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Esports
Overview
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.
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).
Industry Updates
Market Sizing
Esports market in the US could reach USD 420–760 million by 2026
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COVID-19 IMPACT
Market Mapping
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.
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.
The Disruptors
Funding History
Incumbents
Developers use in-house solutions to create popular esports titles, while tech giants adopt an acquisition strategy to enter the space
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.
Large tech players such as Amazon, Microsoft, and Google have also entered the esports streaming space, with Amazon’s acquisition of Twitch (USD 970 million in 2014), Microsoft’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.
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.
Notable Investors
