Esports and Money in 2020

Originally published on VC Cafe

Eze Vidra

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We’re very excited about the potential of Esports at Remagine Ventures. Apart from the cultural phenomenon and increased viewership of Esports, like any other professional sport, there’s also a business aspect. So what’s the relationship between Esports and money and where does it stand in 2020?

A recent McKinsey report focused on the potential Esports represents for brands prompted me to dig deeper.

Esports industry revenues — scratching the $1 billion a year

Despite the massive viewership, Esports as whole is still relatively small when it comes to revenue. In 2020, revenues are expected to reach $1 billion, and grow by 60% in 2023.

Esports revenue growth for 2020 was recently downgraded by Newzoo to $950M — Source: Newzoo Global Esports Market report

A few facts about Esports revenue according to Newzoo:

  • Global esports revenues will grow to $1.1 billion in 2020, a year-on-year growth of 15.7% from $950.6 million in 2019.
  • In 2020, $822.4 million in revenues — or three-quarters of the total market — will come from media rights and sponsorship.
  • China is the largest market by revenues, with total revenues of $385.1 million in 2020.

Tournaments and Prizes

Imagine that every sport was owned by its inventor. i.e. the person or company who invented Soccer, would be the sole decision maker on the format, timing and rules of competitions, and would be entitled to a revenue share from each event. That’s not the case with FIFA, the ruling body for soccer, but it is the case in Esports. Players may have a dream job, but the game publishers have all the power, as recently picked up by Wired magazine:

“Publishers made a game. They sell the game. They own the IP. Anything having to do with the games has to go through them. And now they own the leagues, too”

Game Publishers Have All the Power, Wired

During the Covid-19, social distancing measures made large tournaments which usually draw millions of ticket holders to stadiums, to either…

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Eze Vidra

Managing Partner at Remagine Ventures. Founder of Techbikers, Campus London and VC Cafe, proud Xoogler. On the boards of Chargifi, HourOne, Vault AI and EchoAR