Feb 17 2015 - 7:54 pm

Report: Esports to generate $500 million in revenue by 2017

Esports' rise in popularity has been nothing short of meteoric
Dot Esports

Esports' rise in popularity has been nothing short of meteoric. But one report says that the industry is poised for even greater growth, if it can surmount its shortcomings.

Gaming market research and consulting firm Newzoo released a 68-page report on the still-young esports economy yesterday, and the results look promising—albeit with caveats. According to Newzoo, the industry is poised to reach $465 million in revenue by the year 2017, a nearly two-and-one-half fold increase over last year’s $194 million.

The report takes a conservative approach to the estimate, using traditional sports as a model for comparison. The 2017 projection would "(render) esports comparable to a top 10 sport or globally renowned leagues like the NFL or Champions League," Newzoo reported.

The number of so-called "esports enthusiasts" will grow from 89 million to 145 million by the end of 2017, according to the report. With an estimated additional 190 million casual spectators by the same year, esports could, by Newzoo’s analysis, develop a fan base "comparable to that of Volleyball, American Football, or Ice Hockey.”

However, the 68-page document also reveals glaring disparities in the monetization of that fandom:

"On a global scale, there are 2.2 billion sports fans who each generate an average of $56 per year. The average revenue for individual sports is anywhere from $20 upwards. Esports enthusiasts on the other hand, currently generate an average of $2.2 per person per year, without game revenues taken into account."

Even incremental changes to that number could have a huge effect on the industry. "If the average revenue per enthusiast grows faster and jumps to $7, esports will be a billion dollar business by 2017 with even more growth potential going forward."

Newzoo also projects that the industry will develop a revenue base more resembling that of conventional sports, one that's less reliant on publisher investment and more-so on the sale of media rights.

"Esports, which is a product of a digital age, gets 34% of its revenues from online advertising and still relies on the investment of game publishers...As the esports market matures, its revenue mix will closer resemble that of traditional sports which saw 57% of revenues come from sponsorships and selling media rights in 2014."

The report also gives a nod to the growing esports betting industry, which has seen copious coverage in the wake of match-fixing scandals in Counter-Strike: Global Offensive. "Esports betting is likely to already be close to a $100 million dollar industry,” Newzoo reports. "For Pinnacle, one of worlds’ largest sports bookmakers, it is the 7th biggest betting market in terms of volume, exceeding sports like golf and rugby."

The numbers are promising indeed, but they also demonstrates the crossroads the industry now faces. With either $465 million or $1 billion in revenue on the horizon and a myriad of critical decisions needed to get there, it’s no wonder that the report highlights 2015 as "pivotal in determining the future of esports."

Image via Ken Teegardin/Flickr (CC BY-SA 2.0)