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Money Smart Athlete Blog

The growing and lucrative industry of eSports

Jun 16, 2021 | Esports, Special Themes

By Iacovos Iacovides, APC Sports

Most people are now familiar with eSports and people younger than 40 have almost definitely had a discussion regarding eSports with friends or acquaintances. When eSports started gaining traction, the very inclusion of the word “sports” in the context of videogaming was enough to lead to mockery and sarcasm. Generally, discussions orbiting around eSports spark controversy. The success of eSports lies—partly—on the fact that the industry tapped into a market that simply did not exist before, as gamers are not the first thing that comes to mind when one thinks of sports professionals or fans. Whether you love it or hate it, it does not matter anymore; eSports is on the up and up and one needs only turn to the numbers to understand the extent of its success.

Up until recently, there were documentaries, researches and whatnot describing the disastrous effects of the increasing time that kids spend in front of computers and gaming consoles. If we take the cynical approach, eSports events are nothing more than places where kids gather and pay to watch other kids play games. What would sound absurd and even dystopic ten years ago has turned into a global moneymaker. How we got here is simple. Someone managed to turn it into a show and profit from it which by itself was enough to attract others who wanted to profit from it as well; the fact that the investment was small with huge potential, made it even more alluring to investors.

Since 2016 when people started taking notice of eSports, its growth in terms of revenue, investment and popularity has been jaw-dropping.  By the end of 2020, there were almost half a billion people around the world who were either casual eSports viewers or enthusiasts (regulars). That is almost 150 million fans more than the industry’s popularity in 2017. Interestingly, more than half of these people are in North America. According to a study by Syracuse University, eSports is set to topple all traditional sports in the US in terms of popularity with the exception of the NFL by the end of this year. One of the benefits of eSports is that it is more interactive and accessible than traditional sports. You can chat with people from around the world while watching the game and you can even learn from the players themselves. While almost nobody will say “I can do that” when Lionel Messi scores a screamer, they are more likely to say that for eSports and believe that they can emulate what professional players do.

Naturally, investment levels are also looking good. They have gone from hundreds of millions of dollars in 2017 to billions in 2018. In 2020, the pandemic stalled investment but there are signs that it is slowly picking up again. Investors include major names such as Canadian rapper Drake and former pro athletes like David Beckham, Michael Jordan and many more. Paradoxically, we are still unsure about the precise direction that the industry will take as it has still to mold itself into something solid. Moreover, there are many particularities which are specific to eSports such as the fact that it depends on adjacent industries (such as game developers) who exert considerable influence over eSports. Put simply, while Epic Games own Fortnite — in this case a sport — nobody owns basketball.

Nonetheless, this year for the first time, global revenue is expected to exceed $1 billion. In short, the popularity, investment and revenue levels of eSports are rising and the predictions are that they will keep rising for the foreseeable future. If we also consider the wider sociological trends — the centrality of technology and gaming among younger generations — there is nothing to suggest that the eSports industry is just a bubble. Add to that the input of investors, influencers, celebrities, PR and Media companies and the grip of eSports on society will most likely remain tight. Ironically, the most uncertain aspects of the industry relate to the industry itself: Will it become more centralized? Will organizations, unions and clubs increase or decrease? What kind of relationships will be developed with adjacent, yet vital, industries? These considerations will shape the future of eSports as well as its financial and economic landscape.

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