At the upcoming MIPtv market in Cannes a producer will be showcasing its latest offering, Drone Wars, and in 4K.
The show is fast-paced and typical of a new genre of visual entertainment. Indeed, a very timely report from the equity team at investment bank Berenberg says that eSports is proving to be an extremely valuable business, and watched by an audience on TV, online or in stadiums, similar to how people consume traditional sports. In 2017, says the report, an estimated 385 million people watched eSports in one form or other, and helping drive the sector to a 24 per cent CAGR since 2014.
Berenberg says: “By 2025, we expect this viewership to rise to c850 million and for eSports to be a $20 billion industry. In 10-20 years’ time it could potentially rival the traditional sports industry. The main beneficiaries of eSports will be the video gaming companies due to marketing and monetisation opportunities. Other winners include PC hardware companies, tech giants, telcos and gambling companies, as eSports acts as a catalyst for their goods and services.”
“In 2017, the eSports industry generated revenues of only c$0.7bn, largely due to it being under-monetised at $1.8 per fan, compared to $54 for traditional sports. We forecast that by 2025, eSports will generate $24 per fan, which equates to a $20 billion market. This is conservative compared to some estimates. The Chinese tech giant Tencent (c$570 billion market capitalisation), which currently dominates the eSports space, believes the eSports market in China alone will be worth at least $15 billion by 2022, approximately the size of the NFL. This is in line with our bull case of $40 billion globally by 2025.”
Berenberg’s study reminds us that one major sporting event, the 2022 Asian Games, will feature an eSports event, and the 2024 Olympics (in Paris) is also considering adding eSports.
“eSports revenues have had a 46 percent CAGR since 2015, and we believe this will continue. This will be largely driven by the sale of media rights to companies such as Twitch, a game streaming platform with 100 million users that was bought by Amazon in 2014 for $842 million. Other companies buying media rights include Facebook and Disney. Additionally, there has been an expansion in companies creating and selling eSports content, such as Time Warner, Modern Times Group and Alibaba. Furthermore, sponsorship deals are growing rapidly, with more than 600 new deals between 2016 to mid-2017 from brands such as Mercedes and Visa, which are eager to reach the millennial eSports demographic.”