The eSports industry has seen tremendous growth over the years, both in terms of viewership and revenue. The increasing viewership is what mainly contributed to the revenue growth – and it's not just because those viewers are generating revenue. Seeing the potential of reaching a large and engaged audience, brands are investing in eSports marketing, both directly and indirectly. This has contributed to rapid revenue growth in the industry, only slowed down by COVID limiting large public eSports events.

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eSports has also experienced growth in several other aspects, with many of them interrelated in one way or another. In this post, you will learn more about just how much the eSports industry is growing so you can understand how to leverage it.

Game publishers, event organizers, teams, brands and investors need solid data to make marketing decisions. As we analyze key takeaways from Nielsen’s past two years of sponsorship valuation data and research around fan behavior and preferences, it’s evident that esports stakeholders have a lot to look forward to in the coming months. The esports market was valued at USD 694.2 million in 2017 and is expected to reach USD 2,174.8 million by 2023, at a CAGR of 18.61% between 2018 and 2023. The esports market is expected to grow because of various driving factors, such as increasing popularity of video games and growing awareness about esports.

1. We are passionate about esports, and our mission is to help our customers build successful esports businesses and achieve greater engagement with the esports audience. Our Esports Game Coverage With data coverage on League of Legends, CS:GO and DOTA 2 we provide data on the three biggest games in esports, that account for 90-95% of of all.
2. Other potential revenue streams in esports, and therefore opportunities for investment, include IT infrastructure and merchandising. Given the virtual nature of video games, IT infrastructure is critical to esports, and as 5G technology is rolled out over the next few years, the video game industry will see significant benefits.
3. . eSports Statistics, Demographics, & Interesting Data (2020). South Korea was the second highest eSports market, with 92 million euros in revenues.

Leverage the Growth of eSports (With the Stats Associated):

eSports Viewership is Growing

Since 2016, there has been a significant increase in eSports viewers – both occasional viewers and enthusiasts, i.e., viewers who watch it regularly. Between 2018 and 2019, there was a 12.3% increase year over year. In 2019, there were 245 million casual viewers and 198 million enthusiasts, making the total audience 443 million.

By Feb 2020, the year-over-year growth rate had slightly dropped to 11.7%, although that's still a sizable increase. In 2020, there were 272 million occasional viewers and 223 million enthusiasts. So, the total audience size grew to 496 million, almost half a billion eSports followers.

By 2023, Newzoo predicts that the annual growth rate will be approximately 10.4%. They also expect that the number of casual viewers will grow to 351 million. And that there will be 295 million eSports enthusiasts, making the total audience 646 million.

Newzoo has also released statistics highlighting the growth in the European audience for eSports. The total audience for eSports in Europe was 79 million in 2018, growing to 86 million in 2019 and 92 million in 2020.

As you can see, there has been a steady growth in eSports viewership, and the trend is likely to continue in the coming years. The increase isn't just limited to dedicated eSports fans; there also seems to be an increase in people who view it casually. This is likely a result of increasing awareness about eSports and ease of access to the internet.

Also, viewing platforms like Twitch and YouTube have seen growth in their users. That's another contributing factor to eSports audience growth. You will learn more about these factors later on in this post.

However, there is one proviso regarding expectations of future growth. The above predictions for future growth were made before COVID had such an impact on the world. Newzoo recognizes that 'the eSports audience is not smaller (meaning there's no decrease in demand), and the number of organizers is not fewer (so there's no decrease in supply).' However, this year has seen eSports events postponed and cancelled, and if this continues, it may impact future growth.

eSports Awareness is Increasing

One of the main reasons why there has been growth in eSports viewership is because more people are learning about it. There has been a tremendous rise in awareness of the eSports industry since 2015. Back then, there were slightly more than 800,000 people who had heard about it. These numbers soon changed, and by the next year, more than a billion people had learned about eSports.

These numbers continued to increase in the following years, by a few hundred thousand annually. By 2017, eSports awareness had risen to 1.28 billion, and it reached 1.43 billion by 2018. Statista doesn't appear to have continued recording these figures since then, but they predicted that by 2019, an estimated 1.57 billion people were likely to be aware of eSports.

We can, however, glean additional information on eSports awareness from Newzoo's report. They indicated that the global awareness of eSports in 2019 was actually 1.8 billion, and they expected this to rise to 2.0 billion in 2020. Newzoo expects that 530.4 million of these will be Chinese.

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So what does this increase in viewership and awareness mean for brands? For the most part, it says that they have a new channel to target in their marketing mix. It also says that they have more people to reach within the eSports industry. So, eSports marketing will help them expand their reach and deliver their marketing messages through engaging channels.

The rise of Platforms Offering Live eSports Coverage

It's no surprise that more people watch eSports videos and events considering how online platforms now make watching eSports content more accessible. eSports streamers use these platforms to broadcast live coverage of events and their own gameplay. This makes it easier for fans to participate in their favorite events and engage with their preferred eSports athletes.

So, you can see an increase in the number of viewers and broadcasters on these platforms as well. Although not all the viewers and broadcasters on these platforms are relevant to the eSports industry, this increase still likely affects the industry.

Source: blog.streamlabs.com

Streamlabs made some interesting observations in their Q3 2020 report. The majority of streamers still prefer Twitch. It represents 91.1% of the market share for hours streamed, up 14.5% from Q2 2020. The reason for this significant increase was because of Microsoft's shutting down of Mixer. However, Facebook Gaming also saw an increase in market share, up 1% over the quarter to 3%. YouTube Gaming hasn't benefited much from Mixer's end, dropping 1.2% to have a market share of 5.5%.

Twitchtracker provides some interesting statistics about Twitch's progression over the years. COVID lockdowns have led to many people increasing their time on Twitch. 889 billion minutes have been watched over the last year, up from 660 billion minutes in 2019. Similarly, there are now 4.4 million monthly streamers in Twitch in 2020, compared to 3.64 million in 2019.

The platform has also seen a steady increase in the number of channels simultaneously broadcasting live. This number increased by 20% in 2019, with 49,500 average concurrent live channels. In 2020, the increase so far has been 69%, with 83,900 average concurrent live channels. So, there is a ton of activity on these platforms, signifying that eSports fans are highly active and engaged with relevant content.

People are Spending More Time Watching eSports

Audiences watched over 7.46 billion hours of content across all live-streaming platforms in Q3 2020, slightly down from Q2's 7.71 billion hours. Surprisingly, considering its fall in market share, YouTube Gaming experienced the most growth for hours watched with an increase of 156M hours from Q2 to Q3. Facebook Gaming exceeded 1 billion hours watched for the first time.

However, although Q3 2020 saw a small drop in hours viewed, it still represents a 91.8% increase on the 3.89 billion hours watched in Q3 2019.

Streamlabs also included some data about the top eSports watched during the quarter (Q3 2020). LCK (League of Legends Champions Korea) saw 33,310,312 hours watched. This was closely followed by the PUBG Mobile World League 2020, with 33,179,000 hours watched, and League of Legends European Championship, with 28,957,234 hours watched.

Since consumers spend so much time on eSports, this means that brands need to meet them where they're at by adopting eSports marketing. This could be through ads, reviews, product positioning, influencer marketing, and more.

eSports Revenue Growth and How Brands are Contributing to It

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Realizing the potential of tapping into the eSports market, some brands have already made significant eSports marketing investments. So, the industry has seen an impressive increase in revenue in recent years.

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According to the previously cited Newzoo analysis, there was an average revenue increase of more than 30% annually until 2018. The rate of increase decreased at this point; however, eSports revenue in 2019 was $957.5 million, still a 23.3% YOY growth (and slightly greater than what Newzoo had predicted). Yet, COVID has had a noticeable impact on eSports revenue, and Newzoo has revised its 2020 eSports revenue estimates downward from $1100.1 million (as predicted in February 2020) to $950.3 million globally. If this is accurate, it will represent a fall of 0.8% in YOY revenues. This fall in revenue will predominantly occur because there is currently almost no in-person attendance at eSports events, with restrictions on large gatherings. As we have seen elsewhere, eSports and gaming are more popular than ever – there are, however, COVID-related restrictions on revenue streams at the moment.

Newzoo’s latest estimates of eSports revenue streams, suggest that the $950.3 million is likely to be made up as follows: sponsorship $584.1 million (up 7.5%), media rights $163.3 million (up 3.3%), publisher fees $108.9 million (down 11.6%), merchandise & tickets $52.5 million (down 50.3%), digital $21.5 million (up 60.9%), and streaming $19.9 million (up 44.9%). The effects of COVID are obvious when you look at the relative changes in the revenue streams.

Visible Growth in eSports Tournaments

There's little doubt that with so much growth in many of these statistics, there would also be growth in eSports tournament prize money and player earnings – at least until COVID arrived. In 2018, the total prize money for 4579 tournaments was $164,829,763. So, the mean tournament prize pool was $35,997. With 23,020 active players at these tournaments, the mean earnings for each player were $7,160.

In 2019, the total prize money for 5288 tournaments was $234,433,656, up 42%. So, the mean tournament prize pool was $35,997. With 27,279 active players at these tournaments, each player's mean earnings were $8,594, up 20%.

Unfortunately, COVID has seen a considerable drop in both the number of tournaments and total prize money offered. As of late October, the mean earnings per player plummeted to $3,975.

Conclusion

These stats showcase eSports' rapid growth until the recent temporary reduction due to the effects of COVID on large-scale events. Gamers are spending more time than ever on the streaming platforms at the moment; however, they have less competitive content to view.

But this will only be temporary. The reduction in eSports events is considerably less than many traditional sporting occasions. Many competitive eSports continue. You can still sponsor teams at tournaments (remember that sponsorship has continued to rise, despite the effects of COVID). Perhaps you could also partner with influencers in the industry and have them promote your brand or review your products. There are tons of opportunities you can seize to ride the wave of eSports' popularity.

Taking the guessing game out of competitive gaming is part of my work each day. Game publishers, event organizers, teams, brands and investors need solid data to make marketing decisions. As we analyze key takeaways from Nielsen’s past two years of sponsorship valuation data and research around fan behavior and preferences, it’s evident that esports stakeholders have a lot to look forward to in the coming months. New fans, leagues and sponsors all point to more opportunity—and to be sure, change—in 2019.

New “kids” on the block

Globally, the esports audience continues to broaden—and with this, the characteristics and motivations of the “average” fan continue to be moving targets for marketers. For example, our most recent wave of Nielsen Esports Fan Insights global research shows that the newest fans of esports are being directly introduced to the scene by others, as opposed to discovering a new league or event on their own—in turn, drawing in an audience who is learning about esports via dabbling in viewership of major global events recommended to them by others.

Interestingly, friends or family who are fans of esports currently have more influence over attracting new fans than online personalities or streamers who are themselves part of the ecosystem—though we expect this to evolve as professional players continue to build their own personal brands alongside their team commitments.

The newest esports fans—who began following within the past year—are also of a different demographic makeup: while the youngest esports fans are predominantly male like the established fan base, there is a higher percentage of females among the newest esports fans. Importantly, new fans also skew a bit younger—that is, esports is capturing increasingly more teens as its audience expands. This presents both additional challenges and opportunities to marketers and esports rights holders, who are eager to expand their sphere of influence. Sensitivities around messaging, violent games, and sponsor categories continue to exist for marketers engaging with the youngest esports audience; however, teens becoming more committed fans of esports can also broaden the potential slate of esports titles that can be a successful part of the ecosystem moving forward.

The “Fortnite Factor”

One clear example of the confluence of new titles rising to success alongside teens entering the esports scene is the undisputed gaming industry disruptor of 2018—Fortnite. SuperData Arena provides comprehensive coverage of the global gaming video content and esports markets, and it shows that Fortnite skyrocketed to become the most-watched game on Twitch last year, peaking in May at 130 million monthly hours watched. Though the vast majority of this content was not esports/competitive gaming related, the title’s popularity among teens, in particular, opened a new way for this demographic to start exploring the esports scene, starting with the ongoing Skirmish events held during 2018. SuperData Arena shows that 45% of gaming video content viewers ages 13-17 watch Fortnite gaming video content. With the heavy investments planned for Fortnite esports in 2019—including the highly-anticipated Fortnite World Cup—the title has the opportunity to bring new viewers to the esports scene.

However, for existing esports fans, Fortnite could present a challenge to how they spend their esports viewing time moving forward—which, for as committed as esports fans are, has its limits given their love of other forms of entertainment as well: most notably, their own personal gaming time. In Nielsen’s recent research conducted on Twitch’s U.S. fan panel, esports fans most excited about Fortnite’s new esports competitions were more likely to currently watch specific event play from Overwatch League, Dreamhack, and RLCS on Twitch over the past year, as well as broader gaming video content related to PUBG and League of Legends—suggesting these and other titles could face increased competition for viewers’ attention in 2019.

Interestingly, Nielsen’s fan data shows Fortnite esports are most likely to make a splash in Western markets. Esports fans’ interest in Fortnite is markedly higher in the U.S., U.K. and France versus Germany, and even lower in Asian markets. As esports is commonly understood to be a global opportunity, acknowledging the more limited interest in Fortnite esports in countries like South Korea, Japan, and even China will help to properly manage expectations for the game’s entry onto the esports scene this year.

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The state of the esports sponsorship market

The esports sponsorship market is growing when it comes to the number of individual brands involved, and the growth in non-endemic support from consumer brands across industries such as insurance, automobiles, and telecommunications. We expect a wider variety of sponsors to continue to test the esports space in 2019—while 2018 progress was clearly a step forward, non-endemics are still entering the space cautiously, and with overall lower profile assets vs. their mainstay endemic counterparts.

Looking at Nielsen’s Esport24 sponsorship tracking and valuation database, which measures the equivalent media value of all branding present within numerous esports events and leagues annually, the growth of non-endemic sponsors within esports has continued to accelerate year over year. Isolating events covered in both our 2017 and 2018 databases, non-endemic brands represented 49% of all sponsors (across league/event and team partners) last year, an increase of 8% vs. 2017. While non-endemics’ total associated sponsorship values also rose by a more modest 4% year-over-year, they still lag behind the total values generated by endemic sponsors in these events, which in 2018 accounted for 61% of all partner value Nielsen measured.

Encouragingly, in 2018 esports teams began to monetize their jersey assets in a much more meaningful way. Relative to 2017, apparel branding enjoyed the single highest gains of any sponsorship asset in our Nielsen Esport24 data set, jumping from 11% to 23% of total QI media value across all asset types. This growth was driven by a combination of more teams signing jersey partners for the first time, additional jersey assets/branding locations being added to maximize potential value, and optimization at a team and league level to help partner brands get the most from their esports team investments. The first month of 2019 has already seen major team partnership deals signed within esports, so expect this to be a growing trend throughout the rest of the year.

Location-based leagues such as the NBA 2K League and Overwatch League have been particularly successful in attracting brand support from regional or local organizations and non-endemic sponsors that previously have not invested in esports given the global audience it attracts.

In its inaugural season, 72% of NBA 2K League teams’ in-broadcast sponsors were non-endemic brands, compared to 49% for broader esports sponsors tracked in 2018. Not only did NBA 2K League teams engage a variety of non-endemic partners associated with their local geography—they also brought a host of new non-endemics to esports via carryover of traditional NBA brand relationships. In fact, 46% of all NBA 2K League teams’ in-broadcast sponsors corresponded with their associated NBA teams’ partners.

Similarly, the Overwatch League—across its league and team partners—exceeded the esports average for non-endemic brand involvement during its inaugural season. Of QI Media Value driven by league/team sponsors in 2018, 43% can be attributed to non-endemic partners—versus an average of 34% in 2017 and 39% in 2018.

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Top non-endemic categories making a splash within the OWL environment included food/snacks, audio, and entertainment. With only five of the 12 teams having official partners activating in-broadcast during the inaugural season, the league has the opportunity to bring even more brands to the esports space in 2019—all the more so given its expansion to 20 teams, and along with that, new global and regional markets.

We at Nielsen believe strongly in data-driven decisions, especially in evolving spaces like esports, where new trends come fast and frequently. One thing we’ve consistently seen in our work in the esports space is that brands are no longer taking their esports investments lightly—for marketers, data tells a story that can ultimately help guide their way through the esports ecosystem. Rest assured, there will be plenty more data points to capture for the coming year of esports—stay tuned.

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This article originally appeared on esportsobserver.com.