Esports – Where Does All That Money Come From?

The global eSports market has grown massively over the last few years, sporting an audience of 148 million enthusiasts last year (according to market research firm Newzoo) and bringing in an estimated $493 million in revenue.  That number is set to hit the $1 billion mark as soon as 2019 too.

Other sources claim the rise of esports fans around the world is even more extreme:

map showing esports watchers around the world

With such strides being made in the industry, and its bottomline, we have to ask: Where does the money actually come from?

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Esports revenue can be broken down into a few different sources, with advertising and sponsorships bringing in the lion’s share of the money into the scene.

Newzoo estimated that an average of 71% of 2016’s $493 million came from a blend of advertising and sponsorships with a number of widely recognized brands dipping their toes into the eSports pond.

This past year saw the globally recognised Coca-Cola Company give esports the stamp of approval as they poured their money into sponsoring the World Championships of the hit MOBA League of Legends.

In addition to splashing their image across the screens of the 43 million viewers who tuned in to watch the live final, Coke Zero further made their mark on the scene by officially partnering with League of Legends publisher/developer Riot Games.

They teamed up for the developmental League of Legends series, branded the Challenger Series:

“We have worked very closely and collaboratively with Riot Games to create a league that delivers true value to the fans and players of the sport, and that begins to build an infrastructure for eSports that mirrors that of the more traditional sports,” said Coca-Cola’s global head of gaming, Matt Wolf, upon the reveal of the partnership.

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It’s not only big brands such as Coca-Cola, Red Bull, PepsiCo, Gilette, TV network HBO and Nissan North America that are climbing aboard the eSports gravy train.

Tapping into Coca-Cola’s idea of an “infrastructure for eSports that mirrors that of the more traditional sports”, we have seen a number of professional sports teams and organizations (as well as some heavy hitting sports stars) grabbing their slice of the eSports pie by choosing to invest in teams.

From organizations such as professional basketball team the Philadelphia 76ers (who purchased Team Apex and Team Dignitas), to European soccer giants Manchester City, more and more sports industry heavy hitters are taking note of the rising popularity of eSports.

Here’s a quick rundown of the games that are the most popular in the land of esports:

With celebrities such as basketball legend Shaquille O’Neal, former New York Yankee Alex “A-Rod” Rodriguez, former LA Lakers superstar Earvin “Magic” Johnson Jr., and more coming aboard, it is only a matter of time before the million dollar industry hits the billion dollar mark.

Although, it seems it’s not just teams these celebrities and sports organizations are interested in.

This past February, the National Basketball Association (NBA) revealed a partnership with the makers of the popular NBA 2K video game, Take-Two, to form a “first-of-its-kind” eSports league.

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Set to begin play in 2018, the league will feature 30 NBA 2K teams, each owned and funded by one of the actual NBA  franchises, competing in a five-month season that will run alongside the official NBA season and culminate in a championship event.

So, not only do you have money pouring in from sponsorships and advertising, but you also have companies branching out into funding leagues and tournaments and, while the NBA’s league may be the “first-of-its-kind” (at least according to the NBA), this is not the first time big industry has backed an esport tournament.

Live Events are just another way the eSports industry keeps food on the table, with tournaments drawing huge numbers of players (and audiences) to either play against (or witness) their eSports heroes in action.

The record for most number of spectators currently lies with the 2017 Intel Extreme Masters event which was held in Katowice, Poland this past year.

professional esports players playing in front of fans
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The weekend long event, sponsored by technology heavyweights Intel, played host to an estimated 173,000 fans with over 46 million unique viewers tuning in from around the world to catch just a slice of the action from the safety of their gaming rooms (figures courtesy of VentureBeat).

With an almost unfathomable number of people tuning in to watch eSports, it is no small wonder that broadcasters are some of the biggest investors into the growing eSports scene.

The Inc owned streaming platform, Twitch.TV, has been on the forefront of delivering free streaming services to the multitudes of gamers looking to tune into the action Their main competitor being the ever present American-based video-sharing (and now streaming) platform YouTube.

However, as of this year, YouTube has officially embraced eSports in the best way it can: by pumping more money into the cash cow.

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According to a report by Reuters, Alphabet Inc’s YouTube is “doubling down on the lucrative business of competitive gaming” by signing a “multi-year broadcasting deal with e-sports platform FACEIT to stream its competitive gaming league, the Esports Championship Series (ECS)”.

The deal will grant YouTube exclusive rights to the streaming of the third season of the Counter-Strike: Global Offensive league (a privilege previously granted to Twitch.TV) with the platform looking to offer specialized sponsorship packages to advertisers looking to further their own foray into the world of Esports.

Sponsorships, advertising, live events and broadcasting: these are just some of the things that keep the wheel of the Esports industry turning. Spectator or player: How did you contribute to the well-oiled machine this year?