E-Sports, also known as Electronic Sports, is a form of organized, multiplayer video game competitions played by professional players. This limitless gaming universe is mostly supported by millennials.
By Lars Kalbreier, CIO Vontobel Wealth Management, based in Zurich
The overwhelming majority, about 80 percent, of the fans follow these competitions on internet streaming platforms (e.g. Twitch), which means that viewers can follow the tournaments from anywhere in the world.
However, the physical presence of fans at events is continuously increasing as well and for some larger events, entire sports stadiums are rented. It is quite common for these large events to be sold out within minutes and an example of such an event is the «6 Day Intel Extreme Masters 2018», which had about 169’000 fans that attended.
Growing Numbers Every Year
Currently, about 88 million spectators regularly watch E-Sports and about 193 million occasional enthusiasts, with interest in this movement; with growing numbers every year. It is expected that the number of viewers will grow by 50 percent by 2020. Asia’s fascination with the digital world as well as the local acceptance of E-Sports as a sport is the reason that the continent makes up half of all spectators.
E-Sports will also participate in the Asian Games 2022 as an official sport. This is the first time that gaming has been combined with other traditional sports at an event. In the meantime, even the IOC is discussing whether E-Sports should be introduced as the 43rd discipline at the 2024 Olympic Games in Paris.
Frequent E-Sports Viewers in 2018 (in millions)
(Source: Newzoo)
Unlike in the Asian market, professional gaming is not as popular in Europe, because many European adults consider video games as «children’s toys». However, it should be noted that this technology has not been around for too long and the younger generations (Millennials, Generation Y & Z) are growing up with the digital world.
Some schools in Sweden have gaming as part of their curriculum and in England, there are so-called «E-Sports summer camps».
Most Popular E-Sports Games
- League of Legends (Tencent)
- Dota 2 (Valve Corp)
- FIFA (Electronic Arts)
- Rainbow Six Siege (Ubisoft)
- Fortnite (Epic Games, Tencent)
- Overwatch (Activision Blizzard)
Current Situation
As with regular sports, professional gamers have to train several hours a day to keep up with the world’s best. E-Sport teams are professionally set up and can comprise hundreds of people. These include many trainers who coordinate fitness, strategy, analysis, health and much more. Since E-Sports also requires strategic thinking, most teams engage a mental coach to prepare the players for stressful and tricky situations.
Often, teams also have in-house marketing departments to promote their team and their sponsors. E-Sports fans are crazy about their favorite team’s merchandise. In 2018 alone, they bought promotional items and tickets worth $95.5 million.
Big Sports Clubs Set Up Own Teams
(Source: fifa.com)
But there are also differences compared to traditional sports. The gaming industry is constantly evolving, with new video games being added to the market and existing ones regularly updated or changed. These modifications can cause problems for professional gamers, as they have to get used to these changes quickly.
The football simulation FIFA is a good example to explain this. In this video game, you can control and manage your favorite football club by yourself. Every year, a new version of the game will be released. The most important changes are usually the player changes (if a real player changes his football club during the year, this will be reflected in the new FIFA), but there are also adjustments to the gameplay.
Large Contracts
Therefore, the game experience can change completely within one year. In traditional sports, these yearly innovations are not common and at most, small innovations are introduced e.g. «Video Assistant Referee», but the basis of the sport remains the same.
E-Sports revenues in 2018 showed significant growth in all areas. The total revenue amounted to about $906 million, which represented a year on year increase of 38.2 percent. However, the most notable figure was sponsoring. Thanks to contracts with Daimler, DHL, and Intel, large companies were able to get enthusiastic about the E-Sports world. Revenues here increased 53 percent year on year to $359.4 million with continued strong upward trends.
Global E-Sports Revenues 2018
(Source: Newzoo)
The increases in revenues led to the increases in the pot sizes of prize money. Epic Games have recently announced that the total prize money for the «Fortnite» World Cup in 2019 will be $100 million. Such numbers are not common in traditional sports.
In comparison: The prize pot for the «Tour de France» bicycle race in 2018 was only 2.77 million euros, and for one of the world's largest golf tournaments, the «US Open», it was only $12 million.
How Does the Game Market Look in China
(Sources: Newzoo, 2018 Global Games Market Report, Base: Chinese online population)
