Esports is a hot topic in investment circles these days. After all, it’s an attractive, lucrative, billion-dollar industry that’s targeting key, hard-to-reach demographics. Even though the term esports is getting dropped on a daily basis, many people still have no clue what it actually is.
In short, the esports industry represents a sophisticated ecosystem of professional competitions in various video games. We’re talking about complex, organized events featuring the best professional players, with millions of fans worldwide tuning into the action, and millions of dollars in prize money virtually every week.
The esports industry is growing at a steady pace, not just in terms of revenue but prize pools, viewership, and influence, too. It breathes through a healthy, active community that’s difficult to reach, making esports a unique and very effective niche for hard-to-target audiences.
The Esports Industry Is Massive
The numbers are absolutely brilliant. In 2014, the esports market revenue worldwide was just short of $200 million—$194 million, to be precise. In 2018, esports climbed to $865 million, with 2019 surpassing the $1 billion mark. The latter hasn’t officially been confirmed yet, but the projections suggested $1.096 billion, and they’ve been pretty accurate thus far.
The viewership numbers are following the general trends in the industry. Both casual and enthusiast viewership are on the rise. In 2017, there were roughly 143 million enthusiasts and 192 million casual viewers. Fast forward to 2019, enthusiasts jumped to 201 million while casuals went up to 253 million. 2022 projections suggest the total esports viewership will be close to 650 million, almost 300 million of which will be esports enthusiasts.
There’s more to it than sheer numbers. Think about the scale of the industry. It created jobs for tens of thousands of people worldwide and is finally getting the proper infrastructure in the form of several esports venues.
Esports is no longer a marginalized hobby; it’s a modern-day movement driven by quality content and young, passionate people.
The Astronomic Rise of Two Supporting Niches
In addition to the esports industry itself, there are several other smaller niches that support it. Some of them, such as legal gambling on esports, have already exceeded the parent industry in certain aspects.
Yep, you’ve read that correctly. Esports gambling is basically a separate niche inside a niche. However, since it’s showing off exponential growth, it’s more like a separate industry, based on a completely different ecosystem which favors different elements than the esports industry. It sounds a bit complicated at first, I know…
Streaming is another notable supporting industry that goes hand in hand with esports. It’s in no way similar to esports betting. Instead, streaming is tightly connected to the professional players and prominent scene figures who stream during the off-season or between major events. Still, esports gambling is a much bigger fish in the pond, racking in millions in revenue and continuing to grow at a steady pace. Best of all, it’s completely legal!
Legality of Gambling on Esports
Back in the early days of gambling on esports, things were pretty shady. The biggest names in the online gambling business were reluctant to the whole esports gambling idea, so shady businesses took the matter into their own hands. Illegal skin betting websites took control of the market, facilitating underage gambling and taking little to no effort in protecting their users’ personal information.
Luckily, the biggest online gambling platforms realized esports gambling’s potential and shook the scene. Nowadays, legit online gambling sites possessing all the necessary certificates and licenses control the majority of esports market, with only a handful of skin betting sites fighting for leftovers.
There are plenty of numbers projecting the esports betting industry’s worth, most of which collide against one another, so we can’t point out any numbers with certainty. What we can point out is the fact that esports betting is slowly surpassing its parent industry in almost every department. Plus, the growth started roughly at the same time that legal esports betting sites started popping up. The revenue is already there, the popularity is skyrocketing, and believe it or not, more and more people are beginning to follow esports scenes just so they can gamble on them…
Most Popular Esports Titles
As far as the most popular esports titles go, there are three names you need to know about:
- League of Legends
- Dota 2
The first two titles belong to the MOBA (multiplayer online battle arena) genre, which took the esports scene by storm and pushed it onto the mainstream stage. League of Legends is the most popular esports title, enjoying massive viewership and popularity across the globe. To put things into perspective, the latest LoL World Championship had roughly 4 million peak viewers and 1 million viewers on average.
Dota 2, on the other hand, is the most lucrative esports title out there. It’s all thanks to the biggest Dota 2 events, The Internationals. We’re talking about annual events that gather the best Dota 2 teams in the world and feature gigantic crowd-funded prize pools. Last year’s The International had almost $35 million in prize money.
CS:GO is not holding any notable records like LoL and Dota 2. What’s so special about it, then? Well, it’s the biggest and most popular FPS (first-person shooter) game with a passionate and highly active community. It’s feeding off sponsorship deals and brand exposure. Most importantly, it’s still going strong, eight years after its initial release.
Still Relying on Sponsorship Deals
Despite all the numbers pointing upwards, the esports industry is still very young and fragile. Over the course of the last two or three years, we’ve seen attempts to improve the long-term stability of the entire industry through the aggressive franchising of up-and-coming esports competitions.
Sponsorship revenue amounted to $456.7 million in 2019, which is roughly a 34% increase from 2018. The number is way above the likes of media rights and advertising revenue, which are supposed to be leading the charge here. Media rights revenue is just above $250 million, while advertising cruises around the $190 million mark.
Both media rights and advertising combined are just short of the total sponsorship revenue, which just goes to show you how much the esports industry is still relying on sponsorship deals. While they are somewhat surprising, these numbers aren’t raising any flags just yet. The esports industry is relatively young and is still trying to make its footprint out there… And let’s be real, doing so is basically impossible without some of that crispy VC money.