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The Future Of Esports Growth

Over the next five years it’s expected that we will see the esports market continue to grow with sponsorships playing a key role

Photo Credit: ELLA DON

The esports market is estimated to grow at a CAGR of 21.81% between 2022 and 2027. The size of the market is expected to increase by $3,515.1 million.

This growth for esports is largely dependent on several factors, including branding through esports, an increasing amount of events and new platform launches. A report from Technavio has covered the growth of esports with analysis, drivers and possible challenges facing the market.

It’s worth noting that the report places the esports market in the global interactive home entertainment market. This market covers companies engaged in producing interactive gaming products, including mobile gaming. The research gathered in the report has covered external factors within this market that may influence the growth of esports.

Branding through esports is proving to be a key driving factor for market growth. Brands play an role in growing the space, sponsoring an esports event is one of the more successful branding techniques. Companies can sponsor an event and in return, that event will promote a product or an entire brand. Successful sponsorships will see the brand gain new revenue and opportunities which in turn drives the global esports market.

To date, some of the top sponsors of esports events include Twitch, Intel, Adidas AG, Vodafone, The Coca-Cola co and Mercedes-Benz. Red Bull Gaming has also held a strong presence in the esports space with sponsorship deals spanning various events and teams.

One trend that is beginning to bring esports closer to that of other more traditional sports events is an increase in esports betting. Betting in esports is projected to see significant growth during the forecast period of 2022 to 2027. This growth will particularly take off in the US as lenient laws on betting in the country will allow greater flexibility for betting. With the continued ease of online transactions and mobile betting apps, it’s expected that more growth could stem from betting companies. We have already seen companies such as Betway Group become sponsors for esports teams.

Market growth for esports from Technavio

Esports challenges

The growing cost of game development could prove to be a major challenge that impacts market growth for esports. Consumer demands and higher quality products and innovations in the gaming world are seeing an increased cost in game development.

The report highlights key factors surrounding the video games market that will have a knock on effect on the growth of esports. Developers are needing to hire specialised staff, which bumps up production costs. The report also mentioned the rise in Hollywood actors taking on voice acting roles within games, resulting again in higher costs. However, one could also argue that big names entering the world of video games, while expensive, could also help to promote the space further.

Esports is still a relatively new space and while it has seen significant growth, even becoming a subject that can be studied at colleges and universities, there are growing pains to wade through. Investors need to feel confident in the space and as some events in the past have fallen through due to a lack of authenticity it can be difficult to navigate the space.

Teams themselves are also facing issues with salaries, many are still earning small amounts of money given the height of the events they take part in and while some are reaping the rewards, others are left wanting. The same can be said for gender pay gaps, while this is an issue that spans many industries, it unfortunately is already rearing its head in the esports space.

Demographics and regions

The fastest-growing segment in esports comes from sponsorships and will continue to dominate much of the forecast period. As previously mentioned, while not everyone is finding the space to be lucrative, many companies are seeing esports as a profitable investment. Currently, half of the global esports audience is made up of males aged under 35 years, with sponsorships majorly targeting this demographic.

The Asia-Pacific (APAC) region is estimated to contribute 43% to the growth of the global market, making esports particularly popular in the region and ripe for growth. APAC has been a long-standing lucrative market for the gaming industry in general so it may not come as a surprise to see the region attracting investments and brand sponsorships.

APAC currently stands as the most promising market for esports and is expected to continue see steady growth. In addition, countries such as China, Japan and South Korea are contributing to the maximum growth of esports in the region. Other regions such as the US, Canada, and Germany are also showing promise for future growth.

APAC is leading the way for adoption

Esports future

Esports has already come a long way in recent years and data shows that despite some challenges, the space is showing promising projections for growth. With the rising popularity of video games and platforms such as Twitch promoting players into stars, it’s clear to see the momentum that esports is building. For many working in the esports market, the goal is to see the sport reach all new heights that would put it on par with other massive sporting events.

Written By

Paige Cook is a writer with a multi-media background. She has experience covering video games and technology and also has freelance experience in video editing, graphic design, and photography. Paige is a massive fan of the movie industry and loves a good TV show, if she is not watching something interesting then she's probably playing video games or buried in a good book. Her latest addiction is virtual photography and currently spends far too much time taking pretty pictures in games rather than actually finishing them.

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