Newzoo, the global leader in esports, games, and mobile intelligence, is today announcing the release of its 2018 Global Esports Market Report. This is the fourth edition of Newzoo’s annual report, which provides an in-depth look at the esports economy, globally and per region, and a realistic estimate of its future potential in terms of trends, viewers, franchises, and revenue streams. The high-level takeaways from the report have been made available in a complimentary version that you can download here.
In the coming year, the global Esports Economy will grow to $905.6 million, a year-on-year growth of 38%. The majority of this, 77%, will be generated directly (sponsorships and advertising) and indirectly (media rights and content licenses) through investments made by endemic and non-endemic brands that will spend $694 million, an impressive 48% increase since last year. This can be broken down into $174 million on advertising, $359 million on sponsorship, and a further $161 million on media rights and content licenses. Media rights will see the biggest jump year on year, up 72% since 2017. Consumer spending on tickets and merchandise will total $96 million, while another $116 million will be invested by game publishers into the esports industry through partnership deals with white-label organizers. You can learn more about the scope of our Esports Economy estimates at the end of this article.
The 114-page annual report announced today is part of our Global Esports Market Report service that includes quarterly trend and forecast updates and a granular audience and revenue forecast dashboard. The service is subscribed to by the majority of global games, media, and hardware companies, as well as esports teams, organizers, and sponsors.
Newzoo CEO Peter Warman: “As a consumer phenomenon, esports continues to grow its huge base of passionate fans across the globe. As a business, esports is now entering a new and critical phase toward maturity. Big investments have been made, new league structures have been launched, sponsorship budgets have moved from experimental to continuous, and international media rights trade is starting to heat up. At the same time, player salaries have soared and the esports ecosystem and viewership hours still very much rely on a select number of globally operating teams and game franchises. Profitability and return on investment is, for many organizations at the heart of the Esports Economy, a challenge.”
Global esports viewers will total 380 million this year
The global esports audience will reach 380 million this year, made up of 165 million Esports Enthusiasts and 215 million Occasional Viewers. Based on our audience and revenue expectations for 2018, the average revenue per Esports Enthusiast in 2018 will be $5.5, up 20% since 2017. As the esports industry matures and the number of local events, leagues, and media rights deals increases, we anticipate the average revenue per fan to grow to $6.6 by 2021. Our audience numbers are slightly lower than previously reported for two reasons. Firstly, an in-depth analysis of esports viewership among rural and urban populations in growth regions such as India, Southeast Asia, and the Middle East and Africa led to a minor downward correction. Secondly, the numbers now reflect only the viewers of professional esports content, leagues, and events. Previously, participants in amateur (online) competitions, such as ESL Play, Toornament, and FACEIT, were also part of the Esports Enthusiast group. However, a notable share of these active competitive gamers does not watch professional esports content. Due to the increasing importance of media and viewership in the esports industry, and hence a sharper focus on pure viewership numbers, this group is no longer included in our audience estimates.
The Future of Esports
An industry survey that we performed late last year found that the majority of respondents from teams expect esports to take another five to 10 years to mature fully as a business. The same research showed that brands and agencies expect the ecosystem to be fully professionalized in three to five years. This illustrates the current status of the market: great expectations from outside and more conservative views from people within. This year will be pivotal in determining the pace at which esports becomes the global multi-billion-dollar business we all envisage. Several key factors will influence the speed of its growth, including whether esports can engage new fans through new formats and franchises, the growth of mobile esports, the success of the franchising structure, and team profitability.
On its current trajectory, we estimate the esports industry will reach $1.4 billion by 2020. If any of these factors accelerate, a more optimistic scenario places revenues at $2.4 billion.
North america leads revenues; local initiatives thrive in western europe
North America will remain the largest esports market in 2018 with revenues of $345 million. This will show impressive growth to reach $656 million by 2021. Most of these revenues will come from sponsorships, which will grow from $100 million in 2017 to $162 million in 2018. This is boosted by the number of North American teams that have welcomed new non-endemic sponsorships and the region hosting several of the world’s largest leagues and tournaments. The 23 million Enthusiasts in North America will generate $14.80 per fan this year, higher than in any other region.
Western Europe is the second-largest region in terms of revenues with $169 million in 2018. Western Europe, more than any other region, is characterized by localized esports ecosystems that operate next to regional tournaments and leagues. While international leagues are very popular, local esports organizers have done extremely well over the past few years. Some notable examples are ESWC (France), Gfinity (UK), and LVP (Spain). As audiences across countries are culturally diverse, many sponsors, media companies, and investors that operate on a local level are looking for esports initiatives that match their strategy. Sponsorship will remain the biggest revenue stream with $62.9 million, while media rights will total $26.6 million this year, a year-on-year growth of 49%.
China is also a booming esports economy with estimated revenues of $164 million in 2018 and a total esports audience of 125 million. China is notable for the growing popularity of mobile esports, including casual titles. For example, the Global Final of The Battle of Balls Professional League attracted an audience of 13,000 in Shanghai and 5 million viewers on various Chinese live streaming platforms. You can learn more about mobile esports in this free report.
All graphs in this post and more can be found on our resources page, which is continually updated to reflect any changes in our estimates.
THE GLOBAL ESPORTS MARKET REPORT
Our annual Global Esports Market Report fills the demand for an accurate and realistic overview of the esports economy and its future potential, on a global and regional level. It provides an insightful analysis of the esports market, including revenue and audience estimates (2016-2021), industry developments per region, top events and franchises, and the key trends shaping and disrupting the industry. This report is aimed at those looking to create and optimize their esports strategy and positioning. Along with the report, subscribers receive a quarterly update, access to the Global Esports Market Dashboard, and tailored support from our expert analysts. Newzoo also provides its esports clients with a variety of other esports intelligence services, including Consumer Insights on 28 countries.
Learn more about the scope of the report, including the methodology in this factsheet.
Scope of our revenue estimates
We define industry revenues as the amount the industry generates through the sale of sponsorship, media rights, advertising, publisher fees, and tickets and merchandising. Our revenue numbers exclude prize pools and player salaries, which we consider to be cost items at an industry level, and fan contributions to prize pools, which we consider game-related revenues. We also exclude revenues from online gambling and betting related to esports (e.g., via BWIN, Unikrn), an economy that exists in parallel to esports and, similar to sports, generates more revenues than esports itself. Finally, we do not include capital investments in esports organizations, as we think it is important to distinguish between revenues and investments. In terms of countries and regions, we define the market size as the amount generated by consumers in that specific territory, as opposed to the amount that companies based in a particular territory generate worldwide. Learn more about our scope and methodology in this factsheet.