Esports 101: What You Need To Know About This Quietly Massive Entertainment Phenomenon
All eyes in media and entertainment are on Jeffrey Katzenberg’s and Meg Whitman’s upcoming mobile-first premium video streaming service Quibi that launches next month (I wrote about the case “for” and “against” Quibi previously for Forbes). But for her part, Whitman seems most astonished by the rise of esports. In my recent interview with Whitman, she proclaimed that “the esports thing is the most amazing thing I’ve ever seen.” Expanding on the subject, Whitman said, “I’ve seen businesses that are up and to the right in Silicon Valley. This is straight up. It’s extraordinary. Just extraordinary.”
She’s right, of course. After all, as massive as the theatrical motion picture business is with global box office reaching $42.5 billion in 2019 B.C. (before coronavirus), it pales next to the global games market that generated about $150 million last year (or, 3.5X box office numbers). In the movie business, a $100 million box office opening weekend signals a blockbuster. Multiply that by 10, and you have the game industry’s largest opening. In 2013, Grand Theft Auto V grossed $800 million in its first 24 hours and hit the $1 billion mark in just three days. And now that gamer title is the highest grossing work of entertainment ever. Over 90 million units sold. More than $6 billion revenues generated.
Gamers, who are generally young males, are hard-core super-users who certainly aren’t afraid to spend money for the games they love. They also love to watch a good live head to head challenge, even if they watch it online, virtually. These head-to-head gamer battles on epic games like Call of Duty and League of Legends drive a quietly massive industry known as esports, which is projected to generate billions of dollars worldwide over the next few years. esports is already far bigger than you may think. Goldman Sachs forecast global esports revenues to easily exceed $1 billion in 2019 and nearly triple in just three years by 2022. Esports attracts more young male viewers than the World Series or NBA finals – and has for years.
Just like any real world traditional sport, esports feature teams of players who become celebrities in their own right with massive social followings. Leading players, like their more traditional star athlete counterparts, become LeBron-like superstars to a digital native millennial audience that finds them to be more directly relatable. League of Legends superstar Faker, for example, makes more than $2 million annually – and that number doesn’t include his sponsorship revenues. Faker and other super-“e”thletes are increasingly repped by a new breed of Jerry Maguire-laden management firms that emulate the major traditional sports agencies.
It shouldn’t surprise you, then, that head to head team competitions now regularly take place in large-scale arenas filled to capacity with tens of thousands of fanboys. PricewaterhouseCoopers projects that esports will continue to pack them in over the next several years, forecasting tickets sales for esports events to rise massively at a CAGR of 21.1% through 2022. Where “real” sports go, gambling always follows of course. And, fans bet more than $8 billion on esports last year. That seems real to me.
Brands and advertisers agree and increasingly think of esports as simply being a new class of sports for Gens Y and Z. All the big brand names you know and love, especially highly-caffeinated ones like Red Bull and Coca-Cola, already spend significant sums to sponsor individual e-thletes, teams and events. And, those numbers are growing fast, as more marketers jump on board to reach their coveted young market.
Smart media and entertainment companies see these unmistakable trends and have also moved aggressively into esports to reach this valuable young audience that is increasingly glued to their screens (esports fans reportedly spend twice their time playing and watching video games than watching TV). In one notable move several years ago, Turner Broadcasting (now owned by AT&T) partnered with mega-agency WME/IMG to create the first esports league appropriately called ELeague. Think of it, aspirationally at least, as being the NFL of esports.
Not to be outdone on its gaming home turf, behemoth Activision Blizzard bought live esports event organizer Major League Gaming in 2016 for $46 million and created its own esports league called Overwatch. Activision’s stated quest was to become the “ESPN of esports.” Meanwhile, ESPN embarked on its own quest to become, well, the ESPN of esports, when it launched its own dedicated esports channel online and broadcast tournaments offline. And, this is not just a U.S. phenomenon of course. In 2017, Chinese behemoth Tencent committed to invest $15 billion on esports over five years.
Esports already is a major new media and entertainment force, and it is still very much in its early e-nnings (yes, forgive me). Don’t think of it as being a fad, because it isn’t. In the words of Scott Rupp, founding General Partner of BITKRAFT Esports Ventures, a leading esports venture capitalist in the heart of Silicon Valley, “As big as games and esports already are, it is still early. We’re in the midst of a demographic tidal wave that will keep growing the current base of 2.5 billion gamers out there. And with accessibility catalysts like 5G, mobile esports, cross-platform play and new distribution platforms built by the tech giants, there are multiple tailwinds to drive growth for years.”