Global eSports video gaming market to grow to 600 million

04 April 2016 Consultancy.uk

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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Champions League glory hard to buy for football’s economic elite

15 March 2019 Consultancy.uk

The thrills and spills of knock-out football can still be one of the sport’s great levelling forces, with the Champions League’s second round having shown that the biggest spenders aren’t always able to buy their way to glory. While a league format broadly favours the squad depth of the beautiful game’s richest teams, half of the tournament’s wealthier teams exited in the first one-on-one elimination round.

As the Champions League burst back into life in February, following an agonising winter break, only two of the 16 teams re-launching their Champions League last-16 bid were from outside the so-called Big Five football leagues. With the exceptions of Portuguese champions FC Porto and Dutch footballing powerhouse AFC Ajax, teams from the world’s biggest spending leagues monopolised the second round. As outlined by analysis from KPMG’s Football Benchmark, the Premier League was represented by four teams, with three clubs come from La Liga and the Bundesliga respectively, while Serie A and Ligue 1 both retained two clubs.

This followed a grimly predictable group phase, which had seen the two most expensive squads progress in all but one of the eight collections of four teams. The one team to buck that trend, Ajax, had last won Europe’s premier club competition in 1995, but those halcyon days have long since faded into memory, and Ajax had failed to progress beyond the group stage in 13 years. With the second youngest squad in the tournament, what now seems to be an awakening football giant had some shocks in store for the second round too.

Group Stage values

Despite an impressive Europa League run which saw the team reach the final two years ago, Ajax had not progressed in a Champions League knockout stage tie since the 1996-97 campaign. That all changed this time, as Erik ten Hag’s men overturned a first leg deficit to trounce Real Madrid 5-3 on aggregate. Having felt hard done by in a 2-1 defeat at the Johan Cruijff ArenA, the Amsterdam club cruised to a 4-1 victory at the Santiago Bernabéu, a result which saw the tournament’s fourth most expensive squad crash out to the third cheapest remaining team.

The supremely expensive team, which had won three Champions Leagues on the trot, had crashed out in spectacular style. For many footballing purists, the end of the seemingly invincible Galacticos would have been enough to restore some of their faith in the sport – but there would soon be more schadenfreude to revel in, as a succession of Europe’s most bank-breakingly costly teams would soon join Los Blancos in their exit.

The pick of the bunch was unquestionably Paris Saint-Germain, who forfeited a 2-0 first leg advantage to somehow crash out of the Champions League. The team, who are fast becoming known as the foremost bottlers in Europe, faced a grim dissection in the French press following a 3-1 defeat by Manchester United at Le Parc de Princes. While it would be over-egging it to paint United as ‘giant killers’, the Red Devils squad is worth markedly less than the club bankrolled by Qatari oil money. PSG hold two of the most expensive players of all time in French World Cup winner Kylian Mbappe and Brazilian playboy Neymar.

Second Round values

Elsewhere, the round’s cheapest squad proved further that money is not everything, as Porto overcame Roma (the Italian club has since parted ways with manager Eusebio Di Francesco in the wake of this humbling) – while Juventus battled back to beat Atlético Madrid. The most ‘balanced’ tie of the round, there was a squad value difference of only €22 million between the two squads, in favour of the Spanish giant. With that being said, €113 million of Juve’s price-tag came from the summer acquisition of Cristiano Ronaldo. Ronaldo’s tie-settling hat-trick went to show that money spent in the right place ultimately makes the difference.

Spending wisely

At the same time, there were also four teams which lived up to their large price-tags. Manchester City pummelled Schalke over the course of two legs, hammering the German team 7-0 in the second game. With the largest squad market value in the tournament, the Citizens showed that their spending had not merely been a frenzy provoked by having large amounts of money to throw about – a la PSG – and that every penny had in fact been used to craft one of the continent’s most well-balanced and dangerous teams, to ultimately contend for the title.

Tottenham Hotspur similarly brushed off Borussia Dortmund, while Liverpool eventually overcame Bayern Munich, to leave no German teams in the tournament. Meanwhile, Barcelona similarly did for the French contingent of the Champions League, bundling out Olympique Lyonnais 5-1.

Operating Revenues

Going forward, the humbled economic superpowers of European football will take solace from the fact that their huge operating revenues will allow them to buy up talent which has emerged in this year’s Champions League. With Real Madrid having re-installed Zinidine Zidane as Head Coach, the club has already committed itself to spending big in the summer, cashing in some €50 million of its €743 billion revenue stream from last year to sign Éder Militão from Porto – who has impressed in this year's Champions League – in the summer.

Whether the PSG project is financially sustainable in the long-term remains to be seen, meanwhile, but with a huge portion of commercial revenues including shirt-sales from the club’s array of superstars, it will likely also seek to bring in more big names in the summer. The club was reportedly in the running to sign Ajax star Frenkie de Jong, before Barcelona finally secured his services from the end of the season.

The likes of Ajax will meanwhile face an uncomfortable wait, as a range of its new crop of outstanding players inevitably attract the attentions of Europe’s top spenders. With the lowest operating revenues of any team left in Europe, the club will face an uphill struggle to hang on to the likes of teenage captain Matthijs de Ligt. However, it would not be the first time that the club has been plundered for its top talent, and what Ajax and clubs of its size can take forward is that with the right eye for lower-key recruitment, they can rebuild, and still challenge Europe’s elite.