A new analysis by Deloitte estimates that the burgeoning esports industry will reach global revenues of $1.5 billion and a fanbase of 600 million people by 2020. That financial haul is comparable to France’s top soccer circuit, Ligue 1, and nearly a third of the size of the NBA.
Deloitte principal Pete Giorgio points toward the launch of the NBA’s esports league, the massive audiences drawn by the Overwatch League (including a sold-out Barclays Center in Brooklyn for the finals), and the financial investment of business luminaries like the former Hewlett Packard CEO as signs of continued acceleration.
“Even in the past three or four months, it feels like it’s hit another gear,” Giorgio, who leads the Deloitte’s U.S. sports practice, said. “There’s a level of professionalism and just a level of business that’s associated with [esports] that we hadn’t seen before. When Meg Whitman comes out and becomes part-owner of an esports team, that’s real business.”
The recent report emanated from Deloitte’s technology, media, and telecommunications division. In 2017, Nielsen Media had reported that two-thirds of esports fans, who are predominantly young males, watch live streams and 37 percent had attended an esports contest. Deloitte research found that half of Generation X plays video games at least weekly, which is close to the level for Gen Z and millennials.
Giorgio noted how many inflection points there have been in the past few years. Among them was the sudden emergence of Fortnite. That game attracted 125 million players in just 11 months and only celebrated its one-year anniversary last week. When star gamer Ninja played the musician Drake back in March, the stream of that contect set a Twitch record for non-tournament play with 635,000 concurrent viewers—nearly double the previous high. The only publicity was a Drake tweet.
“One of the fascinating things about esports is that it doesn’t actually have a lot of the structural limitations that traditional sports have,” Giorgio said. “You don’t actually have to have a stadium. You don’t have to sell tickets months in advance. In the esports world, you can conceive of a tournament in the morning, market it in the afternoon, and execute it that night.
“Some of the constraints that are there in the traditional world just don’t exist in esports. The velocity in how these things grow and expand, maybe break apart and re-form—I think it will be fascinating.”
Giorgio expects to advise some of its existing traditional sports clients (such as the United States Golf Association, NBA, United States Tennis Association, and United States Olympic Committee) about the importance of staying “nimble and agile.” He said sponsorship opportunities won’t follow traditional assets—41 NBA home games for instance—because tournaments and games can pop up quickly. Sponsors might make plays “almost on a minute-to-minute basis,” he said.
Giorgio added, “That, to me, is the fascinating part: if I’m buying an esports franchise right now or investing in a league, I’m using that as an opportunity to learn how to improve how I think about my traditional sports.”
One issue that esports will face going forward was also raised at the recent Olympic Summit: the lack of a governing body. Giorgio said esports likely won’t consolidate to one monolithic league the way the NBA governs basketball, MLB leads baseball, and so on. He’s not sure League of Legends, Overwatch, Fortnite, and others will all come under one umbrella.
Another key point in the report was a quote centered on media trends. The authors wrote, “Whether AI or human, broadcast is becoming more social, decentralized, and interactive.” Most esports don’t have an obvious center of attention, like a football or hockey puck. That presents both a challenge and an opportunity to redefine broadcast. And the natively digital platform is fertile for advertisers and sponsors.
“Twitch knows exactly who every single person is that’s watching that event,” Giorgio said. “They can directly target them with ads whereas a lot of football teams still don’t even know who’s sitting in their stands—but they will.”
Though esports has become a giant business, Giorgio has a lingering question. Will gamers grace the cover of, say, a Wheaties box? That crossover seems imminent, but the timeline is unclear.
“When does the first esports athlete hit the mainstream?” he said.