According to an analysis by Newzoo, global esports revenues are expected to eclipse the $1 billion mark for the first time ever in 2019, continuing the expansive growth of the competitive video gaming industry.
The research firm released a report on Tuesday that found that the esports industry as a whole brought in $865.1 million in revenue last year.
Brand Investments Fueling Growth
The company projects that the sector will reach revenues of $1.1 billion in 2019, an expected growth rate of 22 percent year over year. Newzoo provided projected revenues through 2022, when they see esports revenue rising to nearly $1.8 billion.
That growth will mostly be fueled by brand investments like sponsorships, advertising deals, and media rights contracts. Some leagues and organizations are already starting to take full advantage of this: the Overwatch League has already signed a television deal with Disney and ESPN, for instance, while also forging sponsorship arrangements with Coca-Cola and other major brands.
“This is not experimental budgets. This is for the long term, and it’s good amounts of money,” Newzoo CEO Peter Warman told Reuters about the major investments happening in esports. “It’s what the ecosystem needed and what investors wanted to see.”
Esports Has Young and Growing Audience
There’s an obvious reason for all these brands to get a piece of the global esports market. The audience for virtual competition continues to grow, with Newzoo predicting that 453.8 million people will watch at least one esports event in 2019. About 201 million of those are expected to be true “esports enthusiasts” who will watch at least one professional event per month.
Most of that audience is coming from Asia, where South Korea and China have proven to be esports powerhouses. Newzoo’s analysis suggested that in 2019, 57 percent of those enthusiasts would come from Asia, compared with just 16 percent from Europe and 12 percent from North America. Regular viewers also skew male (72 percent were men), with adults in the 21-35 age range being the biggest audience.
Will Viewers Spend on Virtual Sports?
While all those numbers are positive, there are some signs that esports may not be heading on quite as positive a trajectory as many expected a couple years ago. Newzoo found that the average fan will only spend about $5.45 a year on esports, way below what is seen in more traditional sports. And while the analysis still predicts strong growth, future revenue estimates are lower than they were in last year’s report.
That may be why some esports organizations have scaled back their staffs in recent months. An ESPN report noted that both Infinite Esports & Entertainment and Vison Venture Partners – the parent companies for several esports organizations – made layoffs late last year.
As the esports sector grows, it could also become a more important part of the sports betting industry. At the moment, while betting is available on many professional events at some online sportsbooks, it is considered a small niche for bookmakers. That could change in the next couple of years, however, with NJGames.org estimating that total wagering on esports competitions could rise to as much as $12.9 billion by 2020.