Beyond gaming: what we know about the eSports market
Updated: May 30, 2019
For those who pay no attention to DOTA2 or eSports, Syed Sumail Hassan might just be a name that rings no bells. However, for the 10 million DOTA2 players or the 131 million eSports audience around the world, Sumail and his ID “SumaiL” refers to one of the best DOTA2 solo players, as well as one of the 30 most influential teens in 2016 according to TIME magazine, who recently highlighted this 16-year-old from Pakistan as “the youngest person ever to earn $1 million playing competitive video games”. Unlike any of the other influential names on the list, SumaiL became a public icon and made his fortune by playing video games – most notably helping EG to win The International 2015 (TI5) DOTA2 World Championship with a total $18 million prize pool – which was then surpassed by TI6, with a total prize pool of over $20 million. SumaiL is just a small piece of the global eSports landscape. With skyrocketing numbers of revenue and audience, the eSports market has grown tremendously and at such a rate that video gaming has already gone beyond just gaming.
A few facts about eSports:
According to Newzoo’s 2016 Global eSports Market Report, total global eSports revenue hit $325 million in 2015. It is anticipated that the market will expand to $463 million with a 43% YoY growth rate in 2016
The same report revealed that as of 2015, an audience of 131 million would regularly view eSports contents and participate in eSports events. Significantly, these “eSporst Enthusiasts” are willing to pay for such participation
The most lucrative eSports event in 2015 was The International 2015 of DOTA2, which contained a purse of $18 million. By comparison, the purse of the Wimbledon Mens/Womens Singles was $14.86 million, while the purse of Super Bowl 2015 was $15.5 million. DOTA2 TI5 was ranked in the top 5 sports by prize pools in 2015
There were 112 major eSports events held in 2015, which generated an estimated $20.6 million in ticket revenue. The total prize money of all eSports events reached $61 million in 2015 with a 70% YoY increase over 2014
The eSports industry has attracted investments from large corporations like Coca-Cola, Alibaba, and Microsoft. Professional sports athletes, like Shaquille O’Neal, Stephon Marbury, and Jeremy Lin have also announced their involvements in the eSports industry
eSports fans can contribute directly to the prize pool through purchasing tickets for events and virtual items in exchange for in-game rewards. For example, Valve, the publisher of DOTA2 contributed only $1.6 million to the $18 million TI5 prize pool while fans funded the rest through crowdsourcing. However, the eSports industry is still relatively immature compared with traditional sporting markets in terms of the merchandise and ticketing revenue directly from consumers. The Newzoo report found that the average annual revenue per eSports fan was still lower than traditional sports. See figures below:
What about China?
China has the world’s largest number of eSports fans. The report from Newzoo estimated that China would generate 15% of the world’s eSports Revenue in 2016, totalling $69.45 million. A report from iResearch on the eSports ecosystem in China logs the nation’s eSports audience numbers at 124 million, plus an additional 100 million live game broadcast viewers. Chinese eSports fans generated more than $350 million in revenue by the end of 2015. Consumers in China are now engaged in an eSports industry that includes content development, game execution, game distribution, eCommerce platforms, players, clubs and audiences. Along with the on-going commercialisation of eSports content in China, the combination of copyright, ad sponsorship and the overall fan economy, are expected to attain more than $10 billion in revenue.
Despite the differences in numbers regarding the scale of eSports in China, there is no doubt that the nation will continue to be a major player in the world’s eSports landscape, given its large online population and fast growing internet economy.
While the eSports market continues to grow unabated, it is clear that its influence within sporting and digital industries will only increase. As eSports is naturally a digital industry, further cultivating an online community whilst eSports fans and players are already interacting heavily online becomes a challenge. Additionally, everything we know about eSports has emerged within the last 5-10 years, and video games have a much shorter period of popularity amongst fans than traditional sports due to their complexity and the rapid progress of technology. Therefore, the second challenge for the industry is to cultivate a sustainable and expanding fanbase which invests itself in the eSports market for the long term. Finally, building awareness is not enough – the challenge is to increase the individual revenue per eSports fan throughout the various stages of eSports ecosystem.