Esports

A foundational component to the next generation of digital entertainment.

Overview

The term esports, short for “electronic sports,” refers to organized, competitive video gaming played at a professional level. Esports draws in large audiences, and often feature multiplayer human-versus-human competitive games. The esports industry includes a host of game genres out of which Multiplayer Online Battle Arena (MOBA) is the largest genre by viewership and includes popular titles such as League of Legends and Dota 2.

Global esports industry revenue reached USD 951 million in 2019, up from USD 194 million in 2014—a 37.4% CAGR. The esports industry encompasses a complex ecosystem that includes game developers, leagues, third-party league organizers, team organizations, and broadcasting platforms. Among them, team organizations have seen recent high activity in terms of funding and revenue growth while there have been several up-and-coming disruptors in the broadcasting platforms and leagues and tournaments segments.

What's driving this industry?

Industry Updates

Astralis secures NLC spot
Sep 27
Misfits Gaming raises USD 35 million; announces Scripps partnership
Sep 23
StreamElements raises USD 100 million in Series B funding
Sep 22
View all updates
Market Sizing

Esports market in the US could reach USD 560 million-990 million by 2025

Conservative case

USD 560 Mn

Base case

USD 773 Mn

Expansion case

USD 990 Mn

USD million02004006008001,0001,200202020212022202320242025
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COVID-19 IMPACT

  • Hours of live streaming content watched jumped 91.8% YoY in Q3 2020.

  • Financing for esports tournament platforms, game developers, and team organizations increased and several companies held IPO’s in 2020.

  • 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.

  • 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.

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.

Incumbents
Growth
Early
Seed
Pre seed
Developer/publisher
?
Team organizations
?
Broadcasting platforms
?
Tournament platforms
?
Esports Infrastructure
?
Communication platforms
?
Organization.gg
Organization.gg
Organization.gg
Organization.gg
Organization.gg
Organization.gg
Valve Corporation
Epic Games
Riot Games
Activision Blizzard
Microsoft
Motorsport Network
Ubisoft
Krafton
TiMi Studio Group
Theorycraft
1047 Games
Lightforge Games
Lightfox Games
Hidden Leaf Games
Omeda Studios
SunSpear Games
Elodie Games
Mountaintop Studios
Frost Giant Studios
NAG Studios
Cloud9
Team SoloMid FTX
Axiomatic Gaming
Enthusiast Gaming
Astralis
Modern Times Group
SMAAASH Entertainment
YDX Innovation
Shopify
Intema Solutions
GameSquare
Evil Geniuses
100 Thieves
Team Envy
Fnatic
Gen.G Esports
Team Vitality
FaZe Clan
Misfits Gaming
Dignitas
Guild Esports
Immortals gaming club
G2 Esports
OverActive Media Group
Tempo Storm
NRG Esports
OG Esports
Ninjas in Pyjamas
Excel Esports
MCES
ORDER
Tribe Gaming
Team Genji
Andbox
Tiidal Gaming Group
Team Spirit
Good Game Group
GODSENT
Dire Wolves
Team Heretics
Veloce Esports
beastcoast
XSET
Oxygen Esports
Resolve Esports
Ovation eSports
Nocked
AS Monaco Gambit
Team 33
Semper Fortis Esports
OFFSET Esports
ICON Esports
Final Level
DarkZero Esports
Imperial Esports
Amazon
Facebook
Google
Microsoft
Fox Corporation
Engine Media
Sliver.tv
Restream
Mobcrush
Boom.tv
Caffeine
Genvid Holdings
StreamElements
VENN
Maestro
Easylive.io
Juked
Dixper
Final Level
Microsoft
Esports Entertainment Group
Engine Media
Subnation Media
Sony
Project Worldwide
Mobile Premier League
Skillz
G-Loot
AviaGames
Super League Gaming
FaceIT
Challengermode
BLAST
Battlefy
Gfinity
Esportal Group
Matcherino
epic.LAN
Nicecactus
Player1 Esports
WePlay Esports
Game Taco
Game.tv
Freaks 4U Gaming
Epulze
FirstBlood
Play One Up
Stakester
Players' Lounge
eGoGames
Repeat.gg
Shotcall
Gamerpro
Esports Tickets
Gaming Frog
eMasters
ESGPlay
FYX Gaming
Gizer
Tag Esports
Toornament
Pllay
Community Gaming
1v1Me
Azarus
Mission Control
MegaFans
Organization.gg
Ryvals
OkLetsPlay
Game+
1st Eleven Esports Limited
Gamelynx
SMAAASH Entertainment
Esports Entertainment Group
Vindex
ReKTGlobal
Nerd Street Gamers
Allied Esports
Alpha Tech
Veritas Entertainment
Wisdom Gaming Group
ESE Entertainment
TGS Esports
F7WA
Glytch
Discord
Roblox
eFuse
Rune
Partie
Ember

The Disruptors

Team organizations and tournament platforms account for the majority of the players in the space

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.

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.

Developer/publisher

?

Disruptors

?
Funding in USD Millions
Theorycraft
38
Watchlist
?
1047 Games
Elodie Games
Mountaintop Studios
Frost Giant Studios
Lightforge Games
Lightfox Games
Hidden Leaf Games
Omeda Studios
SunSpear Games
NAG Studios

Team organizations

?

Disruptors

?
Funding in USD Millions
OverActive Media Group
Public - Market cap USD 86.8 mn
Guild Esports
Public - Market cap USD 38.1 mn
Semper Fortis Esports
Public - Market cap USD 12.5 mn
100 Thieves
60
Team Envy
60
Fnatic
56
Gen.G Esports
46
Team Vitality
41
FaZe Clan
40
Misfits Gaming
35
Dignitas
34
Immortals gaming club
30
G2 Esports
27
Excel Esports
24
MCES
5
ORDER
4
Tempo Storm
3
NRG Esports
Unknown
Team Spirit
Unknown
Good Game Group
Unknown
OG Esports
Unknown
Dire Wolves
Unknown
Veloce Esports
Unknown
Ninjas in Pyjamas
Unknown
Watchlist
?
Tribe Gaming
Team Genji
beastcoast
XSET
Andbox
Tiidal Gaming Group
Oxygen Esports
Resolve Esports
Ovation eSports
Nocked
AS Monaco Gambit
Team 33
GODSENT
OFFSET Esports
ICON Esports
Final Level
DarkZero Esports
Imperial Esports
Team Heretics

Broadcasting platforms

?

Disruptors

?
Funding in USD Millions
Caffeine
294
Genvid Holdings
166
StreamElements
111
Sliver.tv
56
Restream
53
VENN
43
Mobcrush
36
Boom.tv
25
Easylive.io
4
Watchlist
?
Maestro
Juked
Dixper
Final Level

Tournament platforms

?

Disruptors

?
Funding in USD Millions
Skillz
Public - Market cap USD 4.6 bn
Super League Gaming
Public - Market cap USD 115.9 mn
Gfinity
Public - Market cap USD 60.9 mn
Mobile Premier League
376
G-Loot
99
Game Taco
48
AviaGames
48
FaceIT
29
Game.tv
25
Challengermode
18
Freaks 4U Gaming
18
BLAST
16
Battlefy
13
Epulze
8
Esportal Group
8
epic.LAN
Unknown
Nicecactus
Unknown
Player1 Esports
Unknown
WePlay Esports
Unknown
Watchlist
?
Matcherino
FirstBlood
Play One Up
Pllay
Stakester
Players' Lounge
eGoGames
Repeat.gg
Community Gaming
Shotcall
1v1Me
Azarus
Mission Control
Gamelynx
MegaFans
Organization.gg
Gamerpro
Esports Tickets
Gaming Frog
eMasters
ESGPlay
FYX Gaming
Gizer
Tag Esports
Ryvals
Toornament
OkLetsPlay
Game+
1st Eleven Esports Limited

Esports Infrastructure

?

Disruptors

?
Funding in USD Millions
Allied Esports
Public - Market cap USD 68.1 mn
ESE Entertainment
Public - Market cap USD 62.0 mn
Alpha Tech
Public - Market cap USD 16.1 mn
TGS Esports
Public - Market cap USD 10.0 mn
Vindex
80
ReKTGlobal
55
Nerd Street Gamers
25
Veritas Entertainment
10
Watchlist
?
F7WA
Wisdom Gaming Group
Glytch

Communication platforms

?
Watchlist
?
eFuse
Rune
Ember
Partie

Theorycraft

Theorycraft is a startup game development company led by veterans in the industry who have worked on some of the most popular gaming and esports titles, such as League of Legends, Halo, Destiny, Overwatch, Valorant, and Team Fortress 2. 

The company was co-founded by Joe Tung, the former executive vice president of the League of Legends franchise at Riot Games and executive producer of Destiny and Halo at Bungie. The star-studded management team also includes Michael Evans (former tech lead for Valorant, Overwatch, and Halo), Mike Tipul (former creative director at Bungie), Moby Francke (former art director on Valorant, League of Legends, Dota 2, and Team Fortress 2), and Areeb Pirani (former global revenue and finance lead for League of Legends).

In March 2021, the company announced its USD 37.5 million Series A round led by NetEase, Inc. In addition, the round included participation from NEA, BITKRAFT Ventures, Griffin Gaming Partners, Sisu Game Ventures, and angel investors. The fresh capital will be funneled into building its team to work on a community-driven, competitive, player-vs-player game compatible with multiple platforms.

Segment:
Developer/publisher
Total funding:
USD 37.5 million
Competitors:
NAG Studios, Lightforge Games
Disruptor Funding History

Developer/publisher:

Theorycraft
1047 Games
Elodie Games
Mountaintop Studios
Frost Giant Studios
Lightforge Games
Lightfox Games
Hidden Leaf Games
Omeda Studios
SunSpear Games
NAG Studios

Team organizations:

OverActive Media Group
Guild Esports
100 Thieves
Team Envy
Fnatic
Gen.G Esports
Team Vitality
FaZe Clan
Misfits Gaming
Dignitas
Immortals gaming club
G2 Esports
Excel Esports
MCES
ORDER
Tempo Storm
Tribe Gaming
Team Genji
beastcoast

Broadcasting platforms:

The 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 Modern Times Group and 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) and the launch of YouTube Gaming by Google in 2015. 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.

In-house development

Acquisition

Partnership

Investment

Valve Corporation
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Epic Games
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Riot Games
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Activision Blizzard
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Amazon
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Facebook
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Google
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Microsoft
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Fox Corporation
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Cloud9
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Team SoloMid FTX
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Axiomatic Gaming
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Enthusiast Gaming
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Astralis
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Modern Times Group
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Discord
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SMAAASH Entertainment
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YDX Innovation
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Esports Entertainment Group
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Engine Media
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Motorsport Network
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Ubisoft
check
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Shopify
check
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Subnation Media
check
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Sony
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Project Worldwide
check
Krafton
check
Intema Solutions
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TiMi Studio Group
GameSquare
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Evil Geniuses
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Roblox
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Valve Corporation

Valve Corporation is a US game developer and digital games distribution platform founded in 1996 by former Microsoft employees Gabe Newell and Mike Harrington.

Valve revolutionized the first person shooter (FPS) genre of video games with the release of popular PC titles such as Half-Life (1998), Counter-Strike (2000) and Left 4 Dead (2008). Today, Valve’s Dota 2 (2013) and Counter-Strike: Global Offensive (2012) are two of the most popular esports titles. They rank high among peak viewership on Twitch, with 1 million and 0.8 million viewers, respectively, in 2019.

In 2011, Valve launched its first esports competition for Dota, The International (TI), with a prize pool of USD 1 million. The competition held in 2019, TI 19, boasted a prize pool of USD 34 million—the single highest for an esports event ever. In addition, Valve is pursuing a regional league structure covering six regions (the Americas, Europe, Southeast Asia, China and the Commonwealth of Independent States) for its Dota 2 Pro Circuit. This differs considerably from the new franchising structure Riot Games and Activision Blizzard has introduced.

In May 2021, Valve announced that its flagship Dota 2 tournament, The International, was set to resume in August 2021, after a year of hiatus for the tournament as a result of the Covid-19 pandemic. However, The Swedish Sports Federation voted against the acceptance of esports into the sports federation in early June 2021. Subsequently, Valve had made requests to classify the tournament as an elite sporting event as a workaround, which were also denied. Furthermore, no other resolution had been provided by the Swedish government. As a result, due to the complexities created for players and staff to procure travel visas to participate in the competition, Valve decided to relocate the competition to Bucharest, Romania in July 2021.

Notable Investors

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