31 million people watch esports tournaments in the U.S., and more than double that, 68M, in China. And the question is — how do you monetize that at scale? Don’t miss this VB Live event for keen insights on how U.S. companies can effectively operate globally or begin to expand globally.

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Here’s the big esports question: Is there anybody who’s really interested in watching other people play a game as opposed to playing a game themselves? With more than 150 million people a month on Twitch, there really is no question.

Esports, which racked up 300 million viewers worldwide last year, is on track to surpass a billion dollars for the first time this year, across all markets, and not just from indirect revenue sources, like advertising and sponsorship. Merchandise sales, ticket sales, and other items that consumers purchase directly make up about a quarter of that income.

“Blizzard can sell out tickets for its esports tournaments at BlizzCon — these are tickets that go for about $200 a pop, and they sell 25,000 seats in about six seconds,” says Dean Takahashi, lead writer for GamesBeat. “That’s pretty amazing.”

What’s behind the surge? For one, internet infrastructure and bandwidth making live streaming much more viable — and with streaming, you get a much more micro-targeted audience, says Carter Rogers, senior analyst at SuperData Research. Ratings you might sniff at in the TV world are still very viable for esports ecosystems, because the super devoted fans watching on Twitch or YouTube are devoting their time and money to it, making a bigger ecosystem possible.

Games are also getting more fun to watch, Takahashi suggests, with titles like League of Legends, Arena of Valor, Overwatch, Fortnite, and PUBG, and the releases just keep on coming. The esports trend started in the Asian market, almost ten years ahead of the rest of the world, when StarCraft was a thing.

And in China, it’s even getting much closer to a truly mainstream activity, Rogers adds.

“We see games like Honor of Kings or Arena of Valor, which we might think of as very male-focused in the west, with very even gender ratios in their players,” he says. “It’s an activity that reaches across male and female audiences and reaches across age groups.”

However, game tournaments aren’t even the most popular form of gaming video content, despite the big draw. Audiences are stacking up for walkthroughs, game strategy videos, and game trailers.

But no matter what they’re watching, these viewers are extremely engaged, he adds.

“They watch for long periods of time, and they watch live because they want to do things like interact with other fans,” Rogers says. “Esports and live streaming have really brought back live TV viewing, much like real-world sports.”

A big part of the surge is how connected this audience really is, says Johannes Waldstein, CEO of FanAI Inc., which works with esports teams like Cloud9, TSM, Liquid, Optic Gaming, and leagues like the Turner E-League.

“It’s having 90 million people messaging each other on Discord, being on Twitter, being on Twitch,” Waldstein says. “Unlike television, these are the platforms and the places where you have friendships with people you know in real life and with people you know only in the gaming or virtual world.”

Worldpay research estimates that there will be 25 billion connected devices by the year 2020, says Roc Harry, relationship director at Worldpay, and that full-powered mobile devices, which allow users the convenience of streaming anywhere, will continue to drop in cost.

And that’s where much of the opportunity in esports lies, especially in Asia, Rogers says.

“Mobile esports that we wouldn’t consider viable in the west are the norm in Asia,” he explains. “We’re seeing mobile games that have the potential to build a truly hardcore audience.”

Adds Waldstein: “Sponsorship is going to be one of the largest growth areas.”

What they’ve found is that the audience is not as homogenous as everyone assumes, with much more varied cultures, ethnicities, and socioeconomic backgrounds, than you would expect, he says. But it does skew toward the wealthy millennial: Somebody who can afford to go to one of these events, or play competitive games on a higher-end PC.

“You now have some of the big brands and agencies that are not traditionally in esports now suddenly realizing, ‘Wait a second, these audiences block my ads, they don’t watch traditional sports where my advertising budget is typically going, but they have an affinity for my product, they’re the right life stage, they have discretionary spend,'” he says. “This is a good place for me to find and engage with the right type of customer.'”

“Opportunities are breeding more opportunities and attracting more investment into esports now,” Takahashi adds. “I moderated a session a couple of weeks ago at the Milken global conference where there were about 4,000 investors.”

They were all very interested to learn that there are companies like Lionsgate and venture capitalists like Crosscut Ventures investing in teams like the Immortals, he says. Kent Wakeford and Kevin Chou, the former leaders of Kabam, are investing in the company behind the Seoul Dynasty Overwatch team. Tencent, Activision Blizzard, Robert Kraft of the New England Patriots, the owners of the Sacramento Kings, the owners of the New York Mets, the Philadelphia 76ers, and a lot of other traditional sports companies are coming in. Even venue companies like AEG, which owns the Staples Center, are investing in this market.

“It’s those layers of investment that are building up across the whole ecosystem, from the amateur level all the way up to this professional, championship level,” Takahashi says. “That’s what’s really generating a lot of this excitement. It’s breeding more opportunity.”

To learn more about where these opportunities lie, what challenges investors face when going international, and more, don’t miss this VB Live event!


Don’t miss out!

Access this VB Live event on demand for free here.


You’ll learn about:

  • The opportunities provided by the growth in the esports streaming content market
  • What’s causing the streaming content surge and market growth
  • The technology making this explosive esports growth possible on a global scale
  • Confronting the problems around scale in markets like China and elsewhere

Speakers:

  • Dean Takahashi, Lead Writer, GamesBeat
  • Johannes Waldstein, CEO, FanAI Inc.
  • Roc Harry, Relationship Director, Worldpay
  • Carter Rogers, Senior Analyst, SuperData Research

Sponsored by Worldpay