esports

Esports is a booming global industry where skilled video gamers play competitively. In the same way that traditional sports have competitions in baseball, basketball, and football, esports encompasses competitions across a variety of video games. Contrary to common perception, esports is not simply a phenomenon occurring in the basements of unemployed twentysomethings; the industry is real, growing globally, and investable. In fact, over 380 million people watch esports worldwide both online and in person. More people watched the 2016 world finals of popular esports game League of Legends (43 million viewers) than the NBA Finals Game 7 that year (31 million viewers). With its fragmented landscape and digital platform, the esports sector holds promise for a multitude of monetization opportunities.

The following article will include an introduction to the industry as well as insights for those interested in investing in it. It will cover the parties involved in esports, the size and demographics of the audience, the industry dynamics, and how to approach investing in the space. I will provide not only third-party data and analysis, but also my personal experience and insight after listening to people, learning about the industry, and launching an esports company myself.

Esports, short for “electronic sports,” transforms online gaming into a spectator sport. The experience is similar to watching a professional sporting event, except that instead of watching a physical event, spectators watch video gamers compete against each other in a virtual environment. If it’s hard to imagine why anyone would watch somebody else playing a video game, just think about how enjoyable it is to watch Lebron James or Steph Curry play basketball. Just as traditional sports fans enjoy watching top athletes perform at the top of their craft, the same is true of those who watch top video gamers compete.

This industry includes not only traditional sports-related games like NBA2K and FIFA, but also—and more notably—games such as League of Legends, Counter-Strike, and Dota. As we’ll discuss later, individual players can either stream themselves playing to earn money or join larger organizations to compete for large cash prizes. The players can engage with their fans in a variety of ways including social media, live-streaming platforms, and in-person at tournaments. On the other side, fans can watch and follow their favorite teams compete in regional and global tournaments. Many technology platforms, services, events, analytics platforms, and substantial investor capital surrounds this ecosystem as it continues to grow.

Esports is also unique in that a player’s success is independent of how tall, strong, thin, or fast they are. Though there is certainly valuable insight linking good physical health to enhanced gamer performance, it is ultimately inconsequential whether the gamer stands at 5’2 or 6’8 tall. They can both excel at the highest levels of League of Legends, CS:GO, Dota 2, or any other game. Esports can further level the playing field for factors such as gender, culture, and location. This democratization of participation contributes to esports’ allure and its generation of a globally engaged fan base.

Additionally, whereas traditional sports have physical/spacial limitations, esports is more fast-paced and scalable because of its reliance on digital platforms. For example, it’d be impossible to make basketball a 100 versus 100 sport, as a court could not feasibly fit 200 players. In esports, however, new games with infinitely scalable dynamics, variances, and players can be created. In fact, a new installment of, or update to, an established game franchise can hold massive implications. For example, when 2013’s Call of Duty: Ghosts was released, players and viewers had to transition from the 2012 version by learning twelve new multiplayer maps. When updates are released to established games, it causes a massive learning curve as game dynamics and strategies can dramatically evolve.

Which Esports Games Are Most Popular?

Though the actual rankings of the most popular esports games change slightly month-to-month, the ten most watched games on dominant streaming site Twitch remain consistent (Table 1). As of right now, League of Legends remains the most-watched eSport in the world. It’s also worth noting, for those less familiar with esports, that the most popular games are not traditional sports-related video games such as Madden or FIFA. Rather, the popular esports genres include multiplayer online battle arenas (where a player controlling a single character in a team that must destroy the opposing team’s main building), real-time strategy (where a player builds an army to gain dominance over a map), or first-person shooter games (where players take part in a firefight across a map).