The world of competitive video gaming, better known as ‘Esports’ is now said to be worth over £840 million and with great power comes great responsibility. The total audience in 2021 is predicted to reach 557 million people and for investors this translates into a captive audience, 557 million sitting ducks, providing multiple different revenue streams.
What is Esports?
In order to understand how esports attracts investors it is important to understand what it is! Esports is an acronym for Electronic Sport which in layman’s terms covers everything from competitive gaming to playing scrabble online! It provides a community, and much like football fans will go to stadiums to watch their favourite teams play, millions of fans, all over the world, watch popular games such as Call of Duty and NFL on popular streaming services, often from the comfort of their own homes.
Esports covers not only traditional sports, such as FIFA, but also games like the ever-popular League of Legends, which generated $1.5 billion revenue in 2019 alone. Players can choose to engage with their fans – via social media and live streaming platforms or even in custom-built stadiums. In Japan, for example, esports has become so popular that ‘Japanese publisher Konami is currently constructing a new building in the capital city of Tokyo dedicated to its esports efforts’. Furthermore, these tournaments now often attract more viewers than traditional professional sports, creating a brand new type of international phenomenon.
There are multiple different reasons to invest in esports, such as broadcast revenue, prize money, ticket sales and merchandise (to name a few).
For tech entrepreneur Tej Kohli, he has a vision to build ‘a world-class esports team, as well as develop individual players, games and commercial opportunities.
Tej Kohli is not alone in his thought process, with sponsorships and brand deals projected to bring in more than a third of total revenue for the industry this year, according to research firm Newzo.
Furthermore, esports has attracted more than just tech enthusiasts. Grammy-winning and chart-topping Canadian rapper, Drake (real name Aubery Graham) is now the co-owner of an esports team, showing the true influence that this phenomenon has. Even Michael B Jordan, best known for his roles in Black Panther and Creed recently invested in New York-based Andbox.
Beyond this – esports is now the top digital platform for engagement, globally, with users engaging for an average of 51 minutes, daily. This makes it more engaging than Facebook, Snapchat and Instagram, and unlike the beginning of all of these online companies, we are now smarter about our investments.
Whilst Facebook, Instagram Snapchat AND esports all saw high traction rates, globally, it is only esports that has an effective monetisation strategy.