In the wake of last weekend’s Fortnite World Cup event, which culminated in 16-year-old Kyle Giersdorf taking the $3 million prize, esports is edging ever-closer to the mass market. And as FIFA’s eWorld Cup prepares for launch in a few days’ times, Futuresource Consulting’s Morris Garrard, Research Analyst explores the projections and provides expert analysis for this rising phenomenon.
From its core audience of under 25s, the appeal of esports is now breaking through into older age groups, expanding its geographic reach and attracting more females to the sector. As a result, industry revenues are set to exceed $900 million this year. And as leading broadcasters such as Turner, BBC and Sky develop their esports strategies through content acquisition and production, Futuresource data shows that revenues will break the billion-dollar mark in 2020. This will increase to $1.8 billion by 2023, a CAGR of 18%, with global audiences of 800 million.
The strategic importance of esports presents opportunities for both traditional sports broadcasters and established esports platforms, such as Amazon-owned Twitch. Key events such as Dota 2’s ‘The International’ can attract viewing figures comparable to tier one traditional sporting events. Securing exclusivity of major esports events will become the next major media battleground for games media companies as well as traditional TV broadcasters. Futuresource forecasts reveal that media rights will achieve a CAGR of 23% out to 2023, culminating in annual revenues of $464 million.
In addition, a recent Kids’ Tech consumer research study carried out by Futuresource reveals that 39% of children in the UK aged between three and 16 years watch esports and other gaming-based streams through sites such as YouTube Gaming and Twitch. This is slightly more in the US, at 40%. Of these, a quarter watch every day in the UK and 30% watch daily in the US. 27% of UK parents polled in the study said they would support their child if they wanted to pursue a career in esports, further underlining the credence of esports.
Combine all this action with potential recognition by the IOC as an official Olympic sport as early as 2024, and the social acceptance and resulting industry returns are looking far more lucrative than many other aspects of the traditional media space.
Sponsorship forms the majority share of industry income, accounting for over 40% of total revenues, with established sponsors such as Intel, Razer and HyperX now being joined by brands such as Coca Cola, McDonalds and Mercedes Benz. And increased sponsorship opens the gates to significant tournament prize pools such as Giersdorf’s huge Fortnite haul at the weekend. Other leading players like Kuro Takhasomi have career earnings in excess of $4 million; a figure that is almost doubled when combined with his endorsements and sponsorship income. What’s more, with a global prize pool totalling $189 million in 2018, the segment exceeded the men’s tennis ATP Tour prize pool of $135 million.
Headphones manufacturers are also taking a slice of the action. Last year, Fortnite and Player Unknown Battlegrounds (PUBG) became worldwide phenomena, with over 125 million and 50 million players respectively. As these games both rely heavily on audio to hear enemies and communicate with teammates, they have created a surge in gaming headset sales across all platforms. A recent Futuresource gaming headset report shows that the market has experienced significant uplift in sales activity, with headset demand soaring to 25.3 million units in 2018, a 40% rise year-on-year.
The fanfare, marketing opportunity and revenue generation does not stop once an esport event ends, with games publishers creating skins and other purchasable downloaded content (DLC), further capitalising on esports popularity. In 2018, 62% of total gaming software revenue was derived from DLC or other in-app purchases, with further growth forecast thanks to the popularity of free to play games such as Fortnite. Indirect streams of revenue are expected to grow in importance for publishers, which view esports as an increasingly central aspect of marketing strategy and future business growth. With all this activity, the future of esports is looking very lucrative indeed.
Futuresource produces a regular esports report, along with a range of publications that explore complementary technologies, including gaming accessories and headsets. For further information on the full range of reports available, get in touch with Leon Morris via firstname.lastname@example.org or visit the report here>>.