Poised to become a real social phenomenon, eSports is an emerging market whose current limited revenue is growing fast, and could reach €3 billion by 2021 – or 4% of the video game market. This figure is forecast to climb to €10.5 billion in 2030, thanks to an average annual growth rate of 37.6%. Meanwhile, eSports audience figures are set to skyrocket from the current 240 million to 410 million by 2021.
This report delivers an analysis of what is both an offshoot of the video game market and a very different animal, targeting an increasingly large and diverse public. So different in fact that the most innovative publishers are embracing changing consumption patterns and user experiences, and seriously exploring a permanent shift in their strategy to accommodate this new phenomenon. This is also true of a number of players along the value chain (internet giants, TV channels…) working to better grasp the current and future direction this new market will take and, for the most forward-looking among them, to being already to stake out their claim.
The sector’s economy is not yet generating the kind of revenues its popularity would suggest. By the end of 2017, IDATE estimates that e-sports revenues will not exceed 850 million EUR. By 2021 they could exceed 3 billion EUR and this could rise to 10.5 billion EUR by 2030.
The world of e-sports is an emerging market and its current value does not reflect the large revenue it is likely to generate in 10 years’ time. It is a segment of the video game market. Publishers that are embracing changing consumption patterns and innovative user experiences are already seriously exploring it (EA, Activision Blizzard, Valve Software) to the extent that they are permanently refocusing their publishing strategies. Publishers ignoring e-sports risk losing out on a significant and lasting growth driver.
However, it is growing outside the video game publishers’ ecosystem, driven by gamers, promoters and other tournament organisers, and league and championship creators. The e-sports business model and its monetisation has been implemented outside the control of rights holders. The gaming community is setting its own rules and business models. Rights holders, especially games publishers, are now wanting to regain some control by capturing all or some of the value generated from their content.
Over the last three years, e-sports has attracted interest from outside its microcosm from various industry groups whose core business is related to video games to varying degrees: TV and media, communication groups, major consumer brands and casinos. This interest has arisen from the rather sudden realisation that the phenomenon is hugely popular with many gamer generations, especially millennials and “digital natives”. According to Newzoo, they account for at least 50% of the audience of the main e-sports titles (LoL, CS: GO, Dota 2, Overwatch, Hearthstone). Video games are part of the culture of this generation. Millennials have adopted them as a regular recreational activity and have adapted the playing of video games to create a new kind of sports competition.
E-sports are now followed by an increasing number of these young consumers, whose recreational activities related to viewing entertainment are much different from older generations. Advertisers can therefore engage with millennials through e-sports events. Moreover, e-sports provide ways of understanding the behaviour of a segment of this generation that has grown up with the Internet and considers digital as the norm.
A number of metrics gleaned from e-sports have caught the interest and even amazed various stakeholders in the digital and media economies: In 2016 the total prize winnings awarded to e-sports tournament winners worldwide was 93.6 million USD, compared with 65.8 million USD in 2015, a growth rate of 42.3%. The game DOTA 2 is responsible for nearly 95 million USD in prizes handed out to e-sports participants since its release, including 37 million USD in 2016 alone. In 2011 the team Fnatic won the League of Legends World Championship and took home 50,000 USD. The peak viewership on the Web was 210,000. In 2016 the winning team (SK Telecom T1) pocketed 2.68 million USD, the peak concurrent viewership was nearly 15 million and it was followed by 43 million unique viewers. In 2014 the Olympic Stadium in Seoul in South Korea hosted 40,000 people for the League of Legends World Grand Finals There were more than 18,000 at the Staples Center in Los Angeles for the 2016 edition. About 260 million people follow e-sports online, twice as many as in 2014. The vast majority are males (85%). More than 60% of this audience is in the 13-24 age group.
Western TV broadcasters are starting to air tournaments: TBS, ESPN, CW, BBC and now Disney XD. But many challenges remain, including the understanding of the generation of digital natives. The players in the sector will also have to widen the audience of e-sport to the general public, by encouraging the starification of the teams of players.
Beyond the audience, the various actors will have to develop technical tools throughout the value chain.
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