You may have only become aware of Esports in the last couple of years, but the truth is, they’ve been developing and growing quietly in relative obscurity for several decades.
They’ve gone from a hobby enjoyed by a small sub-section of the gaming community to an international sport enjoyed by hundreds of millions of people each year.
Can this continued growth and development continue for esports, or will our interest in them fade away into obscurity again?
Early attempts to host what we would today call esports took place back in the 1970s and 1980s. The first-ever recorded competitive video game tournament took place in October of 1972 at Stanford University, using the game Spacewar.
Without the internet to help, early competitions were witnessed by just a few dozen spectators, often friends of competitors or die-hard fans of the format. However, it wouldn’t be until the 1990s that large tournaments in stadiums could become a reality. Even then, video encoding technologies didn’t allow for good quality online streams, so this didn’t really take off until the late 2000s.
Today, streaming is something almost all of us enjoy in one form or another, with services like Netflix and YouTube normalizing the medium.
Streaming has helped esports reach half a million people in the last few years, with services like Twitch focusing on it specifically. The number of people watching is likely to increase further, though it won’t be what gives esports its “big break”.
In the last couple of years, some traditional television companies have begun experimenting with esports programming, including the BBC and the sports network ESPN.
Coverage on television will give esports its best chance of success, though broadcasters will still have a challenge to convince older audiences to take an interest.
Prizes are a big part of esports and are often discussed in marketing and news coverage about competitions. This contrasts a little to some sports, where prize money is often a topic that is not discussed in public. However, it is perhaps necessary as a way to capture the attention of a new audience.
One of the earliest esports competitions was the Nintendo World Championships that took place in 1990. Winners in each of the tournament’s categories received a $10,000 savings bond, a car, a 40″ TV, and a Mario trophy. Before that, the Spacewar competition in 1972 had awarded the winner a 12-month subscription to Rolling Stone magazine.
Things have come a long way since then. In recent years, esports organizers have competed with each other to offer bigger and bigger prizes, with new historical records being set every few months as each major championship pushes the boundary just a little further.
While this may fluctuate a little in the short term, prizes are likely to keep growing as the balance of supply and demand does. As more large tournaments are founded, they’ll be forced to compete to encourage the most famous and most talented players and teams to take part. While appearance and signing bonuses might be part of this, large prize purses are likely to be a dominant factor.
More Sponsors and Revenue
In the past, sponsorship of esports events was the exclusive domain of game developers and hardware manufacturers. However, as more fans have begun to follow the sport, a growing number of sponsors and advertisers are showing an interest in being associated with it.
Energy drink companies like Red Bull and Mountain Dew, fashion brands like Levi’s, and even the car manufacturer Renault have signed sponsorship agreements with leagues and/or teams in recent years.
In 2017, sponsorship made up 57.7% of global esports revenue. As of 2021, this has more than doubled and grown to account for 59% of the industry’s revenue.
Around 14% of revenue is made up of “publisher fees”, which are paid by video game publishers to third parties in exchange for hosting competitions. These are expected to decline in relative terms in the future. However, this will be more than offset by increases in broadcast deals and sponsorship.
According to Newzoo’s Global 2021 edition of its Esports & Live Streaming Market Report, revenue is expected to reach $1.1 billion in 2021, 14.5% higher than in 2020. There is little to suggest that we’ll see this trend reversing in the coming years either.