Esports: The Virtual Gaming Phenomenon That Makes Very Real Money

What is esports?

Esports has grown from a fringe passtime to a multi-billion dollar industry seemingly overnight. Taking the fun of video gaming, the connectivity of the internet, and the competitiveness of professional sports, esports has found a winning combination that has truly exploded in popularity. 

Lockdowns, of course, helped to fuel the rise of this industry, as people stuck at home sought outlets for their boredom and need for human connection. But even prior to 2020 the evidence of its mass appeal could be seen. 

Watching esports

The video streaming platform, Twitch, is the home of gaming and esports content and was launched specifically for this purpose. By 2015 it had already clocked up 100 million monthly users tuning in to see others play games competitively. The number of users in 2021 hit 140 million per month. 

More than just gaming

Underpinning the success of esports is the social and communal element, which allows audiences to chat with, follow and buy merchandise from their favorite gamers, turning some into global stars for their prowess and online personalities. 

There are various genres of esports games, some mirroring traditional competitive sport, but also one-on-one fighting, first-person shooters, and multiplayer battle or strategy games. Whether playing or watching, esports fans can explore to find a genre they like, and follow or compete with the best in that field. 

Real-world crosser

Another way in which the sector is generating new financial opportunities is by blurring the edge between the virtual and physical worlds through brand partnerships. 

For example, players of Rocket League can drive the Lamborghini Huracán as part of the game, in a brand partnership which also sees the car manufacturer sponsoring multiple esports events with prizes of up to $5k. 

Meanwhile, fashion giant Gucci has collaborated with esports organization Fnatic to create a real-world limited edition watch inspired by one of Fnatic’s teams – League of Legends. The 100 watches will be sold by Gucci for $1620 apiece and will feature crossover elements including the Fnatic logo and colorway. In addition, Gucci has developed a mobile game for Fnatic’s gaming app.

Esports growth 

As for esports, the US alone will see an estimated 30 million users per month this year, a rise of 11.5% since 2021. Although partly fueled by the pandemic, it’s not all online-only. Live events featuring individuals and teams competing against each other in front of in-person audiences. The APAC region is the largest esports market, accounting for 57% of the global industry, and this is closely followed by North America and Europe.

Esports infiltration into popular culture has been helped by the success of games like Fortnite, a seemingly inescapable title that permeated the consciousness of people who don’t play games at all. 

Professional esports teams have come into existence to compete against each other, recruiting new gamers and selling themselves collectively as their own brands with their own identities. Sponsorships, tournaments and franchising – just as in the real sporting world – exists in the world of esports, and there is massive money to be made. 

For example, esports team TSM was valued at $410 million in 2020, with an estimated revenue of $45 million. Esports in general is expected to turn over $1.8 billion in revenue in 2022 through a combination of ticket sales, advertising, sponsorships, merchandise and in-game purchases.

Seeing this potential for growth early on, investment from private equity and venture capital grew from $490 million in 2017 to $4.5 billion in 2018, showing massive growth even pre-pandemic.