The rapid increase in the popularity of the E-sports industry is a best-case scenario of the integration between traditional entertainment and the new age of digital media. Although the industry has breached the 1 billion mark, there is still much work to be done by companies in the industry. Usually, with these sector roundups, we talk about specific companies and their common stock, but I thought it would be nice to appreciate the industry and look at some facts that I had no idea about when I first started looking at the industry.
Worldwide eSports audience size 2021
According to Christina Goug a Statista research expert focusing on the video game and online platform sector:
“The eSports market has boomed in recent years with more and more viewers tuning in to watch their favorite games being played by some of the best gamers in the world.”
Esports’ audience size worldwide has gone from 397 million in 2019 to 474 million in 2021. this is a compound annual growth rate (“CAGR”) of just above 6% per annum. on top of that, the numbers are expected to reach 577 million viewers by 2024. The impact of the global pandemic has been a demand and supply push factor causing this rapid increase in viewership worldwide for the esports market.
There are so many new viewers looking at the beauty of Esports because they can relate to what’s going on through their own personal gaming experiences. This social aspect and connectivity build an ecosystem around the Esports phonetics allowing companies who target the niche to achieve higher profit margins at scale. this is because as more viewers watch the programming and the media the more gamers and teams come onto the different platforms allowing the circle of life of the esports ecosystem to be compact and potentially profitable.
This showcases what a competition win can provide and why so many gamers are now starting to bring in professional coaches to teach them how to win and compete at the top levels.
Largest Overall Prize Pool in Esports
Multiple large tournaments have been hosted around the world. Whether it’s in the USA, UK, or Canada, the tournaments are astonishingly large and there are millions of dollars on the line. However, the single largest prize pool was set at $34 million USD and was then split among multiple gamers at The International 2019. The International is an annual esports world championship tournament for the video game Dota 2, hosted and produced by the game’s developer, Valve.
Valve Software is an American video game developer headquartered in Bellevue, Washington founded by former Microsoft employees Gabe Newell and Mike Harrington. It is the developer of the software distribution platform Steam and the Half-Life, Counterstrike, Portal, Day of Defeat, Team Fortress, Left 4 Dead, and the aforenoted Dota series.
The 2019 competition had 18 teams and 90 players where the winning team (Team OG-5 players) won $15,620,181, second place (Team Liquid-5 players) won $4,462,908 and the third-place prize was $3,089,706 that went to team PSG.LGD also with 5 players.
The top 5 Players of 2021 are all from the People’s Republic of China
The Chinese gamers have dominated 2021 taking a total of $3,281,635.78 in pool prizes. Their top earner was Li Daheng who took home a total of $685,027.78 from 2 tournaments. Both times the game that he played was Arena of Valor. Arena of Valor is an international version of Honor of Kings, a multiplayer online battle arena developed by TiMi Studio Group and published by Tencent Games for Android, iOS, and Nintendo Switch for markets outside Mainland China. As of September 2018, the game has grossed over $140 million outside China
The US legally recognizes esports pros as professional athletes
You heard it here first folks, The US has legally recognized the esports pros as professional athletes.
Riot Games eSports manager Nick Allen expresses to GameSpot that in bringing international players stateside, the United States government has started to issue the players visas as “professional athletes.”
“The United States government recognizes League of Legends pro players as professional athletes, and awards visas to essentially work in the United States under that title,” Allen explains in a video interview with GameSpot.
Acknowledgment as professional athletes comes with all kinds of advantages, including special taxation and visa privileges. What a time to be alive!
USA and China Trade war and tensions continue in the Esports market
Obviously, there’s no war going on between the two countries when it comes to their digital media Esports sectors, but they are head-to-head as the largest earners of all the countries in the world. Just for fun, I want to compare the two economies head-to-head and their capabilities in the gaming sector but this comparison in no way speaks volumes about any other fundamental drivers of the economies or the performance of the teams in the leagues.
The Chinese economy, in nominal U.S. dollar terms, is projected to overtake the U.S. around 2032 and become the world’s largest economy. As of now, the US is still in the lead with a GDP (total production) of 21 trillion USD with a total population of approximately 328 million. This means the GDP per capita (total production per person) is about 65 thousand USD. China has a massive population of about 1.4 billion producing 14 trillion in final goods and services. This means its total production per person is 11 thousand USD.
- China has 4 times more citizens than the USA
- But the USA produces 1.4 times more final goods and services
On the gaming side China has a total of 622 people and in 2021 earned $19 million. This means they have earned on average $30,000 per player. The US has 2832 players and earned $16 million netting them $5,000 per player.
- The USA has 4 times more players than China in major tournaments
- But China has earned 5 times more in these tournaments.
USA’s reaction :
Watch out US, China is coming for you.
Hopefully, you guys have enjoyed this short break from all this talk about gross margins, profitability, and head and shoulders patterns. Next week on the Esports roundup will be going back to regular programming and be diving deep into some of the companies that are directly gaining exposure to this wonderful market as developing.
Here is a sneak peek they are all in the USA and Canada.
China’s reaction:
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