In the present technological era, the human process of being, in terms of industrialization, has ended and the process of becoming digitalized has begun and is accelerating faster than ever. The global expansion of the web has flattened the world and made people more connected than before.
This past February, the Philadelphia Eagles beat the New England Patriots 41 to 33 during the Super Bowl, in front of 103.4 million viewers from across the globe. American football is the most viewed sport in the United States but has lost 7 percent of its total average users since 2017.
Meanwhile, the League of Legends World Championship Finals, held on Oct. 21, was able to garner a total of 200 million viewers worldwide. The up-and-coming “electronic sports” market is taking the world by storm and has already gathered crowds larger than those within some traditional sports leagues.
According to Statista, the esports market is expected to generate $905 million in revenue by the end of 2018 and $1.65 billion by the end of 2021; the sector is expected to grow at a compound annual growth rate of 38 percent. Currently, about 80 percent of this revenue is coming from sponsorships and advertising and the other 20 percent is coming from esports betting, prize pools, tournament ticket sales and merchandise.
Companies like Activision have already generated nearly $1 billion in revenue off capitalizing on the esports trend by selling off 12 “Overwatch” teams last year to sports team owners and supporters across major cities. This startup “Overwatch” league, based on the popular video game, has been a huge success so far, generating lots of money across multiple different tournaments, and it will help set up the next wave of team sales at higher prices.
Take-Two Interactive Software Inc. also capitalized on this growing esports trend by creating an NBA 2K League, where 17 of the 30 NBA teams would be
Aside from the gaming companies, traditional technology giants have also been plotting plans to enter into the lucrative esports market. Companies like Amazon acquired streaming platforms such as Twitch in 2016 in order to tap into the esports market.
Now, Google and Microsoft Corp. have recently announced efforts to let people play big-budget, visually complex games on internet-connected devices without them having to spend too much on devices such as Xbox or PCs. The game-software sector revenue rose 59 percent since last year to $121.7 billion and is expected to reach $134.9 billion by the end of the year.
Game software growth and esports market growth carries huge growth opportunities for other parts of the tech industry as well. Demand for cloud and high-speed internet connection is expected to increase as a result of esports because of the need to constantly integrate data at lighting speeds.
During tournaments, a game delay of even a quarter of a second can heavily skew the outcome of the game. This will accelerate demand for 5G networks once telecom companies start to roll the service out.
Also, increased demand in gaming and 5G networks will also increase the demand for semiconductors, which will benefit companies such as Advanced Micro Devices Inc. and Nvidia Corp. The semiconductor manufacturing industry currently has a revenue of $54.6 billion with an annualized projected growth rate of around 2.2 percent per year over the next five years, according to IBISWorld Research.
By Waiho Zhang