eSports to break through $1bn barrier in 2020 as it moves from niche to mainstream By David Fox
Friday, May 10, 2019 - 09:35
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There were more than 4,000 eSports tournaments globally in 2018, a number that will rise this year thanks to a total prize pool of some US $200m, comparing favourably with the $135m for ATP Tour tennis. This makes it a major draw for competitors - the highest paid eSports star is estimated to earn about $6m per year.
It also had a global online and TV audience of 410m last year, with more than 165m enthusiast viewers (each consuming more than five hours per week). There are also large crowds going to live events, such as the 173,000 that attended the Intel Extreme Masters in Poland over one weekend.
There is a huge base now of users, of viewers, and of professional sports people in eSports, Carl Hibbert, associate director, Consumer Media & Tech, Futuresource Consulting, told delegates at the DTG Summit in London this week.
Futuresource has spent the last six months working on a research report on eSports, which will be released shortly. Hibbert defines eSports as a monetised video gaming competition with an audience, and both the monetisation and audiences are rising rapidly.
Gaming is already one of the main consumer spends. In the UK, almost as much is spent on video games as on music and home video put together, and it is growing faster than both.
Michiel Bakker, chief executive, Ginx Esports TV believes that eSports is already a mainstream activity.
It already dwarfs certain other mainstream sports, he said. Ginx is the world's largest linear TV eSports channel, reaching 55m homes worldwide, operating ten channel feeds in nine languages. It is distributed via Zixi online, with its library stored on the cloud and playout via edge servers, and has a staff of only 40, creating about 1,000 hours of content a year. Its investors include Sky and ITV.
Michiel Bakker from Ginx Esports TV (left) with Futuresource Consulting's Carl Hibbert
One barrier to eSports growth would be too few hours in the day, but Hibbert argued that this is less relevant to the younger audiences that eSports often attracts, as so many children already multi-task while they watch TV (more than 60% in the UK according to one of its surveys), with 55% of those playing games, 36% chatting online, 26% watching other video on second screens, and 16% listening to music at the same time. This trend is particularly noticeable in the US, UK and Germany.
However, eSports is not just something for kids, as another of Futuresource survey showed that 25% of all people in the UK watch eSports each week (compared to 48% watching Netflix). In the 16-25 demographic these figures are 55% and 74% respectively, with viewers in that age group watching an average of seven hours per week - compared to nine hours of Netflix. Although viewing of eSports dropped off considerably amongst older people, there were still about 8% in the 46-55 demographic, and even a few percent in the 66+ group.
This is why the global market for eSports should break $1 billion next year, with an estimate of $922m this year and a predicted compound annual growth rate over the next four years of 18% per year. Currently, 41% of that total comes from sponsorship (of events, teams and individual players), 21% from media rights, and 20% from advertising.
These advertisers have changed from being purely PC/game focused (such as Intel) to general consumer goods (such as Coca-Cola, Mercedes and McDonalds) seeking to engage this elusive demographic, who are less likely to view linear TV.
In terms of rights, the Amazon-owned Twitch network paid $90 last year for the Overwatch League (one of the main games). Hibbert admitted that is still relatively small change compared to traditional sports, but could prove to be a bargain for Twitch.
Global audiences for eSports are expected to almost double (to 800m) by 2023, and should be given a further boost by the Paris Olympics in 2024, when eSports will be a demonstration sport, helping to move esports from being an isolated niche, slightly nerdy eco system to gaining wider acceptance in the mainstream media.
One Chinese city plans to invest $2 billion over the next five years in eSports, including a dedicate university campus, esports zones and funding for companies.
Hibbert expects virtual reality headsets to be a major growth area for eSports. Not only are they far better suited to gaming than to pure video, there is a lot of investment in them for gaming, including as an immersive spectator experience - dropping the spectator in to the game play.
Premier League sums of money
Ginx is a payTV channel, with advertising, but is also moving towards supplying eSports content to other platforms. We are beginning to help organise local, white-label or Ginx-branded leagues. We are helping digital engagement with online tournaments, so we are seeing ourselves both entering the physical space of tournament organisations and the digital space of tournament organisations, and becoming a partner to other distribution platforms, explained Bakker.
As its business model evolves, it is also developing its own direct-to-consumer platform, which will launch in late Summer. Obviously, we have an advantage there, because eSports is a digital native phenomenon, so for us to deliver a platform we know the vernacular that people are looking for. Our platform will be bespoke. It will contain lots of gamification and itemisation to incentivise play and improve engagement, he said.
Bakker believes that eSports sees television as its pathway to Premier League sums of money , but its model will never be
Rory McVicar, Michiel Bakker and Carl Hibbert made up the eSports panel at the DTG Summit 2019 in London
the same as traditional sports as it already makes all of its
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eSports to break through $1bn barrier in 2020 as it moves from niche to mainstream By David Fox 
