Commentary

Video Games Hit Jackpot: Esports Revs Expected To Hit $1.7B By 2021

As young teens, we wreaked daily havoc on alien colonies in our favorite PC strategy game, Starcraft. Subsequently, a separate battle waged in our homes between mother and son. “Go outside, this game will rot your brain!” they’d say, not caring at all for our troops under alien attack.  

Flash forward to the present, where competitive video gaming is a full-fledged global phenomenon.

Just in 2018, total global prize earnings for esports players exceeded $137 million; 65 young competitors individually earned $1 million+ in prizes, 50 U.S. universities boast esports teams (there were zero in 2014), and students can even pursue college degrees in esports!

The teen angst in us screams out: "Mom! How could you not see this coming?"

We experienced this inner turmoil at this year’s “Secret Society,” an event hosted by “televisionary” Mitch Oscar that brings together top media executives and thought leaders to exchange ideas.

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This year’s (not-so-secret) conference kicked off with an analysis of the esports industry, presented by Laura Martin, CEO, Capital Knowledge-managing director, Needham & Company. As a self-described “money girl,” Martin emphasized the incredible amount of revenue generated by video games ($137 billion in 2018) – for players, publishers, sponsors and hosts.

What follows are takeaways and personal reflections from Martin's presentation that had everyone in the room considering a career in esports.

Esports is a global event, and America is still catching on.

Globally, there were 427 million viewers of esports in 2018.

Finland, Denmark, France, China and Russia are top gamer countries. Only three of the top 35 esports gamers (based on total $ winnings) are from the U.S., which explains why American business have underestimated the size and value of this industry until now.

Paradoxically, the U.S. has the highest summary prize earnings for esports players, but individual players make less on average. Compared to China, where 3,347 players split $83 million in 2018, 11,710 American players split $91 million in prizes.

A creative and passionate audience, plus technology on marketers’ side.

Unlike traditional sports, prize money in esports is regularly crowdsourced directly from fans. According to Simmons Research, the majority of esports fans are 18-28, male, with a median household income of $84k. Through the loyalty of these fans, crowdfunded prize pools for Dota2’s The International and League of Legends’ Championship series have resulted in huge winnings for teams and players. Dota fans, for instance, raised $20 million+ for favorite players in the championship!

Modern video games are beautiful, immersive experiences that create an inherently personal experience for players. The quality of these games is moviesque — a feast for the eyes, that ropes in dedicated, sometimes viciously loyal, fans. While movies are limited by shorter lifespan, infrequent releases and zero flexibility for brand entry post-production, video-game worlds can be expanded with sequels and downloadable content on the fly.

As sponsorship becomes normalized in esports, it will be interesting to see if/how games will introduce brand spots into game play.

Esports is the fastest-evolving revenue stream in media right now.

Revenue from esports is projected to grow at 22% compound annual growth rate over the next four years, from $900 million to $1.7 billion by 2021.

With sports broadcasting rights up for grabs in 2021, it’s important for marketing and media strategists to stay informed on different avenues — so they can drive value through esports. Earlier this year, Overwatch League reached 10 million unique viewers across all platforms and peaked at 437,000 concurrent viewers on Twitch and MLG over the four-day event.

By comparison, Amazon (which owns Twitch) reported 372,000 concurrent viewers in September for the first live stream of the NFL's "Thursday Night Football."

Newer games like Fortnite are shrinking the gap between stereotypical gamers and traditional sports fanatics. According to Simmons, only 5% of esports fans are not fans of traditional major leagues (NFL, NBA, MLB, NHL or MLS).

Much to the bewilderment of moms everywhere, there’s clear evidence that esports is too big to be ignored. In summation of what Martin shared: U.S. marketers that show willingness to adapt to the maturing esports landscape and embrace the fantastical artistry of video games to align with audience passion, stand to win big in the years to come.

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