Game Changer
Gaming has grown into a huge category of the entertainment industry. So it’s no surprise that the popularity of esports is challenging traditional sports.
As soon as computing technology brought us video games, the idea of competitive gaming quickly followed. In 1972, Stanford University hosted the ‘Intergalactic Spacewar Olympics’, and by 1983 the U.S. already had a professional team.
In the 90s, home consoles proliferated and spurred the movement, but it was the leaps in the processing power and affordability of PCs that really boosted gaming tournaments. Internet connectivity and Local Area Networks cemented the focus on player-versus-player dynamics (as opposed to high score comparisons), fuelling the competitive nature of the events.
The term ‘esports’ goes back to the founding ceremony of the Korean e-Sports Association in 2000. South Korea built many internet cafes as part of a drive to establish IT infrastructure, and the nation’s enthusiasm for StarCraft by Blizzard was key in solidifying the trend.
Cut to 2022 and the global esports market was valued at around US$1.38b, with sponsorship and advertising estimated to account for US$837.3m of that total. At the latest Asian Games, the honours for esports medallists were the same as for other athletes – and demand was so high that a lottery was set up to sell tickets. In 2020-2021, American colleges awarded over US$16m to students for esports scholarships.
Esports fans can generally view events through YouTube ($GOOG) and Twitch ($AMZN). This emphasis on online streaming rather than traditional TV broadcasting is positive for the global reach of esports, but it also means they don’t benefit from the same earnings from media rights as traditional sports – which amassed a global total of US$55.1b in 2022.
There are also signs that, despite that ease of access, viewership is now stagnating. Some are concerned that these growing pains will alter the shape of the industry. Esport teams haven’t attracted the same attention from billionaires either, with the value of other sport franchises being inflated as trophy assets.
However, there’s still significant capital behind gaming. Riot Act’s League of Legends and Epic Games’ Fortnite – subsidiaries of Tencent ($TCEHY) – remain wildly popular. The takeover of Activision Blizzard by Microsoft ($MSFT) has been the biggest deal to date in the sector. Meanwhile Saudi Arabia has announced an Esports World Cup with the largest prize pool so far for 2024. The next stages might get tougher, but it’s definitely not game over for this industry yet.
