More than $1 billion will be spent on esports ads by 2021

About $280 million were spent on advertising in esports last year.

Photo via ccPixs (CC BY 2.0)

More than 6 billion hours of competitive video games were watched last year, according to a new report by analysis firm IHS Markit. That’s 19 percent up from last year but apparently not enough to convince advertisers to fully commit, the study suggests. The date, slated to be released later today, was quoted in advance in an article by the Financial Times.

Significant fragmentation is holding esports back as a sizable advertising business. Esports viewership might be huge on the global scale, but on a country-by-country comparison, viewership remains smaller than many traditional sports.

That said, esports’ demographic is highly attractive for non-endemics. Brands like Audi, Visa, or Vodafone have all made partnerships with the best teams in the world.

“The audience might be small, but within its demographic, it is overindexing versus traditional sports on TV,” FT quotes IHS analyst Dan Cryan, one of the report’s authors.

IHS estimates that $280 million were spent on esports advertising last year, and forecasts that figure to rise to $1 billion by 2021, which is just a small fraction of the overall digital advertising market, as FT author Tom Bradshaw points out. Market research company eMarketer predicts the global market to reach $113 billion by the end of the decade.

Chinese viewers make the biggest share in the esports market, accounting for 57 percent of all viewing in 2016, according to the IHS figures. China dwarfs the second-largest market, North America. More than four times as many games were watched online in China compared with North America.

While market research forecasts remain a speculative business, the IHS analysts demonstrate a deeper understanding of the industry by not simply comparing esports viewership figures to traditional sports TV ratings.