Game On: Why we’re bullish on Esports
Updated: Aug 25, 2021
The global Esports market size was valued at $1.1B in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 24.4% from 2020 to 2027.
With massive viewership, promising technologies, dedicated professional teams, and consistent growth, Esports is on the rise. We’ve always had our heroes, those whose deeds and accomplishments acted as the torchlight into the halls of our own dreams and aspirations. Where traditional play was limited by the imagination of those involved, the digital play has evolved.
Dr. Philip Zimbardo, An American Psychologist, and Professor Emeritus at Stanford believe that heroism is a “universal attribute of human nature,” not something reserved for a special few. Ultimately, he argues, “All of us can be heroes, we just need to be inspired to answer the call.”
It used to be a strange picture for a parent, kids coming together to huddle into their computer screens and stay there for hours on end. Parents would often wonder, “Why aren’t you outside playing with your friends?” But the tides have shifted, and gaming’s consistent place in the lives of many young people today is no longer such an odd concept.
Online play has become the new social landscape. The 2019 Evolution of Entertainment Study published by NPD Group found that 73% of Americans ages 2 and older play video games, and the average gamer spends 8.5 hours gaming per week, that’s 34 hours a month, and 442 hours per year. Keep in mind that these metrics represent the average gamer, not the avid one.
The importance of socializing within video games cannot be understated, the State of Online Gaming 2021 report by Limelights showed that 53% of gamers said they made new friends while gaming online, and 36% responded that interactivity with other players is a crucial part of their experience.
The first event for what could be considered close to Esports happened in 1972. In a competition hosted at Stanford University, students from multiple disciplines faced off in a battle of the vintage Spacewar game. The event referenced was the Space Invaders Championship, and over 10K gamers participated. The massive amount of interest generated by this event suddenly and definitively put the world of competitive gaming onto the map. Media, game developers, and numerous other organizations started to realize the massive potential within competitive gaming, and promptly acted on it. Nintendo was one of the first companies to act on the potential of Esports, launching its world championship in the 1990s.
Where we stand today:
The League of Legends World Final in 2018 had 100M+ viewers, beating out the Super Bowl’s viewership for that same year. In 2019 the International Finals for Dota 2 had a prize pool of over $34M, and the event live stream reached a peak concurrent viewership of over 1.1M. Esports is still pushing forward, with gaming competitions set to be a part of the Olympics in 2024. The global gaming market was valued at $162.3B in 2020 and is expected to reach a value of $295.6B by 2026. Twitch (A video game streaming platform) has seen viewership hours increase to 18.4B in 2020, a 67% percent jump from the 11B hours of viewership in 2019.
The average Esports pro player on a team has a baseline annual salary of $48K, and when prize money and additional revenue streams are taken into consideration, the average pro player takes in around $74K annually. This has caught the attention not only of the gamers who want to make gaming a career but also of US universities who recognize the value of such a career. In 2016 only 7 colleges and universities had varsity Esports programs in the US. Today there are over 130.
There has been no shortage of capital flowing into Esports related companies, In October 2020 Gaming and Esports live-streaming network VENN announced the closing of a $26M Series A financing round led by Bitkraft and Nextstar Media Group, In that same month Guild Esports, which is based in London and co-owned by soccer star David Beckham, completed its IPO on the London Stock Exchange with a market cap of €41M, an impressive achievement since Guild Esports only launched in June of 2020.
The global Esports market size was valued at $1.1B in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 24.4% from 2020 to 2027. Increasing audience reach and engagement activities, formidable investments, rising live streaming of games, and increasing infrastructure for the league tournaments are some of the key factors driving the market growth.
The young will always look to the heroes of their generation as inspiration, where in the past they might have seen their heroes through stories, today they see those heroes on big screens sprawled across stadiums for millions to see.
While the Esports ecosystem is still young, many talented entrepreneurs are already taking the steps necessary to grow it rapidly. With a massive abundance of viewership, coupled with a passionate fan base of players who want to expand their level of involvement, Esports has a bright future.
This is why AnD Ventures was so excited to share earlier last week, our lead investment in Edge Gaming - a cognitive-gaming training platform revolutionizing the way gamers engage with games, improve their skills and interact with Esports teams.
With Edge Gaming's creation of the "gamers' universe", gamers will interact with games, their friends, and Esports teams in a whole new way.
Edge Gaming’s platform is powered by innovative “cognitive-gaming training technology” that’s embedded in the most popular Esports games today. It creates a whole new user experience for gamers as well as empowering game publisher’s “path-to-pro” frameworks and competitive communities towards growth generation as well as player & fan engagement, which overall increases the lifetime value of the game community