The audiences and events for professional competitive gaming is going to continue its growth trajectory in 2017 and beyond, and this is going to lead to an influx of more cash.
Esports will generate as much as $696 million in revenues this year, according to a market report from intelligence firm Newzoo. That is a year-over-year growth of 41.3 percent, and most of that expansion will come from brands spending on ads and sponsorships. Newzoo estimates companies will put $155 million toward advertising with esports, $266 million toward direct sponsorships of players and events, and $95 million on media rights. The rest of the money will come from consumers buying a mix of tickets and merchandise.
And going forward, it is the brand spending that will power this market into the next decade as Newzoo predicts esports will bring in $1.5 billion in annual revenues in 2020. Newzoo does not include gambling or daily fantasy revenues in these figures, but it does acknowledge that the other gaming industry sees esports as a can’t-miss opportunity.
“Esports is not only growing exponentially as a new independent business and industry, it is also accelerating the convergence of various established industries,” Newzoo chief executive Peter Warman said in a statement. “For brands, media, and entertainment companies, esports provides a chance to capitalize on the favorite pastime of digital natives and Millennials: playing games and watching game content. With the arrival of live streams and events, gaming has entered the realm of broadcasters and media that can now apply their advertising business model to a market previously out of reach for them.”
Newzoo’s report also claims that the audience for esports will expand to 385 million people this year. That includes 191 million enthusiasts who are extremely dedicated to watching every match that features their favorite League of Legends team or Counter-Strike squad. The rest of that total audience comprises more casual fans.
What this all means is that pro gaming’s business reality is looking more and more like a traditional sport in terms of its profit potential, but it still lags behind the mature American sports. Total revenue per fan, a key performance indicator for the health of a sport, reveals that the average NBA fan spends three times as much money on basketball-related products than the typical esports viewer. And when it comes to football, NFL lovers spend 12 times as much money on average than a fan of competitive gaming.
But those gaps will likely continue to close — especially as the young esports audience begins to age and begins to look more like a young professional rather than like a high school or college student.