Esports Industry Worth $493 million in 2016

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Wednesday, August 16th, 2017 | Written by Shane Larson

Esports or video game competitions has been booming in recent times, and last year the industry’s audience grew to roughly 148 million enthusiasts, and generated $493 million in revenue. Moreover, industry experts feel that e-sports shows no sign of slowing in growth, and will likely grow to be a $1 billion market by 2019.

In fact, eSports have become so popular that it is now being considered as a medal event at the Paris Olympic Games in 2024, although a decision on the subject will have to wait until after the 2020 Tokyo Olympics is completed. Commenting on the issue, IOC Co-president Tony Estanguet, said that they needed “to better understand what the process is and why it is such a success,” before finalizing their decision. Estanguet even took time to address the concerns of eSports skeptics, stating:

“We have to look at it because we can’t say, ‘It’s not us. It’s not about Olympics.’ The youth, yes they are interested in esport and this kind of thing. Let’s look at it. Let’s meet them. Let’s try if we can find some bridges.”

Dominant Asian Market

Statistics show that roughly 54 percent of all e-sports enthusiasts are located in Asia, with the overall Asian e-sports market having grown by 18 percent over the last 2 years. Two important markets in the Far East includes China, which reported a 17 percent increase in eSports enthusiasts to 62 million in 2017 from 2014’s figure of 40 million; and Korea, with a 6% rise in numbers to 3 million people in 2017, from 2.5 million people three years earlier.

While North America, Europe and Oceania may lag behind the East in terms of total number of players, the industry is still growing at a fast pace as more Westerners discover the game. Between 2014 and 2017, for instance, e-sports in the West have grown by roughly 21 percent from 14 million to 21 million enthusiasts.

So where exactly does the revenue from e-sports come from? Let’s take a look at the breakdown:

Indirect Revenues

According to reports, about 74 percent of current e-sports revenues are generated from advertising and sponsorship, with experts believing that sponsorship alone will generate $839 million in revenue for e-sports in 2017. Already, worldwide brands such as Visa, Red Bull, PepsiCo, Gilette, Coca-Cola and HBO have become involved with the industry, and have attached their name to major events. For example, Coca-Cola was the official sponsor of the World Championships for League of Legends this year, and commenting upon the arrangement, Matt Wolf, head of global head gaming at Coca-Cola, stated:

“We have worked very closely and collaboratively with Riot Games to create a league that delivers true value to the fans and players of the sport, and that begins to build an infrastructure for eSports that mirrors that of the more traditional sports.”

Direct revenues

The remaining 26 percent of e-sports revenue come from direct sources, including:

– Prize Pools. About 9 percent of all revenues for 2017, roughly $102 million, will come from the prize pool funding derived from video game publishers like EA Sports.

– Ticket Sales. Ticket sales for championships generate roughly 5 percent of all revenue, and are forecast to total $74 million in 2017.

– Amateur and Micro Tournaments. Entrance fees for amateur and micro tournaments will generate roughly $54 million in revenue this year, and provide roughly 5 percent of all overall revenue.

– Merchandise. Merchandise sales at tournaments generated roughly $52 million in revenue already this year, amounting to about 2 percent of all revenues for the industry.

– e-Gaming. E-sports betting and fantasy sites are gaining popularity. Online e-sports have become a $57 million industry in its own right and provide about 5 percent of all revenues from e-sports.

6 Most Popular eSports

While many video games are played competitively, there are six that are dominating the world of e-sports at the present time:

– League of Legends. The multiplayer online battle arena game has roughly 3.25 million players worldwide.

– World of Tanks. With 45 million players registered worldwide, the first person tank simulation is incredibly popular among e-sports enthusiasts.

– Star Craft. The real-time-strategy game has sold more than 10 million copies worldwide to date.

– Defense of the Ancients 2. Also known as DOTA 2, this multiplayer online battle arena game has more than 3 million monthly active users.

– CounterStrike Global Offensive. More than 30 million copies of the CounterStrike first-person shooter game have been sold worldwide, and CS GO has become a cornerstone of the e-sports industry.

– Call of Duty Black Ops II. More than 20 million copies of the first-person shooter game have been sold across all platforms to date.