February 26, 2021
The growth in the popularity of eSports – or competitive, organized video gaming – made mainstream headlines back in 2016 when the League of Legends World Championship Semifinals sold out Madison Square Garden on consecutive nights. With roots that can be traced to gaming competitions at universities in the 1970s, eSports isn’t some new phenomenon. However, its popularity has exploded in recent years and is now on track to become the world’s most-watched form of competition.
Whether or not you agree that eSports is an actual sport, there’s no denying it is a legitimate industry. Just like traditional sports, there are many willing to wager on outcomes. In 2020, eSports betting websites were expected to rake in an estimated $1.8 billion. And just like sports, brands line up to land coveted advertising slots in competitions. Marketing intelligence service WARC estimated global advertising spend on esports at $844 million in 2020. Revenue from eSports, which includes game titles, sponsorships and event tickets, is expected to reach $1.6 billion by 2023.
With no end in sight for the eSports revolution, here are just a few of the companies driving this trend:
If anyone still doubts the eSports industry’s growth and impact, just take a look at Tencent Holdings (Tii:TCEHY). While technically a multinational technology conglomerate holding company, Tencent is also China’s largest online games producer with popular titles that include League of Legends, Honor of Kings, PlayerUnknown's Battlegrounds and Fortnite. Not only has the tech giant supplanted Wells Fargo in the ranking of the world’s top 10 most valuable companies, but it also plans to build an entire eSports themed town in Wuhu, east China. Plans for the town include an eSports theme park, eSports university, cultural and creative park, animation industrial park and more.
While not a household name in the U.S., Huya Inc. (Tii:HUYA) is a leading game live streaming platform in China. As eSports continues to grow, so will the number of users (and revenues) for eSports streaming platforms – particularly in China, a hotbed for eSports activity. Case in point: Huya reported that its total number of paying users in the third quarter of 2020 reached 6 million, representing an increase of 13.2% from 5.3 million in the third quarter of 2019. That growth in paid users contributed to a 24.3% increase in net revenues for that same period.
The developer behind FIFA, Madden, Battlefront, Star Wars, Apex Legends, and more, Electronic Arts Inc. (Tii:EA) is a leader in the sports-game genre – a natural fit for the eSports industry. In January, the company hosted an eSports event where celebrities and professional football players competed in Madden NFL 21, one of Electronic Arts’ flagship gaming series. Competitors included Snoop Dogg, Marshawn Lynch, Derrick Henry, Kyler Murray and more. The game was hosted by Emmy winner and Pro Football Hall of Famer Michael Strahan and broadcast on NFL Network while streaming on YouTube, Twitter and Facebook.
Activision Blizzard, Inc. (Tii:ATVI) is another major player in eSports. With a roster of highly popular titles that include Call of Duty and Overwatch – both of which have city-based eSports leagues around the world structured like traditional sports leagues. The move into eSports has served the game developer well. The company reported that fourth quarter net revenues increased nearly 22% year over year. Activision Blizzard’s games consistently rank as some of the most-watched on the Twitch platform. With approximately 9.24 million users, Twitch is the world’s leading live streaming platform for gamers. Amazon.com Inc. (Tii:AMZN) acquired the platform back in 2014 for $970 million in cash.
Another public company benefiting from the growth of eSports that may not be as well-known as some of the others mentioned, but nonetheless enjoys a loyal following in the gaming community, is Turtle Beach Corporation (Tii:HEAR). A leading gaming accessory business with products that include headsets, keyboards, mice and more, Turtle Beach created the first-ever gaming headset for game consoles in 2005. Look for the company to expand its product offerings after its January 2021 acquisition of Neat Microphones, a developer and manufacturer of high-quality digital USB and analog microphones.
While eSports may not have reached the level of mainstream popularity as traditional sports, that could well change in the future – especially once factoring in the traction gained during the pandemic when traditional sports were shut down. Either way, eSports is not just a fad but a movement that appears to be here to stay.
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