Competitive video gaming or esports has burgeoned into a billion-dollar industry with millions of fans and players globally, leading businesses of all sizes to invest heavily in the sector. From sponsorship to merchandising and investments in esports companies, businesses are keenly vying for dominance. Major players include publishers such as Activision Blizzard, stream service providers such as Amazon-owned Twitch, and Tencent, which owns stakes in several leading esports firms. The impact of commercialization on esports, however, has raised concerns about it eroding the culture and authenticity that makes it so attractive, in addition to incentivizing unfavorable behavior.
The Business of Esports: How Companies Are Investing in the Industry
Esports, or competitive video gaming, have skyrocketed in popularity over the past decade. Once considered a niche hobby, esports are now a billion-dollar industry with millions of fans and players worldwide. This explosive growth has caught the attention of businesses big and small, all eager to get a piece of the action. In this article, we’ll explore how companies are investing in esports and the impact this is having on the industry.
Overview of Esports
Before we dive into how companies are investing in esports, it’s worth taking a moment to look at the industry as a whole. Esports refers to competitive video gaming, where players or teams compete to win prizes and recognition. Esports covers a wide range of games, from traditional sports simulations like FIFA and NBA 2K to first-person shooters like Overwatch and Call of Duty to strategy games like League of Legends and Dota 2.
Esports have grown rapidly over the past decade, driven in large part by the growth of streaming platforms like Twitch and the increasing popularity of professional gaming leagues. In 2019, the global esports market was valued at $1.1 billion, and it’s expected to reach $1.8 billion by 2022.
Major Players in Esports
While esports may have started as a grassroots movement, it’s now a highly competitive industry with major players vying for dominance. Some of the biggest players in esports include:
- Riot Games: The developer of League of Legends, one of the most popular esports games in the world.
- Activision Blizzard: The publisher of popular esports titles like Overwatch and Call of Duty.
- Tencent: A Chinese conglomerate that owns stakes in several major esports companies, including Riot Games and Epic Games.
- Amazon: The owner of Twitch, the largest streaming platform for esports and gaming content.
- Intel: A major sponsor of esports events and a supplier of gaming hardware.
Investments in Esports
The growth of esports has not gone unnoticed by businesses, who are investing heavily in the industry. There are several ways companies are getting involved in esports:
Sponsorship
One of the most common ways companies get involved in esports is through sponsorship. Companies can sponsor individual players, teams, or entire leagues, providing financial support in exchange for branding and exposure. For example, in 2019, Nike signed a sponsorship deal with the Chinese League of Legends Pro League, becoming the official apparel and footwear provider for the league.
Merchandising
Esports fans are just as passionate as traditional sports fans, and they’re eager to show support for their favorite players and teams. Merchandising is a significant revenue stream for esports companies, with everything from t-shirts and hats to in-game items available for purchase. For example, in 2020, Riot Games launched a range of clothing and accessories inspired by its hit game, Valorant.
Broadcast Rights
As esports have grown in popularity, broadcasters have taken notice. Major networks like ESPN and ABC have started airing esports events, and streaming platforms like Twitch and YouTube have dedicated channels for esports content. This has created a new revenue stream for esports companies, with broadcast rights becoming increasingly valuable. In 2019, Riot Games signed a $300 million deal with China’s Bilibili for the exclusive broadcasting rights to the League of Legends Pro League.
Investment in Esports Companies
Finally, some companies are investing directly in esports companies, either through equity investment or acquisition. For example, in 2019, Tencent acquired a 10% stake in Bluehole, the developer of the popular game PlayerUnknown’s Battlegrounds. In the same year, Logitech acquired Streamlabs, a software company that provides streaming tools for gamers.
The Impact of Business Investment on Esports
The influx of investment from businesses has had a significant impact on the esports industry. It has allowed esports to grow and mature, with more professional leagues and tournaments, better equipment and facilities, and increased opportunities for players and teams to monetize their skills. This has attracted more players and fans to the industry, fueling further growth.
However, there are concerns that the commercialization of esports could harm the industry in the long run. Some worry that too much focus on sponsorship and advertising could erode the authenticity and fan culture that makes esports so appealing. Others fear that the large amounts of money flowing into the industry could incentivize unethical behavior, such as match-fixing or doping.
Conclusion
The rise of esports has attracted businesses of all kinds, eager to get involved in this fast-growing industry. Companies are investing in esports in a variety of ways, from sponsorship and merchandising to broadcast rights and direct investment. While this investment has helped esports grow and mature, there are concerns about the impact of commercialization on the authenticity and culture of esports. As the industry continues to evolve, it will be up to players, fans, and businesses alike to navigate these challenges and ensure that esports remain a vibrant and sustainable industry for years to come.