The esports industry is mushrooming

The esports phenomena is rapidly establishing itself worldwide. The industry is turning over billions annually, with figures rising from year to year. A google search for the English term “esports” brings up about 87 million hits, and as of today more people are actually devoted to esports than to traditional sports.

Naturally, esports also increasingly figure in the press or ”old media”, and a steadily growing stream of articles is now being published. In Sweden, for example, Sweden’s largest newspaper ”Metro” has an entire section purely devoted to esports, where articles about Red Reserve feature regularly. Financial newspapers like DI (Dagens Industri) also write about esports, and DI recently highlighted Red Reserve in a long article.

Esports has its foundation in what was previously called TV- or video games, i.e. games shown on a TV or other monitor via a Playstation, Xbox or Nintendo gaming console. A handheld controller, or “gamepad”, is used to maneuver through the game. There are also PC games, which are mainly played with the use of the keyboard and mouse. League of Legends, Dota 2, Counterstrike, Fortnite and Overwatch are examples of some of the most popular PC games. Among the most popular console games we find titles like Call of Duty, Halo, Rocket League, FIFA Football / Soccer and Gears of War. The upcoming trend currently being established is VR (Virtual Reality), where the use of special VR glasses provides a three-dimensional gaming experience.

The traditional sports world are also beginning to consider eports as a worthy member of the community. Discussions about introducing esports as an Olympic branch 2020 or 2024 are already in progress. Several major football teams – such as French PSG, Dutch PSV Eindhoven and English Manchester City – have started their own esports teams. Many of our Swedish football clubs have also contracted players to FIFA Football, and a FIFA tournament between the first division teams is in the works. Esports has become a matter of interest for the general public in the United States as well as in Europe – a fact proven, for example, by the basketball team Philadelphia 76ers’ 2016 aquisition of the esports team Dignitas for an estimated, but not officially disclosed, $ 5-15 million.

Professional Gamers / Casual Gamers

The definition of esports as a proper sport is limited to those games where you compete in organised form, either via a console or PC, and where the finals are played in digital environments or physical arenas. In a general sense, however, the concept of esports, in addition to organised tournaments with professional players, includes all casual gamers – who play to a greater or lesser extent on their PC or console. In this extended category the number of players can be counted in millions, and of course they constitute a giant target group for various actors within the field of esports.

Just like many young and promising football players dream of a professional career, many “gamers” dream of being able to live off their gaming as professionals. A real gamer is motivated by being able to climb rankings and reach social status in the gaming community in which they operate. Gamers are often very faithful and loyal to their gambling communities and support their pro players, who can reach a status comparable to that of Zlatan or Messi in the football world, in various ways. Successful professional players are also highly sought after as influencers and highly attractive to sponsors.

One in ten swedes watch esports in an average month. In fact, in the Nordic countries, the age group 15- to 24-year-olds prefer esports to traditional sports. Esports has really become an established phenomenon for many youngsters and millennials and is definitely here to stay. An advantage of esports to, for example, the top football leagues is that the best teams meet much more often. “Premium games”, that is to say games between the best teams, take place about five times more often than in the top football leagues.

Esports is estimated to have about 250 million viewers (more than for example ice hockey!), most of which are themselves “casual gamers” – and they are a group with great purchasing power. So great that the 2017 finals of ”DOTA 2 – The International” had a prize pool of nearly $ 25 million – most of which came from purchases of various gaming gadgets and donations from the gaming community.

The commercial potential of esports

The esports revenues worldwide were around $ 700 million in 2017, and according to the reputable analytics company, Newzoo, which focuses on gaming and esports, this sum is estimated to be more than doubled, to $ 1.5 billion, by 2020 – and that figure is from their moderate forecast. In their more optimistic forecast, Newzoo estimates that revenues could grow to $ 2.4 billion by 2020. Both of these forecasts are higher than their previous estimates, but the esports has grown faster than previously expected. (See graphs of revenue and forecasts in the section ”Market & Future for esports”.)

Esports fans consume esport on any possible device – TV, mobile, PC, tablet, etc. – and they watch games on-site or streaming at both virtual and physical venues. The fans are also not only spectators, but also consumers of many esport-related products, often sold by the teams that they support and follow. In addition to gaming software, they purchase hardware and merchandise like controls, keyboards, mousepads, team jerseys and much more.

The global giants have also understood the commercial potential of esport. As early as 2014 Amazon bought the gaming platform and streaming service Twitch for $ 970 million, and has since launched the Esports Championship Series. Twitch currently has more than 100 million viewers per month, and a daily 15 million viewers spending an average of 106 minutes per person on the platform.