Co-founder of Gamer One
If you aren’t invested in esports yet, you still have time to join one of the biggest booms of the decade before the train leaves the station.
The esports industry, which includes gaming competitions, gambling, advertising, merchandising, content creation, and so much more, is primed for massive growth. Estimates project esports viewers to outnumber those for every American sports league except the NFL by 2021. Esports fans will total more than 300 million by the same year. Around one-third of Gen Z members have recently watched an esports tournament, and as young people gain more influence as consumers, esports will reap the monetary rewards.
Don’t be fooled into viewing esports as a passing fad. Gamers have been playing together for decades. When the internet arrived, they gathered in online communities, but they didn’t have the speed necessary to game together or livestream their abilities. YouTube and Twitch rode the wave of increased speeds and access to bring players together, and when smartphones turned an entire generation into gamers, the rise of esports became inevitable.
Esports will undoubtedly continue to grow, but that growth may not take the shape industry outsiders expect. Before you make your first investment in esports, keep these five trends in mind:
People love to play games, and the data shows that people also love to play games about other people playing games. Esports gambling, whether by outsiders on matches or by gamers for exclusive in-game items, is a massive market. Totals for esports gambling reached $5.5 billion in 2016. By 2020, that number will more than double to $12.9 billion.
Increased gambling means increased opportunities for investors in spaces adjacent to the central excitement of esports. Game lovers and gamblers need marketplaces, bookmakers, and advice sites to scratch the esports wager itch. These businesses might not feel like esports-focused investments, but they will benefit from the industry’s rise all the same.
Esports is a little too old to be brand new, but legislators still haven’t caught up with the needs of the new market. Two areas will see increased legislative influence over the next year: gambling and classifications.
For gamblers, different jurisdictions have different laws about what bookmakers can and cannot offer. Nevada has allowed esports gambling since 2016, while New Jersey just recently let bookmakers open the gates for gamers. Legislators must also make the important decision of whether to classify esports as a true sport. While the argument may sound frivolous to outsiders, this classification affects whether international athletes can get visas to compete in other countries.
Most of the esports scene today focuses on popular PC titles, like Dota 2, League of Legends, Overwatch, Counter-Strike: Global Offensive, and Fortnite. None of those titles champion VR, but as virtual reality technologies improve, the VR esports scene will grow alongside the tools that make competition possible.
The Esports Observer covered the rocky journey of VR esports through the first quarter of 2019. A few VR titles have attracted audiences, but with only 6 million unique viewers, the space still has its work cut out to join the big dogs of the scene. That could change as more consumer-friendly devices like the Oculus Quest bring accessible, consumer-friendly VR into more households.
Amateurs may never earn the multimillion dollar prizes that esports superstars do, but they love their games all the same — and esports audiences love to watch amateurs nearly as much as they love to watch pros. According to research from Deloitte, esports events make up only 30% of overall gaming viewing.
That figure should not indicate that esports only owns a small part of the gaming market, though. Esports stars get plenty of views on their own channels outside of formal competitions, which accounts for a massive chunk of the remaining viewing percentage. Investors looking to jump into the esports scene must remember that the bright lights of stadiums are not the only places where fans congregate.
As of today, young men make up the largest group of esports viewers. Most studies estimate the male share of esports viewership between 70-80%. That still leaves plenty of room for women to join the scene, though, and as esports establishes its footprint and expands its entertainment offerings, groups outside the early core audience will find their niches.
Deloitte’s research found that people who consider themselves gamers love esports regardless of gender or age. More than 40% of Gen X gamers watch esports weekly, as do nearly 30% of women gamers. Games cast a wide net, and the people who are hooked on their favorite titles are eager to see where the industry goes next.
Some of these trends will manifest in obvious ways this year, while others may take more time to develop. Investors should not view esports as an opportunity for a quick buck but as a long-term play with enormous potential. Ten years from now, those who invested in esports early will be glad they got in when they did.