Will Investors, Advertisers and Sponsors Continue on the eSports Train?

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By Tiffany Grau, @tiffany_grau (ODU)

With the popularity of eSports on the rise, it is only natural that we see investors interested in the industry.

With the popularity of eSports on the rise, it is only natural that we see investors interested in the industry.

What is eSports? eSports is a term that is used to describe video game competitions.  These competitions are similar to sporting events in that they are played before live audiences and broadcast over the Internet, you must follow certain rules, and a referee officiates the event.  

The history of eSports dates to the 1980’s, when gamers would participate in tournaments at arcades. In the 1990’s, console gaming (Nintendo, Playstation, etc.) became more popular, and these competitions moved from the arcade to auditoriums and other large arenas.  In the 2000’s, computers and the Internet helped increase the popularity of eSports and connected more gamers, making eSports a global competition.

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With the popularity of eSports on the rise, it is only natural that we see investors interested in the industry.

According to an article in Business Insider, financial institutions are really starting to notice the potential to make a pretty penny in the eSport industry. “Goldman Sachs valued eSports at $500 million in 2016 and expects the market will grow at 22% annually compounded over the next three years into a more than $1 billion opportunity.”

Market researcher Newzoo estimated that the eSports industry will make $696 million in revenue in 2017, with an audience size of 385 million people, and by 2020, those figures will reach $1.48 billion and 589 million, respectively.

What do forecasts like this mean for advertisers, sponsors and investors: An opportunity to make to make money.

In 2015, advertising and sponsoring for eSports totaled approximately $218 million. This total jumped to $325 million in 2016, with $197 million spent in advertising and $128 million spent in sponsoring. It is estimated that these totals will continue to increase in 2017 and 2018 to $440 million and $622 million respectively.

In addition to the already growing popularity of eSports, competition for market share is set to increase for games such as League of Legends, Call of Duty and other fan favorites. The NBA recently announced that they would be partnering up with Take-Two Interactive – the publisher of “NBA 2K” – and launch its own eSport league in 2018.

The NBA 2K eLeague will be managed by actual NBA franchises with 8 – 12 teams taking part in the first season. Eventually, the league hopes to have all 32 NBA teams participating/represented in the gaming league.

Some NBA teams and former players are already active or rumored to be active in the eSports industry. The Philadelphia 76ers acquired two eSports teams in September 2016 that are only active in League of Legends (LOL).  Magic Johnson and the Golden State Warriors also invested in a team last year, and it is rumored that Kobe Bryant is interested in investing in eSports through his $100 million investment fund.

The future is bright for eSports. With any investment, high risk means high reward but with the growing popularity of eSports and the NBA 2K eLeague, don’t be surprised to see eSports become an even more lucrative business venture than currently estimated.  

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