Newzoo: The esports economy will grow 41% to $696 million in 2017
Above: Multiple revenue streams will generate a total of $696 million for esports in 2017.
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The esports economy will grow 41.3 percent to $696 million in 2017, according to market researcher Newzoo. The total market is expected to nearly triple to $1.5 billion by 2020.
Brands will contribute roughly $516 million in revenue in 2017, and the study suggests that brand investment will more than double by 2020. Meanwhile, Newzoo believes the global esports audience will reach 385 million in 2017 and will grow another 50 percent by 2020.
The esports audience in 2017 includes 191 million esports enthusiasts and is expected to grow to 286 million in 2020. In addition, occasional esports viewers will likely grow from 194 million in 2017 to 303 million by 2020.
North America is currently the largest esports market, with anticipated revenues of $257 million in 2017. That is expected to more than double to $607 million by 2020. Most of these revenues come from sponsorships, which will likely total $113 million in 2017.
Above: Newzoo says esports revenue could hit $1.5 billion by 2020.
“Esports is not only growing exponentially as a new independent business and industry, it is also accelerating the convergence of various established industries,” said Peter Warman, CEO of Newzoo, in a statement. “For brands, media, and entertainment companies, esports provides a chance to capitalize on the favorite pastime of digital natives and millennials: playing games and watching game content. With the arrival of livestreams 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.”
This is the third edition of Newzoo’s annual esports report, which provides an in-depth look at the esports economy and a realistic estimate of its future potential in terms of trends, viewers, participants, and revenue streams.
More than in previous years, the 119-page report focuses on individual regions in line with the exponential growth of local esports initiatives, which are crucial to the growth of the total ecosystem.
Above: The audience keeps on growing for esports.
Brands are expected to spend $516 million in 2017. That number is broken down into $155 million on advertising, $266 million on sponsorship, and a further $95 million on media rights.
The report also show that consumer spending on tickets and merchandise this year will amount to $64 million. Another $98 million is invested by game publishers into the esports industry through partnership deals with white-label organizers.
Game publishers are actively looking to grow their franchises as spectator sports, with the aim of engaging their current fans and reaching new ones. Often lacking the experience and resources to do so themselves, publishers turn to these white-label organizers for help setting up leagues and events around their franchises.
Above: Revenues per esports enthusiast.
Based on Newzoo’s audience and revenue expectations for 2017, the average revenue per fan this year will amount to $3.64. That compares to about $15 for the average revenue per NFL basketball fan in 2015.
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. This is still a factor of three lower than such popular sports as basketball and a factor of twelve lower than the most commercial league in the world, the NFL.
But Newzoo isn’t counting money from betting on esports, and the company said such betting is the hottest topic in the real-money gaming industry, since betting companies see esports as a huge “blue ocean” opportunity. Of course, betting on esports has been around for many years, as it does not require the involvement of any esports companies to organize.
Three years ago, a traditional betting company stated that esports was already its seventh-biggest sport worldwide in terms of betting volume, positioning esports above golf and tennis. 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, and Newzoo noted that sports betting is a far bigger business than sports media rights, sponsorship, and consumer revenues put together. As an example, the NFL generated $13 billion last year, but betting and fantasy leagues around 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.
North America has 25 million esports enthusiasts, who generate twice as much revenue per year as those in any other region, at $10.36 per fan per year.
High-level takeaways from the Newzoo report have been made available in a free version that you can download here.
Source: Venture Beat