Newzoo’s Esports Business Predictions for 2021: Esports Will Propel Gaming into a Bigger Industry than Traditional Professional Sports
To celebrate five years of Newzoo esports research, we recently published an article about our consumer-centric esports predictions for 2021. Now, we’re making a similar set of predictions about the business side of the industry. Following this, we’ll review some of the business predictions we made in our 2015 Global Esports Market Report and in our 2015 article The Five Factors Defining the Future of Esports.
Business Predictions About 2021’s $1.7 Billion Esports Market
Prediction #1: All major U.S. media conglomerates will have digital esports media rights.
U.S. media conglomerates such as Disney, Comcast, and AT&T are already looking into content rights for esports. As these companies look to entice younger consumers, they will become even more active in the scene. We expect these companies to not only feature esports on their linear media platforms (as seen with the Overwatch League on Disney XD) but also on non-linear live-streaming platforms, such as Disney’s upcoming streaming service.
Prediction #2: Esports will help gaming grow into a bigger industry than traditional professional sports.
Gaming as a whole (including esports) is already on track to become a bigger industry than traditional professional sports. We expect that the global games market will generate revenues of $180.1 billion by 2021, and esports will be a major driver of this, with many brands investing in esports to appeal to younger demographics. As more companies get involved and consumers spend more time watching esports content outside of the competitions themselves, esports will generate much growth within the global games industry.
Prediction #3: Esports will not be a part of the Olympics as we know it, but the Olympics will get involved with esports.
Esports will not be featured in the Winter and Summer Olympic Games in their current formats; rather, there will be a dedicated esports Olympics. Again, there is a major opportunity here for the Olympics to resonate with younger audiences.
Prediction #4: The term esports will start to disappear.
Up until now, esports has been a catch-all term for all aspects of competitive gaming. As games continue to develop, the audience — and ultimately the industry at large — will grow, too. Also, as the differences between individual esports games increase, use of the term “esports” will decrease. Games will be referred to by their individual names; for example, a League of Legends tournament — not an esports tournament. While the term will never fully die out, we expect that it will be used a lot less by 2021.
Prediction #5: The highest-earning team will generate over $10 million in gross revenue.
Teams are at the center of the esports industry and are the main driver of fan engagement. Their attractiveness to sponsors — as well as the recent trend of increased revenue sharing between leagues and game publishers — will ultimately lead to increased revenue growth. What’s more, if teams can further grow their fanbases and merchandising offerings, revenues will increase even more. In the coming years, we expect the team that generates the most revenue from sponsorships, media rights, and merchandise to gross over $10 million.
Other Business Predictions for 2021:
Prediction #6: A mobile esports athlete will become a millionaire by winning one event.
Prediction #7: The first $100-million-a-year esports media-rights deal will be made.
Prediction #8: In line with the EU’s approach to traditional sports, the three most popular esports will each have well-structured national competitions that flow into international events.
Prediction #9: The world’s 10 most valuable brands (based on enterprise value) will sponsor esports.
Prediction #10: Esports will generate more revenue than rugby.
Did the Esports Business Predictions We Made Three Years Ago Happen?
Prediction #1: Global esports revenues will reach $465 million by 2017.
Result: True! Our stats show that the global esports market was worth $655 million in 2017. This higher-than-anticipated increase is mostly due to unexpectedly high investment by publishers and a faster uptake of the media-rights business model within the esports economy.
Prediction #2: In 2018, revenues from esports will surpass the WWE’s revenues.
Result: True! WWE’s revenues are expected to reach $881 million by the end of 2018; we estimate that esports, however, will generate $905 million.
Prediction #3: Like traditional sports, esports will need to exist on a national, regional, and global level to tap into bigger advertising budgets.
Result: Partly true! While advertising and sponsorship in esports have greatly increased for international/global competitions, local markets — a key driver of marketing spend — remain relatively untapped. Big non-endemic brands have already moved into global esports sponsorships. If this can happen on a local level, there is massive potential for increased revenues. Combined, these local advertising budgets amount to more than the global budgets.
Prediction #4: As multimillion-dollar prize pools are at stake, new rules and regulations are needed to combat cheating and match-fixing.
Result: True! Thanks to the Esports Integrity Coalition (ESIC) and similar organizations, steps have been made within the industry to help combat cheating and fraud in esports.
Prediction #5: As direct esports revenues grow, content rights will become a bigger focus for publishers.
Result: True! Media rights is currently one of the hottest topics in the industry, with both Blizzard and Riot Games already closing big deals. In fact, Twitch recently paid a reported $45 million per year for the exclusive digital broadcasting rights for the Overwatch League (in English, French, and Korean). Other publishers are currently looking to close similar deals.
You can find the original article here.