Market research firm Newzoo has revised its eSports revenues forecast for 2016, bumping its projection from $463 million to $493 million (a $30 million difference). Taking into account this adjustment, Newzoo’s latest market report pegs the rate of eSports revenue growth at a remarkable 51.7 percent year-on-year.
The revision has been made in response to a wave of publisher investment in the burgeoning eSports arena, as well as the accelerating uptake of the media rights business model that Newzoo anticipates as a key driver of future growth. It’s this shift from direct advertising income to media partnerships that the company believes will propel eSports to $1.1 billion of revenue in 2019.
Publisher Investment
All of which is to say that eSports revenues are growing even faster than expected, and that’s largely been driven by an increase in publisher investment, as an increasing number of companies look to eSports as a means to expand their audiences and boost engagement among existing players. Tournaments and competitions have emerged as a key site of publisher interest, with prize pools often standing at millions of dollars.
It’s not just competitors that benefit from these big money events though – it’s created an opportunity for third-party event organisers, too. Newzoo estimates that publishers will have spent somewhere in the region of $100 million on these service providers by the year’s end.
The firm’s report notes that publisher investment is unlikely to continue growing at this rapid rate over the coming years as the number of companies entering the arena shrinks. Instead, Newzoo expects eSports growth to be driven by a significant increase in revenues from brands.
Media Rights
ESports revenues from advertising, sponsorships and media rights are already considerable, and Newzoo believes that they’ll reach $350 million for 2016. But there’s still plenty of room for growth in this arena—even if the rate of publisher investment begins to plateau—and the firm notes that the investment by brands expressed on a per fan basis is still several times lower than you see in traditional sports.
Even at present levels, investment by brands still represents 71 percent of the “eSports economy,” with the still sizable remainder generated by consumer purchases of event tickets and merchandise or publisher spending on service providers.
The report anticipates that the percentage of eSports revenue represented by brand investment is only set to grow as publishers double down on sponsorship and advertising opportunities. And, as the popularity of eSports teams continues to grow, Newzoo expects savvy publishers to begin sharing revenues with these gaming athletes. After all, the fanbases for celebrity gamers may very soon outstrip that of the games they’re competing in.