The Growth of eSports as a Billion-Dollar Business

by - 2 min read

The Growth of eSports as a Billion-Dollar Business

by The Edge - 2 min read

by The Edge

These days there’s a market for just about everything, and even those who lack traditional athletic skills can still compete in front of sold-out crowds eagerly watching their every play. But instead of a ball, helmet, and pads, the tools of their trade are a keyboard, a mouse, or a game controller.

If you’re into gaming, then chances are you’re partially responsible for the massive growth of the eSports business. According to a report from marketing researcher Newzoo cited by Forbes, revenues from the eSports industry – professional competitive video gaming, typically played in front of large crowds and streamed to millions of viewers – is expected to reach the billion-dollar mark this year.

It’s a Big Money Game

Regardless of age or gender, millions of people around the globe enjoy video games. It’s what’s made the gaming industry the most lucrative of all entertainment businesses, reaching a record $43 billion (US) in 2018, according to NDP Group. (By comparison, the global film industry took in $41.7 billion in 2018.) Today, ever-increasing numbers of gamers are playing on live-streaming sites like Twitch, which Amazon bought for $1 billion in 2014. And while eSports is hardly a new phenomenon, many are still amazed at the incredibly lucrative industry that’s popped up around professional video gaming, where there are plenty of people lined up to spend their money.

From the outside, it can be hard to envision how a “sport” built around watching other people play video games could rake in such revenue. But when you factor in the accessibility of technology and the ambition and earning potential of tech-savvy young people, it’s not so hard to see how this part of the technology industry has grown into a multibillion-dollar business.

Millions of Dollars – and Viewers – at Stake

According to Newzoo’s 2018 report, sponsorships made up $359.4 million of the eSports industry’s revenue, which is expected to increase to $456.7 million this year. Next to sponsorship deals, advertising comes in second in eSports revenue streams. With the popularity of eSports on the rise (and possibly at its peak), new tournaments and leagues are being created regularly as a result, based around dozens of games, from shooters like Halo, Call of Duty, and Fortnite to fighting games like Street Fighter and Super Smash Bros. Ultimate. As these events grow in numbers, interested businesses are looking to monetize on the current trend, including media rights, advertising, merchandise, and sponsorships.

There’s also the lure of lucrative prizes for the gamers themselves. Just about anyone can establish their own Twitch channel and stream their gaming sessions to the world, with star streamers raking in millions. For pro gamers, the potential prize money for winning big tournaments is also huge; according to The Washington Post, the total prize money pool for the 2018 DOTA 2 International Tournament was $25.5 million, more than that year’s Daytona 500 NASCAR race ($15.5 million), U.S. Open golf tournament ($12 million), Tour de France ($2.7 million), and Kentucky Derby ($2 million).

As streaming technology continues to grow, viewership and gaming culture has been able to reach audiences in ways it couldn’t years earlier. While outsiders and people above a certain age may not be able to grasp the appeal of eSports, the incredible boom that the business is enjoying is only expected to continue.

In other words, eSports don’t seem to be going anywhere, so don’t be surprised if a huge Fortnite tournament becomes the streaming equivalent of the Super Bowl in the next few years.

 

Dontei Wynter | Contributing Writer

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