Report: eSports “set for mammoth growth”

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A major report from the equity team at investment bank Berenberg suggests that the video games sector is set for further expansion, and that eSports in particular is set for “mammoth growth”. The bank says it expects traditional media companies (“Disney, AT&T and Amazon”) to grow their interest in the sector.

The bank admits that the sector is not yet mainstream in the West yet, but that over the last few decades, viewership for eSports has grown extremely rapidly. “Some 400 million spectators currently watch eSports and we forecast that, by 2025, this number will have grown to 850 million. The majority of the viewership is currently in Asia, where esports can often rival real-world sports viewing figures. However, worldwide, esports is still much smaller than sports. Nevertheless, eSports is a global phenomenon, growing in every region, particularly among younger demographics.”

“Globally, esports revenues have also grown extremely quickly, at a 46 per cent CAGR since 2015, reaching $696 million by 2017. Esports generates revenues much like traditional sports, with media rights deals, sponsorship deals, and ticket and merchandise sales,” adds the report.

“However, esports monetisation still significantly lags behind that of sports. The revenue generated per fan was c30 times lower for esports compared with sports in 2017. There are several reasons for this discrepancy, one being that, up until recently, there was generally little awareness among corporates of the marketing opportunities in esports. However, now that corporates have awoken to the opportunity, sponsorship deals have been growing greatly in number and size. Furthermore, companies are very interested in marketing through esports because the demographics consist in large part of hard-to-reach millennials that tend to be relatively affluent. Additionally, data collection capabilities on viewers are much better than for traditional sports, as esports fans tend to watch games online.”

“Therefore, as interest among corporates continues to grow and viewership keeps expanding, we expect sponsorship revenues to also keep rising. In addition, we expect media rights deals to further expand, with companies such as Disney, AT&T and Amazon all becoming increasingly involved. Nonetheless, the esports market is still in a volatile and adolescent stage. By 2025 however, we think esports will have become more mature, and by then, we forecast in our base case that this market will generate $20 billion in revenue.”


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