KEY POINTS

  • Esports is still at a fairly early stage in its development, but presents a huge opportunity for publishers, broadcasters, brands, and tournament organizers. Short for electronic sports, esports pits individuals or teams against each other in multiplayer video games. Goldman Sachs values the market at around $500 million and expects it to grow a compound annual growth rate (CAGR) of 22% through 2019, to surpass $1.1 billion. 
  • The esports audience is young, affluent, passionate, male-dominated, and digital-first. They live online and on social media, are avid ad-blockers, and don't watch traditional TV or respond to conventional advertising. 
  • There's significant overlap between audiences of esports and traditional sports. Around 28 million esports fans also watch basketball, American football, baseball, or ice hockey games frequently, according to Newzoo. On the other hand, 30% of esports fans — or 6 million people — don't watch any traditional sports whatsoever, representing a large untapped market.
  • Just as the spectrum of traditional sports runs from squash to horse racing, esports also contains many gaming genres. The most popular esports genres include first-person shooter (FPS), multiplayer online battle arena (MOBA), fighting, sports, and racing games.
  • A handful of traditional sports teams in North America and Europe have begun investing directly in esports. Some of these teams — which include basketball, soccer, and American football teams — are signing esports players to professional contracts, and others are absorbing entire esports teams into their franchises.
  • The trailblazer in the esports streaming space is Twitch, the over-the-top (OTT) home of this content in the West. Alongside Twitch, prominent digital platforms like YouTube and Facebook have also edge into esports territory — the former by building out a stand-alone video platform dedicated to gaming, and the latter through partnerships with game publishers to facilitate esports broadcasts on its social platform. 
  • A handful of legacy media companies — like ESPN and Turner — have begun investing in esports. For them, competitive video gaming provides a way to tap an otherwise hard-to-reach audience that isn't likely to subscribe to traditional cable services. In this regard, esports can serve as a vehicle to drive up engagement, brand loyalty, and TV ratings for these legacy media brands.
  • Gaming will be the gateway for early adoption for virtual reality (VR) technologies. Companies that wish to break into the VR industry can look to esports as a way to do [...]