Newzoo’s latest esports report makes for more positive reading for those in and around the industry. Revenue expectations for 2017 are at $696m, up from $493m in 2016.
A substantial amount of this money is through sponsorship, which makes up a significant $266m, but perhaps the most exciting figure is the latest expected growth figures. By 2020 Newzoo predicts that the industry will generate $1488m, or $1.48bn, which makes for a 31.8% increase between 2016 and 2020. Of this $1.48bn, sponsorship will make up a significant $655m piece of the pie with the research firm expecting the major non-endemic companies interest in esports to continue to grow.
The rest of it will come from advertising revenue ($224m) and media rights ($340m). Both of these predictions are for 2020, with media rights anticipated to be the fast growing revenue stream by some margin (at 59.6%). The slowest segment will be publisher fees though these are still expected to grow by 7.9%.
Another significant stat to emerge from this report is the growth of audience numbers. The global esports audience will reach 385 million in 2017, this is made up of 191 million ‘Esports Enthusiasts’ and a further 194 million Occasional Viewers. The number of esports fans is expected to grow with another 50% toward 2020 totalling 286 million.
Numbers is one thing, but how well are these fans ‘monetised’? By Newzoo’s assessments the average revenue per fan this year will amount to $3.64. As the esports industry matures and incorporates an increasing number of local events, leagues, and media rights deals, the average revenue per fan is anticipated to grow to $5.20 by 2020. Expanded localisation of events is expected to be a key theme over the next year or two, in the UK for example Gfinity has big plans whilst ESL UK and Varsity Games’ arrangement with universities for the Derby Series are both positive steps.
It’s over in North America, and mostly the States, however, that the bulk of the money and growth lies for now. North America is largest esports market with revenues of $257 million in 2017 and this will more than double to reach $607 million by 2020.
This is in a large part due to sponsorships, and the considerable money puring into teams via non-endemic sponsors ($113m in 2017), as well as the major tournaments there. Another point that will be of interest to brands is that in North America esports fans are worth almost twice as much in revenue than any other region at $10.36.
Peter Warman, CEO at Newzoo commented: “Esports is not only growing exponentially as a new independent business and industry, it is also accelerating the convergence of various established industries. For brands, media, and entertainment companies, esports provides a chance to capitalise on the favorite pastime of digital natives and Millennials: playing games and watching game content.
“With the arrival of live streams and events, gaming has entered the realm of broadcasters and media that can now apply their advertising business model to a market previously out of reach for them.”
In 2017 merchandise and ticketing will equate to $63.7m though the report notes that this could easily be surpassed if there’s a greater focus on merchandising at events.
This assessment of the industry is of course without esports betting, something that is growing at a note worthy rate. Newzoo justified why esports betting is not taken into account in its release: “Traditional sports market reports do not include betting or fantasy league business models, let alone sponsorships from these betting companies. The two industries are separate for obvious reasons. Moreover, sports betting is a far bigger business than sports media rights, sponsorship, and consumer revenues put together.”
It continued: “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.”
Anyone can take a look at, and download, the free light version of this Newzoo report here.
Esports Insider says: We anticipated these latest Newzoo numbers would be notably higher than last time, but $1.48bn within a few years is exceptional especially when this is without any betting. Close to a 60% increase in media rights also says a lot about where we’ll see money flowing, whilst a 50% growth in the number of esports fans is huge news for the long term future of the industry and its continued growth.