In 2019, the revenue generated by esports events surpassed $1 billion worldwide for the first time, a major milestone in the industry’s history. This was up by 33% on 2018’s revenue, demonstrating the huge growth the industry is currently experiencing.
This growth isn’t expected to fizzle out any time soon. Newzoo has forecast that the esports industry will surpass $1.5 billion of global revenue in the next three years.
While for the general public this success came out of nowhere, for those in the industry this growth comes after more than a decade of work. Long-running competitions like the Intel Extreme Masters, Major League Gaming and the World Cyber Games have been in operation since the turn of the millennium.
Growing Prize Money
The oldest of these is the World Cyber Games, which launched in 2000 and offered a prize purse of just $20,000 across all 174 competitions. In 2019, it handed out $612,500 of prize money, but this is still small compared to The International which paid out $34 million to players of Dota 2.
This prize money helps to attract the best players, which in turn helps to attract more viewers to the events.
Growing Viewership Driving Revenue
This growing viewership helps to attract the sponsors that pay the largest proportion of the industry’s revenue. In 2018, almost 60% of all revenue came from sponsorship and advertising deals, with the rest coming from media rights (TV broadcasters and streaming services), merchandise and ticket sales, and fees paid by game publishers.
Over the coming years, these publisher fees are expected to slowly dwindle away, with the other categories growing to fill the gap.
Increasing these revenue streams is dependent on the success of organisers acquiring more people to watch their content, either in person or online.
Over the last few years, esports viewing figures have been rising, jumping from around 200 million in 2015 to 375 million in 2018. By 2021, the figure is expected to surpass 500 million, with 50% of these being considered “esports enthusiasts”.
Aside from just viewing figures, awareness of esports has risen significantly over the same period. In 2015 around 800 million people had at least heard of esports, but this had doubled to almost 1.6 billion in 2019.
Replicating Traditional Sports
In many ways, esports are beginning to replicate traditional competitions like football, basketball, and cricket.
Apart from the different ways that esports and traditional sports are played, the two share many other similarities. For example, many bookmakers will now allow fans to bet on esports, just like they do with traditional sports.
Events are also broadcast in a similar way, with online streams that include commentary and punditry, just like traditional sports. Some esports are now even broadcast on TV, such as the F1 Esports Series, which can be watched on the Sky Sports F1 channel.
Based on all of these factors, esports should be considered as fully-fledged sporting competitions rather than a niche hobby enjoyed by a group of enthusiasts.
A Threat to Traditional Sports?
While esports are replicating traditional sports, they’re unlikely to pose a major threat. The two can quite easily coexist since they’re not direct competitors.
Popular sports like football, tennis, and hockey cannot be replaced by people playing a video game recreation. Fans enjoy these sports because they’re physical challenges with the most talented athletes succeeding.
The esports that have the most success tend to be ones that can’t be directly compared to traditional sports. In 2019, the most-watched competitions were:
- League of Legends
- Fortnite
- Dota 2
- Free Fire
- CS:GO
- PlayerUnknown’s Battlegrounds
These are all fictional games that have no direct comparison in the real world. This has two benefits, the first being that the inaccuracies between the game and the real thing can’t be pointed out by critics and fans.
The second is that it creates an even playing field for players. Games that have to replicate the attributes of real-world athletes and teams also need to replicate any advantages that they have over less successful competitors. This means some video game players will have an easier time than others, meaning it isn’t a fair competition.
In Conclusion
No matter what metric you look at, esports are enjoying strong growth. They are attracting more and more viewers, enjoying increasing payments from sponsors and advertisers, and rising prize purses for competitors.
This success comes from the professionalisation of the industry, just like we saw in traditional sports last century.
Esports are here to stay and will likely grow for some time, but they won’t be a threat to traditional sports. Instead, the two will coexist and even help each other.