Ivica Milaric

Ivica Milaric

Ivica Milaric is a psychologist with a background in journalism and content creation, now working in the gaming industry. Ivica has been published by Playboy and has 3 books on Amazon. You can learn more about Ivica on our About page.

Reports: Esports Industry to Surpass $1 Billion by 2020

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The projections of the value of the esports market have been varied over previous years. However, projection reports are slowly aligning. The latest meta-projection points towards a value that most experts agree with, which is $1 billion. It now appears all but certain that the market capitalization of the entire field of esports will reach or surpass one billion USD in a little more than a single calendar year.

Esports One Billion

The sum is impressive even though it is still minuscule by comparison. For example, the global worth of the entire gaming industry was $108.9 billion in 2017. The real strength of the esports market is perceived only when the sums are placed aside, and the actual ecosystem of different elements working together is fully perceived. Additionally, projections have the esports industry valued at $2.3 billion by 2022


The Sponsorships

It might sound strange, but throughout modern history, a sport was designed to become relevant only once sponsors notice it. In the recent decade, the sport of Lacrosse in the US is a good example. The game, which is very localized in North America and which started as a competitive activity of native tribes, first became an organized sport in the 1930s in Canada. From then on, it slowly became practiced through the educational system, and the foundation of young players (and spectators) was built. The leagues and the sponsors came last.

Esports are infinitely younger than that, but the network of sponsorship connection is already there. The top-ranked esports teams and organizations and the corporate presence in esports are immediately evident. 

From energy drinks titans like Red Bull and Monster to hardware and software developers and all the way to regular consumer brands like Foot Locker - they are all in the game of esports. Superstars such as Michael Jordan and Drake have also recently invested in esports. What is keeping them there is the effectiveness of the promotion they are paying for. Their presence also means that the companies see value in esports that is beyond simple dollar sums. This shows that the same value will not go away quickly as it lies in the spectators.


The Audience

Esports promoters are the first ones to underline that the viewership in their niche is growing faster than any other sport. However, you do not have to be a statistician to understand that the same growth curve will iron itself out eventually. In spite of that, esports do have a cutting-edge advantage in attracting new spectators due to the immense community of gamers. With each new generation, more and more kids play video games. This will also translate to more and more spectators of esports.

Companies that invest millions in sponsorships understand that growth will slow down, but it will not stop. At the same time, Chinese cities like Hangzhou which are building esports towns understand this even better - so much so that they are investing vast amounts of money on them. But, they are not the only ones betting on esports.


The Brands

Three years ago, Alisher Usmanov put an insane amount of $100 million into an esports team in Russia. The sum was huge and the team that got it, Virtus Pro, immediately came on the map like no other team before it.

Today, no one could argue that the investment was not a good one.  Virtus Pro is one of the most recognizable brands in a booming business. Sure, Usmanov did not get his money back, but the brand that he procured could end up being worth 10x that. In 1947, the LA Lakers were bought for $15,000. They are today worth an estimated $3.3 billion. 

Like always in business, it is the brand that eventually wins or loses. The investors have recognized this fact in esports over the last two years, and it is only the beginning. Since 2015, the investment value in esports has risen by more than ten times.


The Innovation

Lastly, the thing that props up the value to over a billion USD in a year is the ability of esports to innovate. Instant cryptocurrency betting on anything and everything in esports?

Sure, the majority of Millennial viewers will likely possess some digital currency shortly. Giving the audience the ability to influence matches? No problem, they are already online and ready to engage profoundly with the things they enjoy. 

This mentality of change and dynamic adaptation is the ultimate showcase of the value of the whole ecosystem. It is also the ultimate floodgate against the bubble issue - when the rapid growth stops, the market will not fail, but modify itself. It can do the same even radically if need be, thanks to the ever-changing nature of gaming in general.


Where does it end?

With this interlocking system of influences, it is easy to see why most experts agree that the sum of $1 billion will soon be surpassed. What is next to come is hard to say, but for now, there is no apparent ceiling for the domain of esports.


Image Via: Esports Marketing Blog

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