The Biggest Sectors Investing In eSports

"If you are a CMO and you are not in eSports in 2017, you are going to risk getting fired," says Tobias Sherman, former head of eSports at WME-IMG. There’s no way around it, eSports is on the rise. Competitive gaming was an alien concept just a few years ago but now it is on the cusp of becoming a billion-dollar industry. The growth of the sport has been exceptional and with increasing popularity comes heavy investment. From Amazon to Facebook, multi-billion dollar companies are putting large sums of money into this relatively new sector.

Every sporting sector has its own dominant providers of equipment. Football and basketball has Nike and Adidas, Golf has Titleist and Taylor Made and eSports has its own brands too. BenQ and Razer are some of the top brands trusted by players with the latter now being valued as a billion-dollar company. Alienware is hugely popular for computers while companies like Logitech at the forefront for gaming keyboards and other accessories.

ESports is a unique opportunity for investors to get to reach an often elusive demographic: young people. Around two-thirds of eSports fans at aged 18-34 and a surprising 43% have an average income of at least $75,000 according to 2016 research. This is perhaps the main reason why companies are so eager to invest in the industry.

There’s clearly a lot of money to be made in this incredibly fast growing sector. In 2011, the global value of eSports as an industry was roughly $100 million. In 2019, that is estimated to cross $1 billion and by 2022, it will surpass $2 billion. It is growth like this which has got so many companies clamouring for a slice of the pie. Let’s take a look at some of the wide variety of sectors investing in eSports right now.

Traditional and Social Media

Facebook is one of the biggest companies investing in competitive gaming. After several years of speculation, the social media firm has set up its own eSports streaming service on Facebook Live as well as signing an exclusive streaming deal with a new gaming tournament, the Paladins Premier League. Hi-Rez’s popular first-person shooter, Paladins has tens of millions of players worldwide and Facebook will be hoping for a success story.

Sports giants ESPN decided to negate the online route and signed an exclusive $300 million deal with Riot Games for the broadcast rights of League of Legends, while companies like Paramount have elected to invest their money into team sponsorship.

Betting

One successful sector built around traditional sports is the betting industry. Back in 2015, Betway became the first mainstream bookmaker to offer its own dedicated eSports portal with fans able to bet on everything from Counter-Strike to Dota 2.

It’s obviously a new area for betting companies to invest in so there is little precedent for which teams and players to look out for. As a result, companies like UltraPlay are called upon to provide expert insight into the world of eSports.

Finance and Consumer Services

For the majority of companies from this sector, investment takes the form of targeted sponsorship. CenturyLink and Visa have both invested in eSports sponsorship deals with brands eager to target the young demographic.

One company taking a more hands-on approach is retail giants, Amazon. The firm made one of the first major eSports deals back in 2015 with the purchase of online streaming site, Twitch. Since then, the retailers have taken steps to have an even bigger role in competitive gaming. They have set up their own game studios, developing titles catered towards eSports as well as a virtual currency, ‘Steam+’. These are some of the largest businesses on earth.

Auto

While there aren’t any companies in the auto industry rushing to setup their own game studios, there is still considerable investment. Automotive companies are spending big on sponsorship deals in a number of different competitive games.

Counter-Strike: Global Offensive team, Astralis secured a sizeable investment from German car manufacturers Audi in early-2017 and they aren’t alone. Insurance providers, Geico sponsor Team SoloMid and in March 2017, Turtle Wax increased their sizeable investment in OpTic Gaming. Car manufacturers like to be seen as the peak of technology and innovation and investment in eSports plays into that.

Food & Drink

Few industries have embraced investment in eSports like the food and drink sector. One cliché which eSports may have a difficult time shaking off is that its athletes are more used to fast food and sweet treats than calorie-controlled diets and the gym. Food and drink investment plays into this.

Energy drinks are consumed by many gamers eager to get that extra burst of caffeine on a particularly gruelling session. Monster Energy is heavily invested in the sector but not as much as G Fuel with the latter splurging on naming rights for an indoor eSports arena. Fast food companies are also getting in on the act. Major global brands like McDonald’s and Burger King have put money, as have American chains like Arby’s.

Competitive gaming has grown up a lot in the last few years. From almost being smirked at by the rest of society, eSports has moved from the shadows to the limelight and companies across the world are eager to get involved. Investment is a ground floor opportunity for so many businesses eager to capture the elusive Millennial demographic. Given the evidence, it is little surprise that some of the biggest companies on earth are investing in competitive gaming. With funding like this, maybe eSports will become a billion-dollar industry sooner than people think.