NEW YORK, May 22, 2019 /PRNewswire/ -- Few sectors have seen similar rapid growth as the booming eSports sector. This formerly "niche market" has morphed into a mainstream phenomenon, which is taking the media and technology industries by storm. With some eSports competitions garnering more viewership than traditional sports tournaments, companies are realizing that this eSports trend won't be losing steam anytime soon. Major gaming and internet media companies such as Apple (NASDAQ:AAPL), Activision-Blizzard Inc. (NASDAQ:ATVI), Electronic Arts Inc. (NASDAQ:EA), Netflix Inc. (NASDAQ:NFLX), and Enthusiast Gaming Holdings Inc. (OTC: EGHIF) (TSX-V:EGLX) are all entering the eSports scene.
Just a few years ago, eSports was barely a blip on the overall video gaming radar. What was once a non-existent sector has morphed into a $1.1 billion industry with dedicated tournaments, professional leagues, and viewership numbers that rival most major sports events. In 2016, more people watched the final match of popular eSports game League of Legends than the NBA finals. With such an explosion in popularity, early adopters and leaders involved in the esports landscape are well positioned to reap the exponential growth in years to come.
Understanding the eSports Phenomenon
Unlike traditional sports, which have seen limited growth over the past few years, eSports has been exploding in popularity at a remarkable rate. According to one Goldman Sachs report, the eSports market is predicted to double in the next three years. Another famous equity guru, Chris Parry, has gone on to say that what eSports in today's era is in the same place that cannabis was back in 2015.
Companies like Nike, which has endorsement deals with some of the top athletes in the world, are already reaching out to major eSports celebrities with sponsorship offers. Even traditional sports team owners have also dipped into the eSports scene. Francesco Acquilini, the billionaire owner of the Vancouver Canucks, has invested heavily in an eSports Franchise of his own. "eSports has seen extraordinary success and continues to be one of the fastest growing industries in the world," said Acquilini, who recently raised $18.7 million to acquire Luminosity Gaming.
One of the first games to acquire mainstream eSports popularity was StarCraft 2 from Activision-Blizzard Inc. Since then, the company has created many more successful games such as Overwatch, which currently has 40 million players and 11 million live play stream viewers at any time. Activision-Blizzard Inc. has even hired Steve Bornstein, former president of ESPN, NFL Network, and ACB sports to serve as president of the company's eSports division.
Another major eSports game, Fortnite, became an instant hit as the studio behind it reported an astonishing $223 million in March 2018 alone. Fortnite creators Epic Games will be giving away US$30 million at the 2019 Fortnite World Cup. Meanwhile, the world's most popular Fortnite streamer Ninja, brought in nearly $10 million in revenue in 2018.
Other gaming giants, such as Electronic Arts Inc., are also working closely with the eSports community. Their FIFA 18 Global Series saw over 20 million players participate globally in a series of tournaments as the company looks to build a hardcore eSports following.
The Rise of Gaming Media Platforms
Just as major gaming companies are capitalizing on the eSports trend, dedicated eSports media platforms are doing the same. Major streaming companies like Netflix Inc. consider eSports streaming more dangerous competition than HBO, saying "We compete with (and lose to) 'Fortnite' more than HBO." Video streaming services being more concerned about eSports streaming than direct competitors should be a huge indicator of the disruptive nature of this sector.
Another company closely watched by analysts is Enthusiast Gaming Holdings Inc. (OTCQB: EGHIF) (TSX-V:EGLX). Having already become the largest publicly traded video game media company in North America, Enthusiast Gaming has already seen an impressive 625% year-over-year revenue growth
With a network of websites and Youtube channels, reaching over 150 million monthly visitors, Enthusiast is comparable in size to major online communities like Reddit, Discord, and Twitch. Having doubled in viewership in the past six months alone, the company is the fastest growing gaming network in North America (according to Comscore). While these companies are valued in the hundreds of millions and have been purchased by conglomerates, Enthusiast's market cap is small in comparison, at $86 million.
Enthusiast Gaming Holdings Inc. (EGHIF-EGLX) success and rapid growth, is largely due to the company's aggressive growth strategy through acquisitions. in January, Enthusiast announced the acquisition of The Sims Resource, the world's largest female video gaming community with 2.5 billion page views per year. The group also generates 10 percent of all views on Twitch, cementing Enthusiast's foothold on other major platforms as well.
Over the past twenty years, the demographics of gamers have changed. Today, the average video game player is 34 years-old with far more disposable income then they had when they were younger. Instead of "growing out" of the hobby as some guessed would happen years ago, gamers have become more passionate over the years. This means that eSports companies have never been in a better position to enjoy significant growth.
Further Gaming Developments
Apple Inc.'s (NASDAQ:AAPL) gaming revenues from 2018 are estimated to be US$9.45 billion. Their 2017 gaming revenues were an estimated US$8.03 billion, this represents a year-on-year growth of 18% from their gaming portfolio alone, above their total year-on-year of 15.86%. In the 12 month period from March 2018 to March 2019, they actually experienced a total revenue decline of 5.11%. Gaming has become a big business for major conglomerates.
Veteran gamers are looking forward to this summer as Activision-Blizzard Inc. (NASDAQ: ATVI) announced they would be launching an old-school, classic version of their flagship game, World of Warcraft. With the number of active players falling over the past few years, Activision-Blizzard expects player numbers to spike. Specifically, millions of old-time players who've left the game or have been playing on private, non-official servers are expected to re-subscribe.
Electronic Arts Inc. (NASDAQ: EA) continues to dominate the sports games market. The company recently announced their Madden NFL 19 Bowl broke a viewership record on twitch with a live audience of 97,000. This was a 650 percent increase from last year's Madden NFL 18 Bowl.
In a quarterly earnings report, Netflix Inc. (NASDAQ:NFLX) isn't even focused on direct competitors such as Disney+ and Amazon Prime, saying that they can compete with other streamers based on user experience, whereas eSports require a different approach, one which they haven't figured out yet, though alternative forms of media, such as the "choose-your-own-adventure" Black Mirror: Bandersnatch, may provide an answer.
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