A panoramic and global vision of gaming circuit: definition, opportunities and information about the value of this young sector.
Article written by Francesco Mignucci for The Young Economist.
How you imagine the world of gaming, actually? What is the perception that you have about gamers?
When we hear talking about the gaming universe and esports, all of us have a different vision of the sector, where someone thinks that is simply entertainment circuit for few enthusiasts, others think that the gaming is a passion that can be amatorial or professional activity.
Definition of esport and the “difference” within the videogame
First, it’s important to say and to make a premise: every esport is a videogame, but not every videogame is an esport. It is an important thing to say for major clarity. The definition of E-sport is, per Welch (2002): <<In most cases, it is equivalent to a “professional game”, a competition, a way to play computer games in a professional environment>>. It is a partial definition of the phenomenon that is growing year for year. We can add to this definition that:
E-sport is a gaming circuit and a complex of professionalism (players, coaches, broadcasters, marketing and communication experts, team, managers, etc.) that works for give to the audience entertainment events and tournaments based on videogames played on PC, console and mobile, that have some defined features which guarantees equity and regularity. The events and the tournaments can be organized by associations, publishers, societies or network, where the players or the teams of pro-players can participate for free or for a final prize money.
Can be the market of esports an opportunity for business companies?
Why we’re talking about esports? Because these represent a great opportunity for business companies to reach the GenZ and Alpha Generation. If you want to communicate your image, your brand, your products, your services to these targets, you can’t not consider this sector which is rising phase last years, mostly next to the beginning of Covid-19 restrictions that forced all of us to stay at home. We know that many habits changed since 2020, among which the consumption of media.
How can the companies promote their products and services on esports market? There are many ways: some brands decide to pay spaces for advertising in streaming platforms like YouTube or Twitch (that is a dedicated platform for gaming and/or just chatting with streamers or content creators in live streaming) with classic video advertising or banners; a second way is taking a partnership with streamers/content creators that can use or promote the products/services during the live streaming; another way (the most expensive) is create a branded esport team (like Samsung with the Morning Stars). But that is not all. The companies can make a partnership with organizations that managing tournaments or esport event and like classic sport events (e.g., football, basketball, soccer matches) it’s possible to explore the various ways to promote the goods and services for reaching young targets of audience.
Some information about esports audience
The Global Esports & Live Streaming Market Report by Newzoo (2022) evidence that the total audience in 2020 was 435.7 million of people, in 2021 489.5 million and it is expected that at the end of 2022 the audience will achieve 532 million of people. For 2025 is expected that the audience will reach more than 600 million of people. In this report the audience is divided into “occasional viewers” and “esports enthusiasts” where “occasional viewers” means: <<people who watch professional esports less than once a month>> and “esports enthusiasts”: <<people who watch professional esports content more than once a month>> (Newzoo, 2022). In 2020 the audience of “occasional viewers” was the 50,6% (220.5 million of people) and the “esports enthusiasts” audience was the 49,4% (215.2 million of people); in 2021 the firsts are the 50,9% (249.5 million of people) and the seconds are the 49,1% (240 million of people); in 2022, the audience percentages of “occasional viewers” and “esports enthusiasts” will be the same of 2021, but with increased data (270.9 million of people for the firsts, 261.2 million of people for the seconds). The Compound Annual Growth Rate between 2020-2025 is rising (+8,1%).
The data of 2021 about age and gender demonstrates that the “occasional viewers” are composed of 63% of male audience and 37% of female audience. The percentage of 21-35 age is the most consistent (28% of male, 16% of female). About the “esports enthusiasts”, this target is composed of 66% of male audience and 34% of female of which the percentage of 21-35 age is confirmed as the most consistent (31% of male, 15% of female). 10-20 age is the second largest target both for “occasional viewers” and for “esports enthusiasts”.
So, it’s clear also thanks to the numbers reported that the esports are an environment that allows to directly reach the young generations. But it must be done with a clear strategy and direction to pursue.
Revenues and Value of esports market
In the Global Esports & Live Streaming Market Report by Newzoo (2022) results that at the end of 2022 is expected more than 2 billion of people are aware of existence of esports, more than 900 million is the audience for games live streaming and declared esports enthusiasts are few more of 250 million of people. The market of esports generates more than 1 billion dollars of revenues, where the sponsorship is the bigger part (nearly the 60%).
Which companies invest more in esports environment? According to Newzoo’s report the: << Blockchain companies are boosting sponsorship growth in esports by investing high figures into teams and tournaments […] streaming is increasingly becoming a greater part of brand strategy >> (Newzoo, 2022). The forecast of Compound Annual Growth Ratebetween 2020-2025, always according to Newzoo’s report, displays a positive variation (+13,4%). In 2020, the esports generated 996 million dollars in revenues and it is estimated that in 2025 the sector will generate few less than 2 billion dollars in revenues. In the specific, the revenues generated in Asia-Pacific market the esports generate 590.2 million dollars, in 2022, in Europe, 345.3 million dollars, in North America 349.7 million dollars, and in the “Emerging Regions”(the world areas that are not considered previously) 98.8 million dollars.
Which kind of videogames are eligible as esports?
What are the esports game title? We have to do a clear distinction for kind of game:
- MOBA (Multiplayer Online Battle Arena) (e.g., League Of Legends, Dota 2)
- FPS (First Person Shooter) (e.g., Call Of Duty, Rainbow Six Siege, Counter-Strike)
- Battle Royale (e.g., Fortnite, PUBG, Apex Legends)
- RTS (Real Time Strategy) (e.g., Warcraft
- Sport Simulator (e.g., FIFA, F1, NBA2K)
- Online Card Games (e.g., Hearthstone)
- Fighting Games (e.g., Street Fighter II, Mortal Combat, Super Smash Bros)
- Mobile (e.g., Brawl Stars, Clash Royale, etc.)
In conclusion, we think that the esports market according to Newzoo is increasing year for year and still will increase in the future. The esports will be the (present and) next generation space for advertising and for promoting brands and companies, for reaching young people. Like a classic team of any sport, the esport team often has a technical sponsor for the jerseys (e.g., Nike, Adidas, etc.) that permits to have wonderful materials to show thanks to players, coaches and staff, being able to sell to the (young) audience.
Now and for the next years, companies that have specialized in NFTs and blockchain technology penetrate this market thanks to their link within the electronic sports, but the main companies that collaborate within the teams, players, content creators are IT developers and electronics devices suppliers (e.g., NVIDIA, Intel, AMD, ecc.) which are considered “endemic” sponsorships. All brands or companies that is not directly linked to technology supply-chain and the digital world in general (e.g., food, beverage, etc.) are considered “not endemic”. If your business is focused on digital technology, the choice to promote your brand into the electronic sports could be nice.
References
- Welch, T. (2002). The History of the CPL. Cyberathlete Professional League, 2002, Available at: http://www.thecpl.com/league/?p=history, 28.10.2018
- Global Esports & Live Streaming Market Report, Newzoo (2022),
Available at: https://newzoo.com