Rapidly Growing $1.5B Esports Market (And Where It's Headed)

This past week the state of Colorado announced they are planning to launch esports teams at over 50% of the state’s high schools.

So far there are over 100 teams playing multiple titles including League of Legends, Rocket League, Madden, and Super Smash Bros.

Is the athlete of the future digital?

Possibly.

Here’s how it works:

An esports League of Legends competition is 5 versus 5, and everyone has different roles. You can either win by completing an objective or the other team forfeiting.

Unlike a varsity basketball player, the game isn’t on a court — but in front of a screen.

Is there a market for online gaming?

Massive.

Diving Deeper 👇

The Esports Market

Some argue that esports could one day overtake popular traditional sports like football, basketball, and boxing.

And this data could be a clue as to why:

Nearly all youth athletes dream of one day becoming a professional athlete, but the reality is that 99.9% of them will never have that opportunity — heck, most of them won’t even make it to college sports.

The chance to become a professional esport athlete or at least earn a scholarship to college is slightly greater than that of a traditional sport.

It also requires much less help from genetics — it doesn’t matter how tall you are or how high you jump.

Newzoo’s Global Esports Market Report, estimated the revenue value of the esports market would reach $1.5 billion in 2022, up over 15% year-on-year.

And the number of esports viewers will reach over 450 million, consisting of 200 million esports “enthusiasts” and over 250 million “occasional” watchers.

But how does the ecosystem work in comparison to traditional sports?

Esports Teams

Just like traditional professional sports, esports teams have owners, franchises, endorsements, cash prizes from tournament winnings, and more.

All of this contributes to their annual revenue and total valuation.

As of 2020, the top five most valuable esports teams according to Forbes were:

TSM – Value: $410 million

Estimated Revenue: $45 million

Revenue from Esports: 50%

Owner: Andy Dinh

Cloud9 – Value: $350 million

Estimated Revenue: $30

Revenue from Esports: 70%

Owners: Jack and Paullie Etienne

Team Liquid – Value: $310 million

Estimated Revenue: $28 million

Revenue from Esports: 89%

Owners: aXiomatic Gaming, Victor Goossens, Steve Arhancet

FaZe Clan – Value: $305 million

Estimated Revenue: $40 million

Revenue from Esports: 20%

Owners: Lee Trink, Richard Bengston (FaZe Banks), Thomas Oliveira (FaZe Temperrr), Yousef Abdelfattah (FaZe Apex), Nordan Shat (FaZe Rain)

100 Thieves – Value: $190 million

Estimated Revenue: $16 million

Revenue from Esports: 35%

Owners: Matthew Haag, Drake, Scooter Braun, Dan Gilbert

*many of these teams have nearly doubled in value over the last two years, but I couldn’t find accurate data for 2022

How Much Do Esports Gamers Make?

There are 3 main ways to make money in esports: teams, tournaments, and sponsors

Teams

For professional esports players competing in the Overwatch League, players earned an average base salary of $106,000 last year.

But that’s one of the more competitive and well-established leagues in the world.

Team salaries can range anywhere from $40,000 to $300,000 a year.

Tournaments

If a game has a big enough eSports reputation, it will have a massive prize pool.

Take a look at Fortnite:

In the 2019 “Fortnite World Cup”, a total of $30 million was awarded to the winners of its different tournaments.

One of these winners was Kyle Giersdorf, who won $3 million after beating out 99 other competitors.

Is Esports The Future of Sports?

I have gotten in debates with a few people that believe sometime in the next century traditional sports like football and basketball will go extinct.

Why do they think this?

Injuries and long-term effects of playing a sport like football aren’t worth the risk and people will slowly begin to shift in to the digital world (especially as Web 3.0 and the metaverse are actualized).

What do I think?

I do not believe that esports will overtake our love for controlled violence and the actual joy we get from physical sports.

However, I believe that the market for esports will continue to grow and it will be considered as an alternate sport across the world.

Heck, the International Olympic Committee recently hired Vincent Pereira to lead its foray into virtual sports.

Many blue-chip companies have moved in to the space as sponsors:

• Amazon (European Masters)

• NASCAR (Allied Esports)

• Discord (Tribe Gaming)

• Doritos (Bacon Time)

• Mastercard (League of Legends Euro)

And an array of pro athletes/entertainers are invested in the space: