The esports industry survey 2019 by Foley & Lardner LLP and The Esports Observer questioned more than 200 executives — primarily esports and traditional professional sports teams and leagues, media companies, agencies and industry consultants — to gauge where they thought the esports industry is going in the coming year.
The annual survey addresses a number of different topics in the industry including growth and investment, interactions between esports and traditional sports, legal and other risk areas, and technology developments.
The executive summary of the esports industry survey 2019 surmises that:
Respondents clearly see growth and strong potential driven by rapidly evolving technology, with millions already watching ads, buying merchandise, doling out for events, following their favourite players and brands and making in-game purchases. Advertising and sponsorships are expected to drive the most revenue in the next 12 months, beating out in-game purchases and media rights. That media rights — which many industry observers expect to lead the pack in the years ahead — didn’t yet top the list shows that the industry is still just scratching the surface on revenue.
Investors are also increasingly jumping in. Respondents expect private equity and venture capital firms to increase their esports investments over the next year. That tracks with the launch of investment funds focused on esports, which would have been hard to imagine a decade ago. Traditional sports teams and leagues, athletes and celebrities are also expected to further increase their level of esports investment over the next 12 months.
Of course, this rapid growth comes with more problems — notably of the legal variety. Respondents increasingly are concerned with intellectual property (IP) rights and licensing issues, as well as player rights and fair contracts, compared with the 2018 survey.
But despite these challenges, all signs point in an encouraging direction. That might not have been a universal prediction a few years ago, but it’s not surprising to everyone. “It may seem extraordinary that you can now fill arenas with people who want to watch videogames,” Stewart Brand, a writer and one of the organisers of the original event at Stanford, told Rolling Stone in 2016. “But it’s a perfectly reasonable outcome of what you could already see in 1972.”
Highlights of the esports industry survey 2019 include the following perspectives from respondents:
- 47% expect a rise in esports investments expected from private equity and venture capital firms (an increase of 8% from 2018). In addition, 47% also expect traditional professional sports teams and leagues, athletes and celebrities to increase investments (a 10% decrease)
- 88% believe that traditional sports will increase investment in esports to a significant or moderate extent.
- 90% feel the growth of esports has negatively affected traditional sports
- Advertising and sponsorships are expected to be esports’ primary revenue driver, with in-game purchases surpassing media rights (as more publishers include team-branded in-game items)
- Streaming and broadcasting (62%), events and tournaments (60%) and franchised teams (59%) are expected to be where most esports M&A activity happens in the next 12 months
- Cheating and match-fixing concern respondents, with 68% indicating that it poses a significant threat to the legitimacy and the growth of esports. Of those, 47% identified the absence of fraud detection systems as a key contributing factor
- Staying up to date with legal issues and prioritising compliance with regulations is a top priority for 70% of respondents. IP rights and licensing issues jumped among perceived risks from 50% in 2018 to 61% in 2019, as did concerns about contracts that do not provide adequate protection for players
- The United States (60%) and China (56%) are considered to offer the most promising esports investment opportunities over the next five years
Click here to download the esports industry survey 2019, by Foley & Lardner LLP and The Esports Observer.