Gaming represents a truly global industry, inherently borderless, where an internet connection is enough to plug directly into vast ecosystems full to the brim with players. It’s projected that by 2023 there will be in excess of 3 billion people worldwide playing online games, almost 40% of the global population. Online gaming can be broken down into three major categories, PC, console and mobile, providing a number of different avenues to pursue gaming from the casual to competitive level. These three categories combined are projected to generate $196 billion revenues by 2022.
What are Esports?
Esports, short for electronic sports, is a rapidly growing segment of the online gaming industry, and refers to video games played competitively, individually or as a team. Since inception, video games have been competitive, well before they went online — think back to kids spending hours trying to achieve the high score in the local arcade. The advent of PC gaming introduced the concept of playing with strangers, and competing with a global community. This set the stage for the burgeoning esports industry we see today, projected to hit $1.8 billion in revenues by 2022.
As for viewership, esports has already surpassed that of many other professional sports, and is on track to reach 646 million by 2023.
Esports are only growing in popularity, with more people both playing and watching games than ever before. One of the things that’s so interesting about esports is how dedicated the fanbase is. Many traditional sports have heavy social components, such as getting together with friends, going to a bar etc., so the sport may actually not be the focus. Let’s take the 2014 Super Bowl for instance — 115.3 million people tuned in to watch Bruno Mars and the Red Hot Chili Peppers play the halftime show, compared to 111.5 million viewers who watched the game. This diluted interest was further exemplified with the COVID-19 pandemic, where social gatherings and interactions were heavily impacted, and traditional sports viewership suffered accordingly: the final round of the US Open (golf) experienced a 56% reduction in viewership, while the Indy 500 took a 32% hit.
Comparatively, esports were able to strive during the pandemic, with go to platform Twitch experiencing a 17% increase in viewership compared to the previous quarter (Q4 2019). Only 23.5% of events were outright cancelled, with 31.6% of events transitioning from LAN to online, with at-home esports viewers perceiving minimal changes to their experience.
Esports fans have also demonstrated a strong loyalty — out of 427 million total viewers, 200 million tuned in to watch the 2019 League of Legends Finals. This is compared to the 111 million viewers that the Superbowl was able to garner the same year. Although we may see a shift back to in-person events in a post-pandemic world, this highlights not only the resilience of esports, but the unparalleled accessibility to it at a global scale, even during unprecedented times.
Additional Viewership Information:
- 557 million projected viewers by 2021
- Total esport audience set to grow to 495 million in 2020 — YoY growth of 11.7%
- 223 million considered enthusiasts (watch professional content +1 a month), compared to 272 occasional viewers (less than once a month)
- By 2023, this number is expected to hit 646 million (351 million enthusiasts, 295 occasional)
- 50% of viewers considered enthusiasts located in Asia Pacific.
Influencers & Icons
Esports influencers and icons are quickly elevating to rockstar status, accruing massive viewership and earnings.
Youtube: 3.36 M subscribers
Highest Views: 8.8 M
Average Views: 600 K
Earnings: $1.8 million per year
Youtube: 24.2 M subscribers
Highest Views: 45 M
Total Views: 2.3 B
Youtube: 3.58 M subscribers
Highest Views: 20 M (Fortnite World Cup Win)
Average Views: +1 M
Notable Earnings: $3 million for winning Fortnite World Cup
Revenues & Earnings
As mentioned above, the online gaming industry is set to hit $196 billion in revenues by 2022, with esports projected to also hit new highs, $1.8 billion by 2022.
Sponsorship and media rights are also growing within esports, by the end of 2020, $822.4 million is projected to be derived from sponsorship and media rights revenues, a 17.2% increase from the year prior.
What truly puts things in perspective is the winnings generated in esports in comparison to traditional sports. In 2019, the Valve International winners brought in a prize of $15,603,133. Split evenly between players, that would leave each with $3.1 million, which exceeds Tiger Wood’s Masters winnings ($2.07 million), and what Novak Djokovic and Simona Halep took home from Wimbledon ($2.9 million). The total prize for the winning team was $15,603,133, out of a $34,292,599 total pool.
Esports vs. Traditional Sports
Esports have become so pervasive that when you search the commonly used acronym “lol” in Google, you’ll find a slew of League of Legends associated links as opposed to the acronym definition, “laugh out loud.” More and more, the line dividing traditional sports and esports is becoming blurred, professional esports athletes are capable of bringing in millions of dollars in prize money, subject to rigorous training programs and nutrition plans, suffer injuries that may impact their career, and have garnered massive followings. 175 colleges and universities are currently recognized by the National Association for Collegiate Esports (NACE) — and provide coaching, as well as partial and full-ride athletic scholarships. The NBA 2K League is now about to enter its third season, introducing a new format that will include +35 Pro-Am tournaments, with the winning teams to be involved in a League-hosted “NBA 2K League Draft Prospect Series.” Additionally, there will be a first-of-its-kind NBA 2K League Combine.
Dr. Anthony Betrus, a professor of Educational Technology and Business at the State University of New York delivered a TEDx Talk addressing a number of fallacies associated with Esports, while drawing parallels between the competitive world of gaming and more traditional sports.
- Cortisol production induced during competitive esports by the brain is comparable to that produced by NASCAR drivers.
- Heartbeats in-game can elevate to anywhere between 160–180 bpm, similar to that of a very fast sprint or running a marathon.
- Reaction speeds seen in esports are comparable to what is seen in MLB players and NHL goalies
- Mouse and keyboard movements mirror those observed by high level musicians , 6–7 movements per second, up to 400 movements on the keyboard/mouse per minute — 4 times as much as the average person. These rapid movements can be sustained for matches that can be anywhere up to an hour and a half in duration.
- Injury is possible during esports, highlighting the taxing nature of competitive gaming. Some conditions observed included tennis elbow, carpal tunnel, back pain and retina fatigue
- Programs are being developed for esports athletes to support health and athleticism
- Federations have popped up globally to contribute to and support esports, such as NACE
Esports & Blockchain
Blockchain and esports represent two burgeoning industries that have become impossible to ignore, so it’s no surprise that companies have begun to explore synergies between the two. Recently, Microsoft and Ernst & Young LLP announced their plans to use a blockchain-based platform to enable Microsoft’s gaming partners, artists and content creators to track and manage payments and royalty contracts. Circle, in partnership with Dapper Labs, the creator of CryptoKitties, plans to integrate USDC into Dapper Labs’ new Flow network. And notably, Zytara recently unveiled its plan to launch a digital banking platform and payments network aimed towards Millenials, Gen Z gamers and esports enthusiasts. Zytara has also announced plans to issue their own stablecoin, ZUSD, in partnership with Prime Trust.
“This new digital banking platform and payment network will combine all the capabilities of a bank account with a vast array of features that gamers and esports enthusiasts can embrace,” said Al Burgio, Founder and CEO of Zytara. “ZUSD, the Zytara stablecoin will form a quintessential link between the traditional banking system and the rapidly growing world of esports, driving adoption for cryptocurrencies and bringing all the benefits of blockchain to gaming. Users will be able to transact in real time, 24/7/365, streamlining payments and replacing cash with something much more powerful!”
Blockchains have the ability to bring some truly unique features to games, such as individual asset ownership and unique digital items in the form of NFTs. However, where the technology can truly make a difference is through the introduction of stablecoins, such as Circle’s USDC and Zytara’s ZUSD stablecoin. Stablecoins can benefit online gaming in four ways:
- Monetization of in-game currency
- Create entire in-game payment infrastructure
- New revenue opportunities for gamers
- Enhanced revenue opportunities for game developers
Esports and gaming currently lacks a payment solution that is truly borderless, without the level of friction experienced across the industry today. Epic Games recently ran into issues distributing a portion of its $100 million dollar prize pool for Fortnite tournaments. Many times, within industries such as esports where there are high levels of community interest, users are left with the feeling that non-endemic providers just don’t get it. A next generation payment solution that addresses the subtle nuances of the industry helps to create a sense of “built by gamers, for gamers.”
The benefits of stablecoins and other blockchain-based solutions as they pertain to esports will be explored further in subsequent documentation.
Brands Are Getting Into The Game Too!
Esports fans are a discerning group. However, the rapid growth within the industry means that there is increasingly more value in penetrating esports, and several brands are looking to join in. Endemic categories continue to fare well, brands that deal in computers, processors and peripherals. What is interesting is that non-endemic brands have also experienced an up-tick, with their sponsorship share increasing 13% YoY. The continued success of non-endemic brands within esports is indicative of a rapidly growing industry, 1 in 5 esports viewers began watching within the past year, and demonstrates a growing mainstream audience that is comparable, and has even begun to exceed, that of traditional sports.
Here are some examples of how brands are getting involved:
- Earlier this year, BMW announced a partnership with five of the world’s top esports organizations — Cloud 9, Fnatic, Funplus Phoenix, G2 Esports and T1.
- To help promote their Chipotle Challenger Series, Chipotle added an official team partnership with 100 THIEVES’ Matt “Nadeshot” Haag, and Brooke “BrookeAB” Bond, as well as TSM’S Myth and fan-favorite streamers Jack “CouRage” Dunlop and JERICHO.
- Mastercard and Riot Games took the next step in their multi-year global partnership, in addition to sponsoring the Mid-Season Invitational, All-Star Event and World Championship, Mastercard is now a sponsor of the League of Legends Championship Series (LCS) in North America. Notably the two companies also collaborated on a video series, “Together Star Something Priceless.” This initiative a willingness for brands to do more than simply slap a logo on, and create a meaningful connection with the community they were getting involved with.
“The Mastercard brand is known worldwide, and certainly we want brand presence with this audience. But most important is that we fit in the most authentic and engaging way with the audience,” said Cheryl Guerin, Executive VP of Marketing & Communications for North America, Mastercard. “Having a content series, and particularly one that was built by the community themselves — it was crowdsourced and features a number of the truly priceless stories that we’ve heard along our journey of this partnership, from the fans who are truly passionate about esports. Being able to feature them is much more authentic than only featuring our logo. It’s really important that we do this: that we bubble up priceless stories, and inspire others that are passionate about esports.”
As the COVID-19 pandemic continues to hold its grip on the world, borderless phenomena such as blockchain and gaming will likely continue to strive. As we move into 2021, it will be interesting to see not only how these two industries develop, but what comes of them working together.