• The London Finance Journal

Evolving E-Sports Industry

Updated: Jun 5, 2020

Being stuck at home during the ‘Corona Quarantine’, I had exhausted my movie options in the first week itself. So, I turned towards the uncharted waters of the gaming world through Minecraft. After one of the ‘sermons’ by a friend who looked down on gaming and considered esports as ‘insignificant’, I set out to research on the significance of the industry on a global scale. I discovered that the Esports industry has commendably paved its way from a vibrant niche industry into a significant form of enjoyment, all over the world. Experiencing a substantial amount of boost from 2000 to 2010, Esports has blossomed into a multi-billion-dollar industry in 2020! The strong growth trends have convinced me that Esports is definitely not ‘insignificant’. With the existing models, we can ascertain that the industry is going to challenge our understanding of crowd-sourcing and broadcasting in the near future.

Esports industry is not only limited to a particular region but also is spread all over the world in various proportions. North America having the highest revenue $409.1 million in 2019 which is expected to grow till $691.1 million by 2022, followed by China ($210.3) and Western Europe. Furthermore, there has been a substantial increase in worldwide revenue generated by the industry. From 130 million in 2012 to around 1.1 billion in 2019, it is further expected to grow till 1.79 billion by 2022 making the compound annual growth rate to be 22.3%. In addition to that, there has been an increase in enthusiastic viewers from 121 million in 2016 to 198 million in 2019, increasing the total viewers- consisting of both enthusiastic and occasional viewers, from 281 million(2016) to 443 million(2019) and is expected to further grow till 295 million by 2023 at 10.4% compound annual growth rate making the total viewership in 2023 to 646 million. The exponential growth in this industry is going to create a window for both players and game-developers to earn money through innovative approaches in a rapidly changing market.

In this digital era the market is moving increasingly towards online platforms. In fact, we have seen a tremendous spike towards these platforms after the advent of coronavirus. As a result, it comes with no surprise that gamers ‘live-stream’ their games, for the viewers on platforms such as Twitch, YouTube and Mixer. Apart from earning copious amounts of money, many such streamers further go on to become internet celebrities. The most subscribed channel on twitch is ninja, with a total of 14.71 million followers, followed by tfue (7.73 million) and shroud (7.04 million), and on YouTube is Fernanfloo with 35.7 million subscribers. With an

industry this wide, there exists a variety of games, the most played out of them are League of Legends, DOTA2, Fortnite. The League of the Legends World Championship of 2019 was considered as the biggest live tournament and the Overwatch League was considered most watched league, with YouTube and Twitch having the live viewership of 105.5 million hours and 104.1 million hours respectively! The platforms have further observed an increase of 10% in Twitch and 15% in YouTube Gaming viewership due to Corona virus (as of March, 2020).With an increase in an already large pool of consumers, the industry is bound to create ripple effects on related commodities such as videogames, streaming services and television viewership. As the market shifts to the online platform, we find that the accessibility increases to both the buyers and the sellers due the mainly open-access nature of the Web. Hence, the shift towards online esport platforms is bound to create better market conditions than the status quo by increasing the choice at the hands of the user. Moreover, the sellers also have minimal fixed costs, allowing them to utilise their variable factors more efficiently to create a larger and more competitive market.

The revenue generated worldwide is divided into several different segments- such as- sponsorship, media rights, merchandising and tickets, publisher fees, digital and streaming. Most of the revenue emerges from sponsorship, accounting for 636.9 million USD and media rights raising 185.4 million USD. A preconceived bias surrounding the industry is that it lies in predominantly economically developed regions of the world. However, the increase in popularity of the industry can be seen by sharply along the developing regions of the world. Escalating esports markets in regions such as Southeast Asia (+24.0% CAGR), Japan (+20.4%), and Latin America (+17.9%) to close the gap between themselves and older, more developed esports markets. Moreover, as the market matures and the range of competition diversifies, we will see an increase in the market cap. These regions are poised to offer large markets to the industry due to the large population these regions entail amplifying the popularity of esports worldwide Surprisingly, there is an overwhelming demand to include esports Olympics (with Tokyo 2020 getting postponed a lot of fans have their fingers crossed). As the esport market has carved a niche for itself, many universities have started to offer merit scholarships to applicants who have played esport professionally for their high schools.

In conclusion, emerging as a successful market in itself, esports is catching the attention of the key players in the market and proving that it is anything but ‘insignificant’. Through its successful advertisement strategies and engrossing games, esports is set to outperform other industries in due course. Additionally, the adaptability and live streaming facility which helps the audience connect more to the games and gamers, has further increased its appeal. With more people coming in, the increase in revenue serves as perfect incentive for the industry to progress. With

its staggering growth rate in both revenue and audience all over the world, it would be wise to expect promising results from the industry and treat the sporting community with their due respect.

By Nitya Agarwal


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