Esports To Be Worth $1.9 Billion by 2018

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Thursday, December 3rd, 2015 | Written by Lucy Brown

Think the video game industry is all about the sale of consoles, games and accessories? New market research data suggests otherwise. The days when gaming was just a hobby have come to an end, as competitive video gaming is growing in popularity all around the world. Known as e-Sports, competitive gaming is attracting attention from investors and gamers alike and is even causing casinos to rethink their approach to attracting players from the millennial generation. Commenting on a latest report produced by SuperData, the company’s director of research and consumer insights, Stephanie Llamas, explained:

“E-sports are becoming more mainstream and that has attracted traditional media channels like TBS and ESPN. So far, fans have had to seek out platforms to watch tournaments and players, but now people can stumble upon eSports while flipping through channels. Even old-fashioned brands are taking notice and there is a growing interest in advertising to the coveted millennial male demographic on a medium they know well.”

The Value of e-Sports

e-Sports or competitive video gaming involves tournaments where competitors compete for cash prizes. Events are now taking place on a global scale and are being broadcast online with thousands to millions tuning in to watch the action unfold. All of the attention makes eSports appealing for advertisers, not just in the gaming industry, but across all industries that wish to market to millennials. Currently, eSports is believed to be a $748 million niche. About 77 percent of that revenue comes from sponsorship for events. Experts estimate that $55 million of the revenue is owed to e-sports betting and fantasy sites. With interest in e-Sports growing, it’s believed that the industry will be worth roughly $1.9 billion by 2018.

It All Began in South Korea

Many Americans are only now learning about eSports, but competitive video gaming isn’t anything new. In the late 1990s, video game tournaments began popping up in South Korea, and eventually began to attract players from throughout Asia who wanted to participate and watch the events. As video streaming and sites like Twitch came into popularity during the early 2010s, the West finally began to discover the appeal of e-Sports for participating, watching and placing wagers.

E-Sports Spreads Around the World

e-Sports have become a global phenomenon over the last 5 years. Investors are beginning to see the potential to earn big returns by getting in on competitive video gaming early. Reportedly, $150 million was invested in e-Sports betting sites and platforms this year alone. Major networks like ESPN and TBS are expressing interest in televising major e-Sports tournaments like those for League of Legends, Hearthstone and Defense of the Ancients. In some countries, competitive leagues are even in the works. Most recently, Sony announced that they will be introducing a professional league called the PlayStation Plus League, and in Russia, Alisher Usmanov has reportedly spent $100 million to establish a large e-Sports club called Virtus.pro.

Casinos Are Taking Notice

While e-Sports is booming, land-based casinos throughout the country are puzzling over how to attract younger patrons and keep them inside once they walk through the doors. It’s become clear that the table games and slot machines that appeared to millennials’ parents and grandparents aren’t appealing to the new generation of 20-somethings, and as an article posted in The Tucson Sentinel explains:

“Casinos across the nation are suffering from a generation gap, especially at the slot machines, as young people seek more exotic electronic games like the ones they can play on smartphones.”

Needless to say, the lower slots revenues generated by casinos is resulting in lower tax revenues for strained states coffers, thus prompting casino businesses and game developers to devise new innovative ways to appeal to a younger generation more accustomed to playing eSports, daily fantasy sports, and online poker.

To reach out to this important demographic, casinos in Nevada and New Jersey are trying to integrate e-Sports into the design of gambling machines. State legislation has been amended to allow for these new competitive video game gambling machines to be used on the casino floors in hopes of gaining business from those interested in e-Sports. Whether the casinos efforts will bear fruit, however, remains to be seen. After all, tech-savvy millennial players will be well informed as to the gambling odds offered by these hybrid slots, and may be turned off if the payouts are not sufficiently attractive. On the other hand, casinos placing greater emphasis on offering skill based games to customers goes wholly against their traditional approach of dissuading skillful gamblers from entering their establishments in the first place.