Like the movie and music businesses, gaming is a hits-driven business with revenues concentrated to top titles.
Certain, select titles drive large esports communities. Generally, the video game publisher industry views esports as a strategic segment because those titles that become popular as esports tend to have a longer, more productive life span than non-esport titles do. Publisher support for esports and the openness of publishers to third-party activity around their titles varies depending on overall publisher strategy. The audience for esports is vast, and the target market is young and compelling, so investments continue in developing compelling gaming experiences, including several major acquisitions of game publishers by larger technology and entertainment companies since the start of 2021.
Esports can simply be defined as competitive activity around a video game. Because multiple titles are considered viable esports, esports is more akin to a decathlon featuring multiple events than it is to a single sport with a clear governing body like American football. Game tastes and which esports are most popular vary significantly across international borders, and also vary somewhat in regional, domestic consumption. Some examples of top esports include: Call of Duty, Fortnite, Overwatch, Counterstrike: Go, League of Legends, and PUBG (all registered trademarks of their respective holders).
Esports is a fast-growing category. Velocity drives revenue from multiple demographics, as gaming is popular across a wide age range. However, we primarily target a highly valued audience: millennials, and GenZ. Our target demographic spends more on entertainment than any other generation, and by survey 78% of millennials value spending money on experiences rather than physical goods. The esports audience continues to grow among both esports enthusiasts (individuals who watch esports at least once per month) and occasional viewers
(Source: NewZoo Global Esports Market Report), and the size of the esports audience is comparable to NFL Football viewership (Source: Goldman Sachs).
The market for esports is driven by a combination of a large number of both players and viewers across a diversity of popular game titles, giving companies in the space a number of different ways to build profitable followings.
According to Grand View Research, the global esports market was valued at $2,008.4 million in 2021. It is expected to expand at a compound annual growth rate (CAGR) of 21.9% from 2022 to 2030. In terms of audience size, according to NewZoo, the global esports audience will grow +8.7% year on year from 2021-22 to reach 532 million.
Esports enthusiasts—those who watch esports content more than once a month—will account for just over 261 million. The number of esports enthusiasts will grow to 318 million in 2025, with a CAGR of +8.1% (2020-2025). In 2025, the total audience will surpass 640 million.
We view ourselves as broadly competing for the consumer’s activity dollar against any other entertainment activity that they may choose. That said, we follow the ecosystem of large, online and location-based entertainment businesses and can use the successful outcomes of others to help envision a clear, differentiated, profitable path for our own success.
Some of the large entertainment companies we track include: Netflix, Savvy Gaming Group, Callaway’s Top Golf, AMC Movie Theaters, Dave & Busters, Bowlero, Caesars Entertainment. We also track many smaller esports and location-based entertainment operators.