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Why Esports could represent big money for investors

Barely ten years ago, you might not have thought that watching video gamers battle it out in live arenas for huge sums of prize money could be called a ‘sport’, let alone a burgeoning digital industry. But esports is growing fast; and bringing with it opportunities for investors. The often-cited figures from Newzoo predict that the global esports industry will be worth $908m in 2018, reaching $1.4 billion by 2020. Audience figures are estimated to grow from 385 million to 589 million in the same period.

With these projections promising lucrative revenue opportunities, different players are trying to capitalise on esports; from traditional sports teams to pop stars, private equity firms and media and telecoms players. US VC investment in esports grew an incredible 1125% in 2017, with many exciting startups in the space. Reflecting traditional sports, there are emerging businesses in players agencies, lawyers, gambling, marketing firms and more as the ecosystem grows. The potential for growth is huge: as esports is inherently digital, it combines the appeal of watching competitive sport without the physical limitations facing traditional sports. Tournaments can easily be scaled, plus teams can train and play virtually. Furthermore, research has shown that esports fans tend to be highly engaged and have higher than average incomes, making them desirable targets for big brands.

But being a relatively new sector, the path to monetisation is not always clear-cut. Esports teams, games publishers, media companies and event organisers – all with different business models and revenue streams – are vying to establish themselves as industry leaders. Many esports teams are loss-leaders and are still working on attracting the bigger advertising revenues and media rights that keep traditional sports profitable. For brands keen to access the 16-35 demographic, esports offer a unique way to access consumers who are savvy to avoid traditional advertising channels. Relevance to the game has been considered key and some brands have been cautious about aligning themselves with more violent games. However, we were blown away by the crowd’s reaction to sponsor DHL at ESL One Birmingham 2018. Was it the authenticity of the partnership that engaged the crowd?

Overall, the potential of esports is huge, and advertisers, investors and entrepreneurs alike would do well to pay attention to this fast-growing industry – and to capitalise on it during this exciting phase. Our consultants are experts in this market and are well-placed to assist if you are growing your team, or looking for your next career move. Contact us here, or view our jobs page for inspiration.