Market intelligence company Newzoo has issued its “Global Esports Market Report 2017.” The 119-page report forecasts that the global audience for esports will grow from 323 million viewers in 2016 to 589 million in 2020.
- The full report can be purchased here.
- Newzoo is offering a free light version of the report here.
Revenue forecasts match the 15.4 percent compound annual growth rate (CAGR) of the audience figures.
Newzoo predicts that total revenues excluding
esports betting will grow from
$325 million in 2016 to
$1.488 billion in 2020 — a CAGR of
35.6 percent.
The forecast revenue totals include media rights, advertising, sponsorship, merchandise and tickets, and game publisher fees. For 2017, the forecast revenue constituents are:
That growth prospect is what has investors clamoring to take a piece of the trend, even though the esports industry is still at an early stage of development.
Esports betting will be even bigger than the esports industry
Newzoo explains that
sports betting revenues are not included because reports on traditional sports don’t include betting revenues — the “two industries are separate for obvious reasons.”
However, Newzoo notes that
betting on esports is likely to mirror that on traditional sports and be an even bigger industry than the sport itself (for things like
CS:GO betting and League of Legends betting.)
Quoting figures for the NFL, Newzoo explains:
“As an example, the NFL generated $13 billion last year, but betting and fantasy leagues around the NFL games are supposed to have made north of $50 billion. With most big betting companies already embracing esports betting on a global scale, it’s possible that esports betting alone is larger than the esports economy itself.”
In a recent tweet, leading esports betting operator Pinnacle reported that it had taken its five millionth esports bet. Pinnacle took its first esports bet in January 2010, and its one millionth esports bet five years later in November 2015.
Thereafter growth has accelerated and Pinnacle expects to double its total bets to 10 million in January 2018.
Newzoo explains esports growth drivers
One of the biggest drivers of esports industry growth is the sale of media rights. That’s according to Newzoo CEO Peter Warman.
This is closely followed by the rise in sponsorship deals by non-endemic brands that constitute the largest element of esports revenues:
“Media rights trade is becoming a serious business and is expected to grow sevenfold from only $50 million in 2016 to close to $340 million in 2020. Further, even more major non-endemic brands will close big sponsorship deals with teams, leagues, and events.
Nike, Adidas, and Under Armour will battle it out for jerseys in 2017. Early movers are increasing their investment by several factors year on year. Ultimately, esports provides brands an entry point into the favourite pastime of digital natives and Millennials: gaming.”
Esports is getting the advantage of the industry convergence between brands, media and entertainment.
“Games rely on consumer spending while media companies rely on advertising for the most part of their revenues. In the long term, this convergence of industries will provide media conglomerates of the future with a more diverse and sustainable revenue mix.”
Esports spend per fan is increasing
Esports spending per fan remains far below the equivalents for traditional sports. The average basketball fan worldwide spends $15 per year, and the average spend for all sports is $54.
Esports spend for this year is expected to be “an average of $3.64 each in 2017. This includes all revenue streams. The average direct spending per fan on merchandise, tickets, or subscriptions is $0.33 in 2017.”
Newzoo explains that this is the result of low merchandise spending, and the widespread availability of free esports content. Newzoo expects spending per fan to increase with dramatic results.
“If the average direct spend per fan increased to $2.00, the industry would generate more than $1 billion this year.”
Audience demographics support increased spending forecasts
Newzoo breaks down the demographic details of the esports fan base. It determined that around half is between the ages of 21 and 35, with 71 percent male.
Fifty-eight percent of occasional viewers has a full-time job. Sixty-two percent of enthusiasts in full time employment. Forty-seven percent of occasional viewers and 50 percent of enthusiasts are classed as high-income earners.
“This makes them a very desirable target group for different parties, especially big brands. Esports Enthusiasts are digital natives, and are more likely to be consuming content online than through traditional media outlets.”
These figures confirm
earlier research that esports fans are generally older than the common perception, with
higher levels of disposable income.
The Newzoo report includes much additional data, covering tournaments, ticket prices and regional revenue and audience breakdowns.
Overall the report presents a strong case that esports is one of the
hottest areas of economic growth in today’s market. via
legalsportsreport
