The eSports industry surpassed $1 billion in revenue for the first time in 2019, with $409 million of that figure generated by North America. European eSports also set records, crossing the $138 million mark for the first time. Projections have total industry revenues nearly doubling by 2022.
The main drivers of this growth are media rights, live event ticket sales, merchandise sales, and in-game purchases, but mostly (69%) revenue derived from sponsorships and advertising. The trend for more non-endemic sponsors (that is, for products and services not directly related to esports) that has been growing over the last few years continued in 2019. While the energy drink industry is already synonymous with eSports sponsorship, Anheuser-Busch—no stranger to sports sponsorships—filed a trademark request in 2019 to become “the official beer of eSports.”
eSport viewership increased 50% YOY in 2019 amongst internet users aged 16-64, with the Asia-Pacific region continuing to account for over half (57%) of global esports viewership in 2019, up from 51% in 2017. Total eSports viewership is expected to grow from 454 million in 2019 to 646 million in 2023, a 9% CAGR and represents a near doubling of the eSports audience from the 2017 audience of 335 million. Awareness of eSports as a form of entertainment rose to 75% of internet users in the 16-64 age range, up from 69% in 2018.
The future of eSports looks to be driven by mobile, which made up 45% of the total global games market in 2019. Already places like China have thriving mobile esports scenes.
Highlights of 2019 deals and activity involving eSports include:
- Chinese eSports group DouYu International Holdings Ltd. (backed by Tencent Holdings Ltd.) raised $775 million in U.S. IPO
- 100 Thieves raised $35 million in Series B funding
- Aquilini Group acquired Luminosity Gaming for $18.7 million
- Nike signed a four-year deal with the League of Legends Pro League in China, to be the exclusive apparel provider for the league’s 16 professional teams
- Cloud9 raised $50 million in Series B funding
- Twitch signed a $90 million deal for exclusive streaming rights to Overwatch League matches for the next two years
- Activision Blizzard acquired Major League Gaming (MLG), a broadcasting network and eSports competition organizer, for $46 million.
The eGaming industry—which includes mobile, PC, console games, augmented reality, and virtual reality—grew 3% to $120.1 billion in 2019, with Epic’s hit Fortnite accounting for $1.8 billion of that total. Experts forecast that by 2022, the eGaming industry will reach $196 billion in revenue.
While the premium games market dipped 5% in 2019 due to a lack of triple-A game launches, free-to-play made up 80% of spending on digital games in 2019, based on strong mobile performance.
Mixer, YouTube and Facebook all made moves in 2019 to sign platform-exclusive deals with former Twitch streamers to attract a bigger share of the game video content (GVC) audience, which topped 944 million viewers worldwide last year.
The extended reality (XR) segment of the eGaming industry continued to perform, with revenues climbing 26% to $6.3 billion in 2019. Standalone headsets like the new Oculus Quest accounted for 49% of VR shipments, bringing the segment to a more mainstream audience.
While paid online services like Xbox Live Gold and PlayStation Plus are now commonplace in the video game industry, two major players—Apple and Google—both entered the subscription arena in 2019 with the launch of Apple Arcade and Google Stadia.
Apple Arcade gives subscribers access to a library of games for a fixed monthly fee, with Apple reportedly investing more than $500 million to launch the platform and retain several game studios to develop exclusive content. Google Stadia, in contrast, leverages Google’s cloud infrastructure to stream games directly to players without the need for expensive consoles, but games will still need to be purchased individually.
Investing in eSports and eGaming with HERO ETF
With increasing viewership, the proliferation of eSport leagues, the rise in advertising and sponsorships, and marque video game releases that gross more than Hollywood blockbusters, investor interest in eSports and eGaming is set to rise. As a relatively new industry in its early-growth stages, there will be a large number of investors moving into this space looking to capitalize on the opportunities present. Venture capital and private equity alike have contributed to the rapid growth of investment in eSports.
You can invest in this growing sector now with the HERO ETF from Evolve, Canada’s first eGaming and eSports ETF. HERO invests in equity securities of companies listed domestically and globally with business activities in the electronic gaming industry. With exposure to the biggest game studios in the industry and investing in segments including interactive home entertainment, leisure products, application software, and interactive media and services, HERO represents a great way to include a broad portfolio of eGaming and eSports interests in your investments.
Every portfolio needs a HERO—find out more today.