Esports arena: Professionalisation and growth

Esports has seen significant growth in recent years as it evolves from its relative amateur status to a global industry with significant reach, penetration and untapped upside. There are an estimated 2.7 billion gamers worldwide, and those gamers are the audience for esports to draw from which is why the gaming industry continues to invest heavily in esports and the sector is rapidly professionalising.

Esports is one of the fastest growing forms of entertainment and sports with an audience of close to 500 million, a figure that is expected to grow to 650 million by 2023. More than $500m a year is spent by sponsors trying to reach one of the more elusive marketing audiences: males aged 18-34 with money to spend. As with any traditional sportsperson, the players’ commitment to their training, teamwork and preparation can earn them millions of dollars a year from salaries and prize money.

Yet, despite this, the legacy view of esports as a wild west seems to endure. When really, we should be looking beyond that to the sector’s merits and what it is doing to move itself forward in the hearts and minds of its wildly passionate user base and the broader audience:

Mainstream broadcasters

The production quality of the events has increased significantly over the past few years, not only the live event experience, but also the quality of the broadcast feeds that are being delivered to traditional broadcasters, in addition to Twitch and YouTube, whose audiences grow apace. The BBC has embraced esports in recent times with BLAST recently partnering with the public-service broadcaster’s digital platform. The partnership saw the network’s Global Final appear on the front page of BBC Sport and viewable through the red button and iPlayer for the duration of the tournament. This clearly demonstrates the growing credibility of this maturing industry and the popularity of premium esports tournaments.

Integrity

The Esports Integrity Commission (ESIC) had a busy 2020 with the Spectator Bug controversy and kicked off 2021 with a bang as they suspended 35 players, for between one and five years, for betting on matches. This public and decisive show of action by the body, whose members include most of the top tournament organisers, is a clear sign that esports is working to adhere to a higher code, not only at the tier-one tournaments who have strict controls and processes in place already, but also lower down its pyramid.

Audience transparency

Since the majority of esports is still viewed online, the ability of the tournament operators and sponsors to better understand their audience is far greater than traditional sport. Broadcasters can personalise the delivery of content to the most engaged fans and sponsors are able to see with greater accuracy who they are reaching.

Participation

Gaming is a great equaliser and the wide array of tournaments from mass participation to elite allows gamers to dream and see the path to success. With several of the top-tier events now having qualifiers, providing opportunity and with the creation of content tracking the progress of those that are seeking their space at the top table, esports’ infrastructure lends itself to inclusivity and diversity of both its participants and viewers.

Growth spurt

The growth in the esports space is set to continue, with forecasts suggesting it will grow to $1.6bn by 2023 or around 20% per annum. This is highly visible today, as mainstream sports owners are diversifying their offerings to include an esports team, commercial real estate firms in the US are bullish on using vacant spaces to attract esports events to drive footfall and broadcasters hungry for content during the pandemic have turned to esports as they made the relatively seamless shift from offline tournaments to online ones.

We believe that this sustained growth will be driven by the continued professionalisation of the sector as tournament operators deliver greater competition, a more engaged viewer experience and a narrative around the tournaments that allows a closer relationship between players and viewers.

These trends have been building over recent years and the industry is ripe with opportunity. We’ve seen impressive growth from companies like BLAST and we’re always looking for the next big player. Having a premium product that is rightly seen as reputable and elite will allow the sector to mature further and deliver this hugely entertaining product to even broader audiences. The only way is up and we’re excited to be along for the ride.

Niall Santamaria is an investment manager at Edge Investments, the leading growth investor in the UK creative economy, working across new investments and serving as a board member for three portfolio companies across the VR, esports and digital advertising sectors. He has been working for media and creative industries companies for over a decade, with Exodus Ventures, a specialist in the high-growth early-phase digital media sector, Top Right Group (formerly EMAP), and OC&C Strategy Consultants. He is a CFA charterholder and has completed an MBA at the London Business School.