Video games as a competitive sport, or esports, are in the midst of a global explosion. With people stuck at home due to the pandemic, the consumption of online media has increased massively. This drives an entire industry that helps support the sport, involving not only video game console sales, computer and peripheral sales, brand sponsorship, media coverage, and niche outlets, and of course marketing.
The marketing and ad revenue is just starting to bloom, and it is the perfect time to get in on the incredible growth. There are estimates that the viewership for 2021 esports will approach 27 million individuals, and the corresponding ad revenue will top $100 million. Some pessimists will argue that the numbers for the pandemic period are skewed by being inflated beyond normal expectations, and thus will recede a bit in the near future. The gaming industry, however, has plans to maintain its upward trajectory.
The Benefits Of Streaming Esports
Streaming is vital to the overall success of the esports industry. When a live streaming platform allows players to broadcast or televise their events to live viewers, it provides one of the most effective methods of showcasing the industry to outsiders. Many of these outsiders are affiliated with potential ad-buying entities, whether they are part of the gaming industry or merely adjacent.
When the initial platforms like YouTube and Twitch took off and began to grow the seeds of competitive gaming, it also began the groundwork for esports streaming ad revenue. A large number of current esports teams, gaming organizations, and competitive leagues are experiencing enormous growth in their number of followers, which brings exponentially more exposure for sponsors and brands that advertise during the gameplay.
The Stakes Have Never Been Higher
Since the beginning of the current esports era, the video gaming industry has seen a nearly unbelievable influx of those wanting to cash in on the ever-increasing viewership. This has seen the entrance of not only savvy venture capitalists but also large private equity firms that are determining that esports is the next best big investment opportunity.
Investment estimates from 2018 point to a trend of nearly doubling numbers, or more, on a year-over-year basis. Private investments in the esports industry numbered less than three dozen in 2017 while hitting nearly 70 the following year. This trend is also readily visible in raw dollars as well, with insights from Deloitte US indicating that during the same period, investment dollars in esports jumped from about $500 million to more than $4 billion.
Esports And Advertising
Esports teams and leagues have a similar structure to conventional sports, and as such, they have owners, endorsements and sponsors, franchise opportunities, and tournament winnings that all add into the final number indicating their valuation. Ad revenue also contributes in a major way. When the opportunities afforded by advertising are also calculated into the valuation, it is not uncommon to see some of the more profitable or valuable teams having 30 to 80 percent of their revenue derived solely from advertising proceeds.
This leads to the inevitable conclusion that esports ad monetization will not only have immense financial benefits but that by the early stages of esports in general, those benefits are only a drop in the bucket at the moment. With the brick-and-mortar legend, GameStop gearing up for a complete reinvention and rebirth as a competitive gaming and esports hub, the indications that esports has not hit even a small portion of its full growth and audience potential are all pointing to this trend continuing. More streaming services debut daily, and they will all be fighting for a share of ad money.