Esports is going to gross $1 billion in ad revenue worldwide by 2021 as the audience for the genre expands, according to the Esports and the Future of TV report released by IHS Markit.
In 2016, esports drew $280 million globally in ad revenue, a mere fraction of the global ad revenue of $532 billion. Growth in advertising revenue in this genre will be driven by video, influencer marketing and sponsorhship, the report noted.
The popularity of esports is exploding in Asia, with esports set to be a medal event at the 2022 Asian Games in Hangzhou, China. Chinese internet giant Alibaba, whose birthplace is also Hangzhou, invested $150 million in the International E-Sports Federation last year.
Ted Hall, research director of IHS Markit and the report's lead author, said investment in esports will pay off for big-name backers as interest in this genre expands within and beyond its target demographic.
“Some of these acquisitions are initiating shifts in esports business dynamics, with players such as China’s Tencent seeking to control assets across the value chain, and publishers moving into league operation," said Hall.
China makes up more than half of the global esports audience, with 11.1 billion video streams delivered there in 2016. Overall, esports enthusiasts worldwide spent more than 6 billion hours watching games last year, an increase of 19 percent compared to the previous year.
Dan Cryan, senior director at IHS Markit, said the rise of esports demonstrates the value of aggregating audience globally rather than the country-specific approach that defines traditional TV business.
"This is not just online channels taking a traditional business model and moving it online, this is something new," he said. "Publishers, for example, deliver esports video because it helps their other commercial interests rather than having content monetization as their primary focus. This sort of competitive diversification is set to become more common and spread to other genres with time.”
Another report, E-sports Content Ecosystem in China: 2016 Report, released by iResearch, said that 76.1 percent of esports viewers in China are male, 68 percent of them between 19 and 35 years old. Most notably, esports viewers have a higher average monthly income than regular internet users (RMB 6,380 versus RMB 4,648), while 70 percent of their daily consumption is on electronics. The iResearch survey carried out in November 2015 was based on 1,597 samples.