The Global Esports Market will Reach $463 Million in 2016

Today, we announce the launch of Newzoo’s 2016 Global Esports Market Report. Esports, as a professional sport and form of entertainment, has been developing at such a rapid pace. It’s hard to believe that the first comprehensive report on the worldwide esports market was released just one year ago. Following analysis of the most recent data on 2015, our final take on last year’s revenues is $325 million worldwide. The coming year will see the Esports Economy grow to $463 million, a year-on-year growth of 43%, entertaining an audience of 131 million Esports Enthusiasts and another 125 million Occasional Viewers who tune in mainly for the big international events. Newzoo’s 80-page report details the global and local esports markets, which jointly are expected to generate $1.1 billion in 2019, and highlights alternative growth scenarios using traditional sports as a reference and the key factors that will determine its pace of growth.

The History of Esports Research

While many research companies are now attempting to ride the esports wave, Newzoo’s PC Gaming: Power to the People report, released in October 2013, was the first to point out esports and streaming as key trends in games. Since then, Newzoo performs its regular proprietary consumer research on esports engagement across 27 countries worldwide and continuously updates its Esports Audience and Revenue Model with new data sources and deeper levels of granularity. More information on the methodology can be found below. In January 2015, this lead to the first Esports Market Report. This report is now updated quarterly for Newzoo’s premium subscribers, which include the majority of key players within the esports economy itself and the companies seeking to enter it. This premium service comes with quarterly update reports as well as a granular Excel dataset with audience and revenue numbers for 2015 to 2019 for the worlds’ sub-regions. The dataset is updated quarterly if new actuals or fresh research results give reason to adjust the projections.

Wouter Sleijffers, CEO of Fnatic, comments: “Esports remains an industry with great potential for the years to come. Esports is a very diverse space, and for established and worldwide esports brands like Fnatic, it’s vital to follow the developments using reliable and complete data. Our partnership with Newzoo means that we can both stay on top of our game.“

US Leads Esports Revenues, Asia Fuels Audience Growth

In 2016, North America will strengthen its lead in terms of revenues with an anticipated $175 million generated through merchandise, event tickets, sponsorships, online advertising and media rights. A significant part of these revenues flows back to the game publisher, but across all publishers, more money is invested into the esports economy than is directly recouped by their esports activities. China and Korea together will represent 23% of global esports revenues, totaling $106 million in 2016. Audience-wise, the situation is different, with Asia contributing 44% of global Esports Enthusiasts. Growth in this region is, for a large part, fueled by an explosive uptake in Southeast Asia.

Peter Warman, CEO at Newzoo adds: “2016 will be pivotal for esports. The initial buzz will settle down and the way forward on several key factors, such as regulations, content rights and involvement of traditional media, will become more clear. The collapse of MLG was a reminder that this market still has a long road to maturity and we need to be realistic about the opportunities it provides. In that respect, it is in nobody’s interest that current market estimates differ so strongly. Luckily, when zooming in on the highest market estimates of more than $700 million, the difference is explainable by an in-depth look. This estimate only differs in the revenues generated in Asia (Korea in particular), and by taking betting revenues into account. At Newzoo, we believe betting on esports should not be mixed into direct esports revenues as the money does not flow into the esports economy. Similarly, sports betting is not reported in sports market reports.”

Key Take-Aways

From a trend perspective, this year has been dominated by the amount of investors getting involved in esports. An increasing amount of traditional media companies have become aware of the value of the esports sphere and have launched their first esports initiatives. With these parties getting involved, there will be an increased focus on content and media rights. All major publishers have increased their investment into the space, realizing that convergence of video, live events and the game itself are providing consumers the cross-screen entertainment they desire from their favorite franchises. The role that mobile screens play in this is crucial. We believe the uptake of mobile games as esports will accelerate in 2016, particularly in Asia, as many start-ups intensify their efforts and global mobile players get involved. Supercell’s most recent title, Clash Royale, is the ultimate example.

A selection of key facts from the 2016 Global Esports Market Report:

There were 112 major esports events in 2015 and they generated an estimated $20.6 million in ticket revenues. The total prize money of all esports events held in 2015 reached $61.0 million, a 70% year-on-year increase.

The global Esports Audience was 226 million gamers and the number of Esports Enthusiasts reached 115 million in 2015, a YoY growth of 27.7%.

Global revenues in 2015 reached $325 million, a growth rate of than 67.4%. North America accounted for $121 million of this.

Online advertising is the fastest growing revenue segment, up 99.6% on a global scale compared to 2014.

The average annual revenue per Esports Enthusiast was $2.83 in 2015 and is expected to grow to $3.53 this year, still a factor four lower than a mature traditional sport such as basketball, which generates revenues of $15 per fan per year.

The Esports Audience boasts a very valuable demographic, skewing towards consumers with a full-time job and relatively high income. The report shows that they are also big spenders on digital media subscriptions, hardware and mobile content including games.

Methodology: Newzoo’s Global Esports Audience and Revenue Model

The methodology for Newzoo’s esports data consists of three levels: 1) Data Input, 2) Predictive Modeling and 3) Result Validation. For Data Input, extensive primary consumer research across the globe sizes and profiles esports awareness and engagement. Newzoo also continuously tracks and analyses company revenues, live event audience figures, prize money, and video content viewer data. Predictive Modeling uses parts of Newzoo’s Global Games Market predictive model, which consists of several complex databases combining numerous data streams, financial analysis, primary research, as well as population and economic census data. Result Validation is done in two ways: through additional research and by discussing findings with companies including game publishers, esports teams, global streaming companies and local media companies.

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