Does Esports Make More Money Than Traditional Sports?

A recent report by Goldman Sachs suggests that esports could soon generate more revenues than traditional sports.

The Popularity of Esports

The Growth of Esports

The esports industry has been growing rapidly in recent years, with more people than ever before tuning in to watch professional gamers compete. This surge in popularity has led to increased interest in esports betting, as well as investment in the industry.

According to a report from Newzoo, the global esports economy is expected to grow to $696 million in 2017, up from $465 million in 2016. This growth is being driven by a number of factors, including an increase in the number of people watching esports, the development of new business models such as sponsorship and advertising, and the introduction of new games.

While the size of the esports economy is still small compared to traditional sports, it is clear that it is growing at a rapid pace. This growth is likely to continue in the coming years as more people discover esports and as the industry continues to develop.

The Audience for Esports

The Esports audience is growing astronomically. According to a report by Business Insider, the global Esports audience will reach 443 million this year. That represents a year-over-year growth of 15%. And by 2022, the Esports audience is expected to climb to 646 million.

While the traditional sports industry has been struggling in recent years, Esports has been thriving. In 2018, the global Esports economy was valued at $906 million. And by 2022, it is expected to grow to $1.65 billion.

There are a number of reasons for the popularity of Esports. One is the low barrier to entry. All you need is a computer and an internet connection. You don’t need expensive equipment or a team of other players.

Another reason is that there is a wide range of games to choose from. Whether you like first-person shooters, role-playing games, or real-time strategy games, there’s an Esport for you.

Finally, the rise of live-streaming platforms like Twitch and YouTube Gaming has made it easy for fans to watch their favorite players and teams compete.

The Money in Esports

Prize Money

One way to compare the two industries is to look at prize money. According to Forbes, the top ten highest earning esports athletes took home a combined $29 million in prize money in 2019, with the highest earner making $5.5 million. In contrast, Golf Digest reports that the prize money for golf’s four major tournaments (The Masters, The PGA Championship, The U.S. Open, and The Open Championship) totaled $340 million in 2019, with the winner of each tournament taking home $2 million. So while there is still a big gap between the two industries when it comes to prize money, it’s clear that esports is quickly catching up to traditional sports.

Sponsorships

While game developers make money from the sale of their games, the majority of revenue in esports comes from sponsorships and advertising. Brands are attracted to esports because of the demographic of its viewers. According to Newzoo, the global esports economy will reach $696 million in 2017, with $371 million coming from sponsorships and advertising.

When it comes to sponsorships, there are a few different types. The first is direct sponsorship, where a brand pays to have its name or logo displayed on a team’s jerseys or on their website. The second is indirect sponsorship, where a brand pays to have its name or logo displayed at an event or on broadcast partner’s websites. The last type is endemic sponsorship, which is when a brand that is naturally part of the gaming industry, such as a computer hardware company, pays to have its products used by teams or featured on broadcasts.

Media Rights

Media rights are the most valuable and least understood aspect of the esports economy. In traditional sports, live event broadcasts are the lifeblood of the industry, generating billions of dollars in annual revenue. Esports has followed a different path, with most of the early revenues coming from online advertising and sponsorships. Consequently, media rights have been slow to develop and are only now starting to become a meaningful part of the ecosystem.

The big question is whether esports can generate enough live event viewers to justify the high price tags that traditional sports broadcasters are accustomed to paying. The answer is still very much up in the air, but there are a few key trends that suggest esports could one day rival traditional sports in terms of media rights value.

First, younger generations are increasingly gravitating towards esports over traditional sports. This is especially true in key markets like China and South Korea, where esports has already eclipsed traditional sports in terms of popularity and media rights value.

Second, the total addressable audience for esports is growing at an incredible pace. There are now nearly 500 million people around the world who regularly watch or play esports, and that number is expected to double over the next five years. This rapid growth is attracting major investment from traditional sports broadcasters, who see esports as a way to reach new audiences that are otherwise elusive.

Finally, there is already a robust market for premium digital content around esports. This includes everything from official league broadcasts to amateur tournament coverage to highlight reels and player-produced content. This demonstrates that there is significant demand for live esports content, which bodes well for future monetization efforts.

Comparing Esports and Traditional Sports

The esports industry has been growing rapidly in recent years. Some people even argue that esports could one day surpass traditional sports in terms of popularity and viewership. But does esports make more money than traditional sports? Let’s take a look at the numbers.

The Similarities Between Esports and Traditional Sports

While there are a number of differences between esports and traditional sports, there are also a number of similarities. Perhaps the most obvious similarity is that both involve competitions between individuals or teams. In both cases, participants train for many hours in order to hone their skills and increase their chances of winning.

Another similarity is that both traditional sports and esports fans can be extremely passionate about their favorite teams or players. This passion can lead to intense rivalries, as well as a sense of community and belonging among fans. Finally, both traditional sports and esports events often generate a great deal of excitement and media attention.

The Differences Between Esports and Traditional Sports

While both esports and traditional sports are competitive, there are several key differences between the two. Perhaps the most significant difference is that esports are typically played indoors, while traditional sports are played outdoors. Additionally, traditional sports require the use of physical equipment, such as a ball or bat, while esports only require a computer or gaming console.

Another difference is that traditional sports typically require players to be in good physical shape, while esports players only need to be in good mental shape. Esports also tend to have shorter seasons than traditional sports, and there are usually more teams in an esports league than a traditional sports league.

Finally, the prize pools for esports tournaments are often much larger than the prize pools for traditional sporting events. For example, the winner of The International 2019 – an annual Dota 2 tournament – took home $15 million. Compare that to the $2 million prize pool for the 2019 Masters Tournament – one of golf’s four major championship events.

The Future of Esports

It’s safe to say that esports has taken the world by storm. It seems like everywhere you look, there’s another story about how esports is growing and becoming more popular. But one of the most common questions people have about esports is whether or not it can make more money than traditional sports. Let’s take a look at the numbers.

The Potential for Esports

The potential for esports is off the charts. In terms of engagement, a recent Goldman Sachs report on the future of sports estimated that there are already 2.2 billion active gamers around the world, spending an average of six hours per week playing games. And while that number might seem staggering, it’s actually only a fraction of the global population of 7.6 billion people.

The report goes on to say that the esports audience is growing at an incredibly rapid pace and is expected to reach 3 billion by 2022. To put that into perspective, that’s nearly 40% of the world’s population!

And it’s not just young people who are playing games. The average age of an esports viewer is 34, which is 10 years older than the average traditional sports viewer. What’s more, 38% of esports viewers are female, which is significantly higher than the percentage of women who watch traditional sports.

The reach and engagement of esports are clearly off the charts, but what about its potential as a business? Here too, the numbers are staggering.

According to Newzoo, a leading provider of market intelligence for the global games and esports industry, the global esports economy was valued at $696 million in 2017 and is expected to grow to $1.65 billion by 2021. That represents a compound annual growth rate (CAGR) of 26.7%. To put that into perspective, the CAGR for traditional sports was 3% over the same five-year period.

What’s driving this rapid growth? There are a number of factors, but two stand out: sponsorship and media rights.

The Challenges Facing Esports

The global esports market is growing rapidly, with revenues expected to exceed $1 billion by 2020. But the industry faces a number of challenges that could impede its further growth.

One issue is the lack of a centralized governing body. Traditional sports such as baseball and football have organizations that oversee the rules and regulations of the sport, as well as organize competitions. Esports, on the other hand, is Splintered among numerous different game publishers and tournament organizers, each with their own rules and regulations. This can make it difficult for new players to enter the scene, and for fans to follow along.

Another challenge facing esports is its reliance on online streaming platforms such as Twitch and YouTube Gaming. While these platforms have helped propel esports to new heights, they also present a risk: if a major platform were to shut down or significantly change its policies, it could upend the entire industry.

Finally, esports faces the same issues as traditional sports when it comes to cheating and match-fixing. While there have been steps taken to address these issues, they continue to plague the industry.

Despite these challenges, the future of esports looks bright. With more people than ever tuning in to watch competitions, and new investors pouring money into the scene, esports is poised for continued growth in the years to come.