“I believe esports will rival the biggest traditional sports leagues in terms of future opportunities, and between advertising, ticket sales, licensing, sponsorship’s and merchandising, there are tremendous growth areas for this nascent industry”
–Steve Borenstein, Chairman of Activision Blizzard’s Esports Division and Former CEO of ESPN and NFL Network
And don’t just take my word for it, Mark Cuban, Shaquille O’Neal, Alex Rodriguez, high-profile NFL owners Robert Kraft and Jerry Jones, and celebrities like Ashton Kutcher, Tony Robbins, Drake and that’s only a small portion of the people who are seizing this opportunity. Investment firms such as Goldman Sachs have publicly announced their interest and are carefully monitoring the growing industry.
How Does Esports Compete with Traditional Sports?
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One of esports premier games League of Legends (LoL) Worlds Finals amassed over 44 million viewers globally in 2019. This staggering number is over double the people who watched the NBA finals in 2019 (20.5 million). And its not just League of Legends breaking the records; renowned game publisher Valve, holds 2 of the 3 biggest esports (Dota 2 and Counter Strike: Global Offensive). Dota 2, a wildly popular game globally continually breaks the record for tournament prize pools with the 2019 prize pool exceeding $30 million for one tournament. This is the largest prize pool in any esports and sports history for a single tournament, beating out the Superbowl.
Furthermore, Counter Strike has reached an all time high in concurrent players with it grasping at 1 million concurrent players 8 years after release. Can you honestly tell me over 1 million people are playing cricket or basketball at any given time?
With esports being the largest growing entertainment sector with an almost 10% compound increase in viewership annually. A 2018 analysis of the industry from Newzoo shows esports having a total growth of $16 billion in 2018 and a projection to be worth over $138 in 2019.
How Esports Makes the Big Bucks?
One of the beauties of esports compared to traditional sports is the monetization. Apart from the traditional way of sponsorship, advertising and merchandise; all the big esports have introduced ways to support your favourite team in the game. For example a fan of a team may buy an in game item that shows his support to his team and the transaction helps fund the team. Combine this with the mass of hyped fans and tens of millions are earned. This is how Dota 2 is able to have a $30 million prize pool with community support.
The growing esports industry has also brought in some world renowned sponsors. Companies such as Red Bull, Intel, Amazon, Audi, Mercedes Benz, Comcast, Coca Cola, Louis Vuitton and even plane manufacturer Airbus and dating app Tinder. Even traditional sports sponsors such as Nike and Puma want a piece of the pie and invest big bucks.
The Future of the Game
With esports being a relatively new industry, all eyes are on the growth of esports. Business industry leaders such as Forbes and Newzoo are predicting that esports will have a dramatic rise that shows so signs of slowing down. The figures state that esports will still grow up an outstanding 9% in 2020, 2021 and 2022. With all projections on the rise; this seemingly endless field of possibilities is a investors paradise with a future projection trajectory that would make anyone who wasn’t apart of it jealous.
Year 11 MHS Economics 2020 