Global eSports video gaming market to grow to 600 million

04 April 2016

The market size of eSports is currently either under- or overestimated. eSports is a new entertainment market that both Tech and Media companies are optimistically investing in as they see potential for large growth opportunities and an interesting millennial demographic as attractive signifiers. According to predictions by Deloitte Global, eSport's global revenues will be up by 25% in 2016 with a likely audience of roughly 150 million, which undervalues other, more optimistic, predictions.

The current market size of eSports is undervalued by skeptics who do not recognise a direct correlation between the popularity of online video-game content and eSports, valuing the market in merely the millions. Optimists of the eSport market do link the two, and overvalue its market size with predictions as big as in the billions - comparable to major league sports - and triple the projected 2016 growth over 2015.

Deloitte Global's predictions do not support the direct correlation between the success of online video gaming and eSports, because successful online video game channels on Youtube like PewDiePie and Vanoss collectively make up approximately 10% of Youtube's top channels, and their success relate more to the entertainment value (watching other people play online video games for money) rather than for sport. Deloitte Global argues that the online video gaming audience may not directly lead to tens of millions willing to either subscribe or pay to attend an eSports tournament, thus dismiss there is direct correlation that will necessarily translates into revenue growth.

Deloitte Global base their prediction on figures of the current online viewership that major eSports events attract, as well as ticket sales, TV rights, sponsorship and other commercial sources. Following the potential for growth within these variables, Deloitte Global predicts that eSports will generate global revenues of $500 million in 2016, up 25 percent from about $400 million in 2015, and will likely have an audience of regular and occasional viewers of close to 150 million people.

The 2016 prediction by Deloitte Global takes into account, among others, the audience size of an individual eSports event as well as the number of events that take place a year. Even though a single event may attract 40,000 people watching live and tens of millions watching over the Web, a larger viewership per single event than in Basketball, the frequency of major eSports events, annually, is not high in comparison to major league sports. 

While the predicted growth of 25% in 2016 is better than most mature sports, some of which have been around for a century or longer, it does not yet reaching the market size of major sports. Major league revenues in leading sports such as European football (soccer), US football, basketball, baseball, or ice hockey range from $4 billion up to $30 billion. In comparison, the revenue of eSports represents just a fraction with their 2016 prediction of $500 million. 

In dollar terms, eSports is not yet playing in the big leagues. However, eSports does reach tens of millions of people on a regular basis, and over a hundred million occasionally. As such, it is comparable to many traditional sports that have large audiences, big sponsors and interesting demographics. One report on the potential for revenue growth in eSports points to advertising as a great revenue stream; arguing that the spending habits of the gaming audience that cross-over into the eSports demographic are likely to make more in-game purchases, buy more apparel and buy more branded peripherals than other gamers. In the US, 35% of eSports fans are PC gamers, and nearly 80% are console gamers. Another development that may complement the potential revenue growth of eSports in the long-term is Immersive technology, like VR goggles. However, in the near term Immersive technology is unlikely to be an important growth area for eSports, with Deloitte's 2016 prediction of the VR market at less than $1 billion in combined hardware and software sales.

Nonetheless, eSports is turning heads in both the Tech and Media industry. Several acquisitions have been made in 2014 and 2015 like Amazon's acquisition of Twitch for just under $1 billion in 2014; majority stakes in ESL being acquired by Modern Times for $87 million and by Russian investors for $100 million in 2015; and exhibitor Cineplex spending $15 million to acquire an eSports company in order to create a new gaming league that will take place in its theatres, of which the first dedicated eSports venue in the UK. Given the recent investments and developments made in eSports, its potential business value is becoming significant and one to follow with the highly tech and web driven future in sight.


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