 2020 (see chart below). Viewership for top eSports events like the League of Legends World Championship Finals already rivals that of some of the world’s biggest professional sporting events. eSports will soon become a pillar in media and entertainment because of its impressive global appeal and reach. With no inherent discrimination across age, gender or race; no language or location barriers; and no true athleticism required, eSports provides unparalleled access for almost anyone across the globe to participate and potentially earn some cash.
When you unpack the primary eSports audience, you see a marketers dream. 80% of viewers are Millennials (18–34) and Gen Z (13–17), the most valuable and hardest to reach audience through traditional and digital advertising. For decades to come, Millennials and Gen Z will continue to be the largest representation of our workforce and, as a result, will continue to have the greatest purchasing power. The largest brands in the world continue to strategize on how to effectively reach this audience: eSports is the answer. This primary eSports audience is highly engaged and has brands drooling. The majority of the viewers are also players, watching for both practice and entertainment. If there’s any doubt as to whether viewership and engagement will plateau in the near-future, games like Minecraft and Roblox are already turning kids onto eSports.
Smaller brands are already starting to recognize all of this. In 2017, the global eSports economy generated $696 million in total revenue, up 41% YoY. Of that $696 million, $517 million came from brands (media rights, advertising and sponsorships). By 2020, total revenue is projected to reach approximately $1.5 billion, of which $1.2 billion is expected to be generated from brand spending (see chart below).
The majority of this brand revenue will flow back to the best teams. The best teams, playing the most popular games, are locking-up the best players. It’s these players and teams that will continue to grow a fan base that creates a moat around this monster brand revenue opportunity. Venture investors, family offices and professional sports owners have already started to scoop-up some of these teams. The hope is that some will turn into the Patriots, Warriors or Yankees: multi-billion dollar, cash-flowing franchises.
So who’s your team?