Esports Industry Progressing Towards Maturity

Just over a year since making our entrance into the ever-growing, ever-exciting esports landscape, we have continued to highlight the growth of the industry, pointing towards factors that have contributed to its rise.

With this piece, we will aim to reaffirm why now is undoubtedly the best time to be in esports as professional competitive gaming becomes a billion dollar industry this year.

Viewership & Awareness

Over the last decade, there has been a significant increase in viewership for both occasional and esports enthusiasts; this year, the total audience is expected to reach 454m. By 2022, this figure is forecasted to reach 645m, a 14% year-on-year growth.

Credit: Newzoo

As you can see from the infographic, there has been a steady growth in viewership. In 2015, ~800m people had heard of esports, and by the end of this year, it is expected that 1.57bn will become aware of the industry, even more so because traditional broadcasters are entering the space. Increased broadcast means greater exposure and therefore more time spent consuming esports content. As awareness grows over the coming years, this is a trend that is likely to increase, especially when you consider increased investment into the industry.

The Rise of Esports Investments

With consumers spending so much time within the world of esports, brands have a new channel to add to their marketing mix. Brands, particularly those non-endemic to esports, have activated within the industry to communicate their message to their target market. What’s more, they are beginning to realise the potential of tapping into — via ads, product placement and influencer marketing — such a young and dynamic market. Brand investment, primarily through sponsorships, have thus become the largest contributor to the global esports revenue.

A report released earlier in the year by Deloitte indicated growing confidence in the esports industry. The report, titled ‘The Rise of Esports Investments’ outlined that investment had doubled from 2017 to 2018; by 2018, investment had totalled $4.5bn.

Credit: Deloitte: ‘The Rise of Esports Investments’

Inward investment has supported organisations and teams across the landscape in numerous ways. Some organisations and teams have been able to extend their reach, attracting audiences and players globally, where others’, in some cases, have been able to purchase spots in franchise leagues. Call of Duty’s CWL, for instance, offers spots in the league for $20m, which is typical for top-tier professional circuits, and ensures commitment, and therefore, longevity for the industry.

According to Forbes, some of the top esports teams are valued at multiples of ten-fold their revenue demonstrating the significant appetite from investors for more established organisations. For example, Immortals, a US based esports team founded in 2015 is valued at $100m, with current revenues of $5m. It is clear that these massive valuations and investments are a clear indication of expected future growth.

Maturation of Esports

The infographic below shows esports progressing towards a crucial period of its lifecycle; the lucrative maturity phase.

Credit: Newzoo, Global Market Reports, 2017

Maturation is essential to any successful industry, and for esports, that characteristic focuses on a low price/earning (P/E) ratio, whilst maintaining a high dividend yield. In this case, a low P/E means that investors can expect to receive a share of a company’s earnings, for a relatively low investment, as the dividends for holding shares begin to proportionately increase.

During esports’ lifecycle, products and services have entered the market with the aim of catering to unmet demands. In turn, this has resulted in a proliferation of business attempting to profit from these unmet demands. Acquisitions, mergers, and even failures will occur that will subsequently result in the industry’s consolidation; those that survive this consolidation process are thus considered mature and will therefore occupy a greater share of the market.

Over time, this will repeat itself, where new life-cycles will begin, potentially replacing other products or services in the process. These life-cycles are crucial to encouraging the sustainability, and thus, continued growth of the esports economy. It is important to remember that maturation is a process. We must acknowledge that there are still aspects that esports, on the whole, must address to improve the welfare of all stakeholders; the future growth of esports are only forecasted revenues, after all. Actual revenue in the coming years will depend on addressing identifiable pain points as soon as possible. It will involve careful consideration of the factors that will determine the continued growth of the industry.

We have presented an overview of the growing confidence in the future growth of the esports industry. In the coming years, it is important that stakeholders within the industry pay attention to the development of skills and the necessary infrastructure required for longevity and sustainability.

For more details on why esports is too big to ignore, check our previous article! For our next piece, we will be providing an insight into the key factors determining the growth rate of esports. This will lead onto a key issue Intergalactic Gaming aims to address.

To keep up to date with developments, please follow us on our various social media channels:

Website: www.iggalaxy.com
Medium: https://medium.com/@IGGalaxy
Twitch: https://www.twitch.tv/igg_esports
Discord: https://discord.gg/5kx4tKR
Reddit: https://www.reddit.com/r/IntergalacticGaming/
Twitter: https://mobile.twitter.com/IG_Galaxy
LinkedIn: https://www.linkedin.com/company/intergalactic-gaming
Telegram: https://t.me/IGG_Official

Building a next-gen social competitive gaming and esports platform that empowers gamers and teams! 👽