Esports, or electronic sports, is a collective term for competitive video gaming. Competitions can take place in both team and individual formats. The essence of esports lies in adhering to certain conditions. Primarily, this includes the ability to connect a large number of users to the game. Developers must ensure that all gamers participating in a match have roughly equal conditions at the start of the competition.
These conditions enable players to demonstrate their skill and win based on acquired abilities. When balance is properly established, elements of randomness are minimized. Because each player demonstrates an individual approach to the process and develops as they see fit, each tournament is unique. This characteristic attracts the attention of viewers and ignites people's desire to participate in similar matches.
There is also a third condition for organizing esports tournaments: clarity and accessibility of on-screen elements. Adhering to this condition makes the tournament more understandable for players and allows organizers to successfully resolve disputes and conduct broadcasts. Developers must take into account many nuances, including participant selection and network code quality, to classify the competition as esports matches.
The New Era of League of Legends Esports
Riot Games, the developer of League of Legends (LoL), has announced a new esports business model, which involves the creation of a Global Revenue Pool (GRP) to distribute all revenues from digital LoL esports.
This new model will apply to teams in the North American League Championship Series (LCS), League of Legends European Championship (LEC), and League of Legends Champions Korea (LCK).
- Level 1 teams collectively will receive 50% of the GRP.
- 35% of the GRP will be distributed based on competitive results, divided into two parts: one based on regional league results, and the other based on international tournament results.
- The remaining 15% will be distributed among teams that manage to build a strong fan base for their players, leagues, and team brands.
- Riot Games will also provide a fixed stipend to franchise-operated teams and increase the standard share of esports revenue, as well as the amount of digital content released in a given season.
The aim of this change is to reduce teams' reliance on sponsorship in the face of financial difficulties arising from the pandemic: Riot promises a 50% share of revenue after recouping its esports investments. They plan to collaborate with the Chinese LPL to refine this model.
How big is the e-sports market in 2024 ?
The global esports market is estimated to be worth $1.98 billion in 2023. By the end of 2024, its compound annual growth rate (CAGR) is expected to reach 20.9%, totaling $2.39 billion. By 2032, the market value is projected to reach $10.9 billion.
The USA holds a dominant position in esports industry revenues. The esports market in the USA is estimated to be around $871 million in 2023 and is expected to surpass $1.07 billion in 2024. With a forecasted average annual growth rate of 18.7% from 2024 to 2028, the size of the esports market in the USA is expected to reach $1.51 billion by 2028.
Forecast of Esports Market Value in the USA for 2024
The USA holds a dominant position in esports industry revenues. The esports market in the USA is estimated to be around $871 million in 2023 and is expected to surpass $1.07 billion in 2024. With a forecasted average annual growth rate of 18.7% from 2024 to 2028, the size of the esports market in the USA is expected to reach $1.51 billion by 2028.
Esports Audience in 2023
It is forecasted that the global esports audience will increase to 574 million in 2023. Of these, 283 million will be core esports enthusiasts, while the remaining 291 million will be occasional viewers. By 2025, this figure is expected to grow at an average annual growth rate of 8.1% to 641.1 million people.
Expected Global Esports Audience by 2025
Thanks to the globalization of innovations in gaming and broadcasting, more players and viewers will be drawn to the esports scene in 2024. The number of esports viewers has significantly increased from approximately 435 million in 2020 to over 540 million in 2024. The global esports audience is expected to exceed 640 million by 2025 as esports continues to grow and become more widespread.By 2025, the number of esports enthusiasts is projected to exceed 318 million. As more mature gamers enter the esports scene, fan communities are also growing, closely following their favorite influencers and supporting them. By 2024, esports will be fully recognized as a mainstream sport. In 2022, there were approximately 261.2 million esports enthusiasts and 270.9 million casual viewers.
As the number of viewers gradually increases over the years, it is forecasted that by 2025, there will be over 322.5 million casual viewers and 318.1 million esports enthusiasts watching esports.
Share of the Asia-Pacific Region in the Global Esports Audience
Asia, with over 1.5 billion gamers, inevitably constitutes a significant portion of esports fans. This region, including major gaming countries like Indonesia and China, boasts a high level of esports viewership (57%), claiming the largest share of the global esports audience.
As of 2023, the esports audience in the USA is approximately 45 million people. Europe follows closely behind, accounting for about 16% of the global esports audience.
By 2025, the number of esports enthusiasts is projected to exceed 318 million. As more mature gamers enter the esports scene, fan communities are also growing, closely following their favorite influencers and supporting them. By 2024, esports will be fully recognized as a mainstream sport. In 2022, there were approximately 261.2 million esports enthusiasts and 270.9 million casual viewers.
As the number of viewers gradually increases over the years, it is forecasted that by 2025, there will be over 322.5 million casual viewers and 318.1 million esports enthusiasts watching esports.
Share of the Asia-Pacific Region in the Global Esports Audience
Asia, with over 1.5 billion gamers, inevitably constitutes a significant portion of esports fans. This region, including major gaming countries like Indonesia and China, boasts a high level of esports viewership (57%), claiming the largest share of the global esports audience.
As of 2023, the esports audience in the USA is approximately 45 million people. Europe follows closely behind, accounting for about 16% of the global esports audience.
Market Share by Regions
North America
The North American esports market is experiencing significant growth due to high internet penetration in the region. Esports as a form of entertainment is becoming increasingly popular among tech-savvy youth, and various organizations in the region are striving to promote the establishment of esports clubs in educational institutions such as schools, universities, and colleges.
Asia-Pacific Region
Meanwhile, the Asia-Pacific region is expected to become a leading center for esports due to the expansion of the gaming community. In countries such as South Korea, Japan, China, and India, the number of gamers and esports enthusiasts has significantly increased due to the growing popularity of mobile games. Furthermore, the increasingly widespread adoption of 5G networks in countries like Vietnam, Thailand, and the Philippines may contribute to the expansion of the market in the coming years.
Competitive Landscape
Activision Publishing, Inc.
Founded in 1979 and headquartered in California, USA, Activision Publishing, Inc. is a leading video game publisher and a subsidiary of Activision Blizzard. The company holds strong positions in the entertainment industry and has developed innovative games such as Call of Duty, Skylanders, and Crash Bandicoot.
Electronic Arts Inc.
Electronic Arts Inc. is a prominent video game company known for titles such as Dead Space, NFS Unbound, The Sims 4, FIFA 23, and Madden 23. Headquartered in California, USA, and founded in 1982, Electronic Arts provides high-quality games and content for gaming consoles and various networked devices.
Gameloft SE
Gameloft SE is a renowned video game company that has developed award-winning games for PCs and consoles, boasting over 70 million active users per month across all platforms. The company offers games for both business and personal use, aiming to make gaming enjoyable and foster connections. Founded in 1999, Gameloft is currently headquartered in Paris, France.
Other Market Participants
Among other market participants in the esports industry are Tencent Holdings Limited, Skillz Inc., Motorsport Games Inc., Gfinity PLC, HTC Corporation, FACE IT LIMITED, Riot Games, Inc., CAPCOM Co., Ltd., and others.
Key Trends Shaping Esports
Widespread High-Speed Internet Usage Worldwide
The increasing availability of high-speed Internet in both developing and developed countries is a major factor driving the growth of the esports market. Additionally, the rising trend of cloud gaming allows gamers to join from various devices, thereby increasing accessibility and catering to the market demand.
High-speed Internet is crucial for streaming esports content. Faster Internet speeds enable uninterrupted high-resolution live streaming of esports events, providing more enjoyable viewing experiences for fans worldwide. Improved accessibility and quality have contributed to the growing popularity of esports as a spectator sport.
With better internet connectivity, more people can participate in online gaming, which is pivotal for esports. In economies with developing internet infrastructure, improved internet access has opened up opportunities for more individuals to engage in gaming, potentially leading to an increase in esports talent and a broader audience.
Enhanced Compatibility of Esports with Smartphones
Mobile esports is becoming increasingly popular due to its convenience and accessibility. Moreover, the continuous rise in smartphone adoption coupled with the emergence of esports games compatible with smartphones further fuels demand in the esports market.
Mobile esports offers unparalleled convenience and accessibility. Unlike traditional gaming systems for PCs or consoles, mobile games can be played anytime, anywhere, attracting a wider and more diverse audience. Modern smartphones are equipped with increasingly powerful processors, high-quality graphics, and large responsive screens, making them suitable for high-quality gaming.
Game developers are not merely adapting existing PC or console games for mobile devices; they are also creating esports games specifically tailored for mobile platforms. These games are designed with the convenience of mobile users in mind, optimizing gameplay, control elements, and graphics for small screens and touch interfaces.
The Increase in the Number of Professional Sports Clubs in Esports
The entry of more professional sports clubs into the esports arena has intensified competition, increased interest in betting, and raised the market value of esports. Many professional sports clubs from traditional sports such as football, basketball, and racing have begun to create or sponsor their own esports teams or players. Such participation brings a certain level of legitimacy, professionalism, and attractiveness to the market.
The involvement of these clubs intensifies competition in the esports sector as they often bring significant resources, fan bases, and marketing expertise. Heightened competition and increased visibility have sparked interest in esports among a wider audience, including fans of traditional sports.
Government Initiatives Favoring the Legalization of Esports Betting
It is expected that government initiatives aimed at legalizing esports betting will contribute to further market growth in the coming years. Legalization brings esports betting under government regulation, helping to standardize practices and ensure fairness and transparency.
Such regulations can increase consumer trust in betting platforms, thereby attracting more audience participation. Legal recognition of esports betting enhances the legitimacy of the market. This may attract more investors and sponsors as the legal framework provides a more stable and predictable environment for investment.
South Korea has emerged as a key player in the esports market due to its developed gaming infrastructure and high penetration of the Internet and smartphones. Government initiatives supporting the development of specialized esports venues, as well as the increase in the number of esports championships and leagues held in the country, further contribute to the growth of the esports market.
Additionally, the country has a deeply rooted culture of social gaming. PC Bangs (gaming cafes) are widespread and popular, where people can pay hourly fees to play computer games. These spaces have played a crucial role in popularizing gaming and esports, creating a strong gaming community.
Innovative Technologies in the Esports Arena
Technological advancements and innovations are key trends in the esports market that are expected to drive market demand in the coming years. Technologies such as artificial intelligence (AI) and blockchain are expected to analyze gaming data, enhance viewer experiences, improve player behavior, and provide higher-resolution video streams. Artificial intelligence can also enhance viewer experiences by providing real-time statistics, predictive analytics, and personalized content.
AI-based algorithms can enhance live broadcasts by automatically highlighting key moments, player performance indicators, and providing a more engaging interactive viewing experience. Artificial intelligence technology can help track player behavior and ensure fair competition, including detecting cheating or unethical behavior, thereby ensuring the integrity of matches.
Furthermore, blockchain can be used to create unique digital collectibles and fan tokens, increasing fan engagement. These tokens can give fans voting rights on minor team decisions or access to exclusive content, thereby creating a more engaged and loyal fan base.
Conclusion
The esports market is experiencing exponential growth: the audience is increasing, significant revenues are generated from sponsorships and media rights, and there is a strong presence in key regions worldwide. By 2024, the market will become even more mainstream, solidifying its status as a leading sport in the era of digital technologies.