Companies developing esports related titles.

Companies recruiting players to form professional teams and rosters for esports tournaments and leagues.

Companies producing and broadcasting esports related content.

Companies facilitating competitive online and in-person esports tournaments.

Companies operating esports arenas and providing technical expertise for hosting and broadcasting competitive leagues and tournaments. 

Companies facilitating communication among esports players or between players and esports communities during gameplay.

A foundational component to the next generation of digital entertainment.

E-Sports

Overview

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    The term esports, short for “electronic sports,” refers to organized competitive video gaming played professionally. Esports draw in large audiences and often feature multiplayer human vs. human competitive games. The esports industry encompasses a complex ecosystem that includes game developers, leagues, third-party league organizers, team organizations, and broadcasting platforms, covering a host of gaming genres including multiplayer online battle arena (MOBA), first-person shooter (FPS), battle royale (BR), and real-time strategy (RTS). MOBA games make up the largest genre by viewership and include popular titles such as League of Legends, Mobile Legends: Bang Bang, and Dota 2.
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    Growth in social media and advancements in gaming infrastructure act as foundational elements in the industry, while a growing core audience of Gen Z and Millennials offer brands an attractive avenue to promote their products through sponsorship deals with esports teams. Moreover, the industry’s growing prize pools provide lucrative opportunities, enticing amateur gamers to turn pro. Global esports industry revenue was expected to reach USD 1.4 billion in 2021, up from USD 493 million in 2016 (a 23.2% CAGR). 
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Esports market in the US could reach USD 420–760 million by 2026

Market Sizing

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        Hours of live streaming content watched jumped 91.8% YoY in Q3 2020.
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        Financing for esports tournament platforms, game developers, and team organizations increased and several companies held IPO’s in 2020.
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        In October 2020, the esports market researcher Newzoo downgraded its global esports industry market size forecast by 14% from pre pandemic levels due to short-term impacts of cancellation and postponements of esports events.
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        Due to the reduction in live events, Modern Times Group merged ESL (Electronic Sports League) and Dreamhack and subsequently cut operational costs by laying off several employees. Further, Activision Blizzard reported that it is laying off 50 employees in its esports division for similar reasons.
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COVID19-IMPACT

Market Mapping

<p>The developer segment in the esports industry is dominated by large incumbents, such as Activision Blizzard and Riot Games, both of which have enjoyed longstanding success with popular esports titles such as Call of Duty and Overwatch for the former, and League of Legends for the latter. SunSpear Games, Theorycraft, and Frost Giant Studios are notable startups in this segment founded by former Riot Games and Blizzard Entertainment employees.</p><p>The number of team organizations is growing quickly as esports becomes more popular, and the segment is dominated by growth-stage organizations such as FaZe Clan and 100 Thieves. The broadcasting platforms segment is occupied by a sizeable number of incumbents, while disruptors are entering the fray as online viewership is growing to become the most preferred form of esports consumption. Tournament platforms account for a large share of the disruptors in the space, as this is considered the entry-level to professional competitive gaming. The esports infrastructure segment is also populated with a handful of growth-stage companies deemed essential to the industry’s growth and accessibility. Guilded is a company to note in the communication platform segment, up against a longstanding incumbent, Discord.</p>

The Disruptors

<h3>Team organizations and tournament platforms account for the majority of the players in the space</h3><p>Team organizations and tournament platforms make up the bulk of players in the space and also account for the majority of the total funding (USD 1.5 billion) as of August 2021. Team organizations are led by FaZe Clan and 100 Thieves, both of which have developed strong premium lifestyle brands in addition to their esports operations. In the tournament platforms segment, Mobile Premier League has emerged as the leading private company with USD 226 million in funding as of August 2021.</p><p>Within infrastructure and broadcasting platforms, Vindex (backed by esports industry veterans Mike Sepso and Sundance DiGiovanni) and Caffeine (backed by Fox Corporation) respectively are notable disruptors. Among private companies, Caffeine is leading in terms of funding with USD 294 million and players have raised a total of USD 2.3 billion in funding as of August 2021.</p>

Disruptor Funding History

The Incumbents

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    Developers use in-house solutions to create popular esports titles, while tech giants adopt an acquisition strategy to enter the space
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    Incumbents are represented by established developers, streaming platforms, older esports teams, and a popular communication app for gamers. In addition to developing games, developers influence the industry by creating franchise models for esports leagues (e.g. Riot uses a franchise structure for League of Legends, and Activision Blizzard does the same for Call of Duty and Overwatch). Gaming company Axiomatic has entered the space via strategic investments and acquisitions across all segments. Media and entertainment companies such as Enthusiast Gaming have also made key acquisitions in the tournament platform and team organization segments.
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    Large tech players such as Amazon, Microsoft, and Google have also entered the esports streaming space, with Amazon&rsquo;s acquisition of Twitch (USD 970 million in 2014), Microsoft&rsquo;s acquisition of Beam (2016, later rebranded to Mixer and discontinued in 2020) and the launch of YouTube Gaming by Google in 2015 (later combined with the main YouTube platform in 2019). These three tech giants have also shifted their focus to offer cloud gaming services using existing resources from their cloud businesses.
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    Furthermore, in a recent announcement Canadian e-commerce company Shopify announced its entry into the esports arena with the launch of its esports team, Shopify Rebellion.
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