Esports vs Traditional Sports: Audience, Market and Growth
Although video game tournaments have been around for some decades now, it’s only in the last couple of years that this entertainment has managed to breakout into a global phenomenon with serious revenue-generating potential. We would like to share our vision on how traditional Sports industry coexists with Gaming and Esports in particular. In a nutshell, Esports is a hyponym referring to competitive video game tournaments. It does not represent the whole Gaming industry, but plays vital role in its further expansion.
Before we dive into the details, let us quickly make a recap of what have already been achieved. Since the first Quake Cyberathlete Professional League was established in 1997 the Esports industry has shown a tremendous growth, reaching a 411 million fan audience by the end of 2018. Research indicates that 65% of fans are between the ages of 18–34, and, while the fan base does skew male, 38% of esports fans are women.
In theory, this is a target audience for those companies, the potential customers of which are well-known for using ad blockers as well as spending more time on Instagram, YouTube or Facebook rather than near the TV set. Marketing is therefore conducted through partnerships with pro teams, streamers and bloggers, who have certain influence within their audience. As a result, those companies benefit from advertising their stuff in a more user-friendly way. Irritating commercials are commonly ignored and skipped, while an integrated product placement has more chances to be seen and hence be bought.
For these reasons, Esports enterprises try to build up a structure similar to traditional Sports. They invest into cyber arenas, merchandise and global outreach. Speaking about globalism, the 2017 League of Legends world championship, held in Beijing, viewed over 106 million fans. This is roughly the same as the total audience of 2018 Super Bowl in the US. Moreover, the growth rate of LoL tournaments audience has tripled since 2013, while the total amount of people watching Super Bowl has seen a downfall at 10 million TV viewers since 2014. The numbers speak for themselves, so it would be fair to conclude that Esports are at the cross-section of some powerful trends: social network being formed and maintained online, digital consumption of video, and global growth in the gaming audience.
Consequently, one may think that those views fairly represent the total amount of money invested in those industries, however, this assumption barely hits at the scale of matters. According to a report, recently published by Goldman Sachs, eSports were estimated to generate only $655 million in annual revenue in 2017, including 38% from sponsorships, 14% from media rights, and 9% from ticket revenue. As media rights and sponsorship continue to grow, along with the formalization of pro sports leagues total eSports monetization is expected to reach $3 billion by 2022.
Nevertheless, this data is valid only for tournaments, so don’t be deceived by small volumes. Taking into account the quantity of news popping up after different announcements of future partnerships between, for example, Disney, ABC and Overwatch, or NFL and EA, the eSports industry is experiencing an increase in total amount of investments.
On the contrary, traditional Sports market is valued at $620 billion, yet this sum implies almost each and every type of sport as well as the infrastructure construction, sporting goods, licensed products and live sports events. Therefore one should mention the Gaming market valuation has reached utmost $135 billion in 2018 — a decent milestone for a relatively new industry.
In consequence, we anticipate numerous public and private investment opportunities that we believe will benefit from the structural growth of Esports, both in terms of audience monetization, as the necessary infrastructure is already being built to complete the evolution of Esports from the “Wild West” of sports to a full-fledged professional sport. The differences between these industries are rapidly diminishing, as most of rules in eSports business tend to be inherent from “conventional brother”.
Vladyslav Chernykh, BDO at SWIDOM
Ivan Panchenko, CBDO at SWIDOM
