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What makes eSports such a profitable global industry in 2020?

Esports is an industry that has been rapidly expanding in recent years. In the beginning, professional video gaming was something that had a very small following, with tournaments having tiny prize pools. However, in recent years many of the leading players in the sport are earning millions of dollars on an annual basis, with massive sums of money being invested into players and teams.

Investors are looking to get involved, with many people seeing it as being a major competitor to traditional sports in a few years. If an investor can invest in a team in the beginning, this investment could be massively multiplied in just a few years. Companies also see eSports as being a great way to gain brand exposure, among younger people, leading to large sponsorship and endorsement deals across the board.

Massive audience numbers

Figures show that there is revenue of more than $1 billion eSports, with the global audience stretching over the 443 million mark. This is great that rugby union and American Football combined, with this global audience set to hit 646 million in the next few years according to Evolutionofesports.com.

This shows how eSports is fast on the path to being extremely financially lucrative, with major interest and exposure for leading events and players. Inside of three years, annual total revenue in eSports could reach $2.3 billion if the current trajectory is maintained, rivaling many major traditional sports.

Big prize pools

Prize pools have been rapidly rising in recent years, with the $25 million that is up for grabs in The International Dota 2 tournament being more than what UEFA Europa League teams play for each season. The average rate of growth for eSports prize pools each year is 42%, with the total prize pool in eSports getting close to the $200 million annual figure.

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If you win the Fortnite World Cup, you get a $3 million first prize, which is much greater than the $2.4 million prize for the winner of the Wimbledon tennis championship. With massive amount of money in traditional professional sports, it is only natural that large sums will be attracted to eSports because of the massive audience numbers.

Green Man Gaming EVP for performance marketing Paul Turner spoke about this massive growth. He said: “As the interactive shows, the sky really is the limit, as esports continues to outgrow the more traditional sports, and the lucky professionals involved continue to bag bigger purses than their more traditional rivals.”

Growing base of games

When eSports was just getting going, there were mainly just a handful of main video games that had any sort of significant base of events. The likes of Starcraft, League of Legends, Call of Duty and Halo were commonly the main games you would come across. Nowadays, this list has grown a lot bigger, with tons of games now having their own events.

While the likes of League of Legends is one of the more popular eSports out there today, it can be hard for the casual fan to get involved. This is where traditional sports fans tend to be a gateway over to eSports, by tuning into events where the likes of FIFA or Madden are being played.

They are taking their favorite traditional sports and making the transactions over to these sports in video game form. This was particularly popular during the COVID-19 pandemic.

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With little to no live sport to watch at the height of the virus, a lot of people turned to eSports. Many major players in traditional sports took to the sticks in these events. NBA players were playing NBA2K, football players were playing FIFA games and so on. This helps with the expansion of eSports.

Streaming vs Professionals

There are two main avenues that are seeing a lot of success in the eSports realm. Streamers are gamers who are not necessarily the best at the games but they bring their personality to the table when streaming games in front of sometimes tens of thousands of viewers.

It is an extremely popular way to watch people play video games. While a lot of professionals do stream also, there are many professional streamers who clock in as many as 14 hours every day for their viewer base.

You then have the professional eSports players who are competing against the best in the word at a given title. Over time, players build up a fan base, similar to how Lebron James or Tom Brady would acquire fans. While they may play for teams and organizations, oftentimes the profile of the player is bigger than these groups.

As well as prize money from events, they also get a salary if they are part of an organization, as well as having access to all sorts of endorsement deals and other forms of income. Oftentimes an organization will take a cut of these earnings, generating profits for investors, as well as being able to leverage these high-profile eSports professionals for marketing campaigns and partnership deals.

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Conclusion

As you can see, there is a lot of profit potential in eSports today. There are many avenues you can go down in search of profits, with each one having its own nuances and advantages. It seems like only a matter of time before eSports takes over as the dominant force when compared to traditional sports.