The consumption of video game content has changed significantly over the years. Once the domain of pimply teenagers in their parents’ basements, video game playing (gaming) has evolved into an interactive activity where, thanks to the internet, players from around the world compete against one another in real time. The number of worldwide gamers is staggering — 2.4 billion, according to Statista. However, the way that content is consumed by those not holding the game controller has changed too. In the past, if you weren’t playing the game yourself, you were relegated to watching your friends play, bored and hoping they would hurry up and relinquish the controller back to you. Over the last couple of years, however, video gaming has become much more of a spectator activity with the emergence of platforms that focus on live-streaming video gameplay (such as Twitch, YouTube Gaming and Periscope), as well as live tournaments that can draw thousands of live spectators and millions of live-stream viewers.[1] In live events, players compete against one another in games such as Dota 2, Fortnite, League of Legends, Call of Duty, Overwatch and Madden NFL — often for a piece of a prize pool that can run into the tens of millions of dollars.
While the first official competition on record happened at Stanford University in October 1972, the modern era of electronic sports, or esports,[2] really emerged in the 1990s with the introduction of the next generation of game consoles and games, as well as video gaming-focused leagues and tournaments. Since that time, the popularity of esports has exploded. According to market researcher Newzoo, the revenues of the global esports market, including media rights, merchandise, tickets, advertising, brand partnerships and investments from game publishers, stood at less than $200 million in 2014 but is expected to exceed $1 billion in 2019.
For elite-level gamers, the stakes are high and the payouts lucrative. In 2018, for example, the total esports prize money reached $150.8 million — up from $112.1 million the prior year. In July of this year, 16-year-old gamer Kyle Giersdorf won the solo event of the Fortnite World Cup held at Arthur Ashe Stadium in New York City, taking home $3 million in prize money as the last player standing. The event, which boasted a $30 million prize pool, touted more than 40 million participants in qualifying events for the final — which included 50 duo teams and 100 solo players. The three-day event drew over 19 million views on Twitch. Those viewers watched the event for nearly 23 million hours. The 23,000-seat stadium was sold out each of the three days of the event finals.
As a result of the mainstream adoption of esports, investor money is flooding into the industry. In May of this year, Comcast announced plans to build a 3,500-seat, 60,000-square-foot dedicated esports stadium that will be the home of Comcast’s esports team, the Fusion. In a sign of the importance that Comcast places on this investment, the estimated $50 million stadium will be located within the complex that houses all of Philadelphia’s major professional sports teams — the Eagles, Phillies, 76ers and Flyers.
Venture capitalists also view esports as an attractive investment area. In April, for example, Battery Ventures, Canaan Partners and New Enterprise Associates (NEA) each participated in the $46 million Series B financing of esports gaming team Gen.G. Bessemer Venture Partners led last February’s $37 million Series A funding round in esports gaming team Team SoloMid. NEA also participated in last November’s $15 million Series A funding round of PlayVS, a high school esports league. This is just a sampling of venture investment in the space.
Institutions of higher learning have even entered the fray, offering elite esports gamers incentives to attend their schools. According to the National Association of Collegiate Esports, there are currently over 100 colleges and universities offering scholarships. The dollar value of these scholarships is broad. Miami University of Ohio, for example, offers $4,000 scholarships to each of its 20 team members. Robert Morris University offers 50% of tuition and room and board for its varsity members. New York University offers its esports scholarship winners a full ride.
Key Takeaway
While it’s hard for many to wrap their heads around esports, the growth of the space is hard to ignore.
[1] To put audience size in context, esports viewership in the U.S. is projected to surpass that of the National Hockey League, National Basketball Association and Major League Baseball by 2020.
[2] Multiplayer video games played competitively for spectators, typically by professional gamers.
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