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Goldman Sachs $GS #Esports moving from wild west to revenue boom $GMBL $ATVI $TTWO $GAME $ $TCEHF $ $

Posted by AGORACOM-JC at 1:15 PM on Monday, November 12th, 2018
  • Goldman Sachs has become the latest financial powerhouse to give the future of esports a glowing report.
  • Following PwC’s Sports Survey 2018, US investment bank Goldman Sachs has published its own research on esports, concluding that, by 2022, the esports audience will “reach a similar size to the NFL today”.
  • GS reports that increasing levels of professionalism — not least organisational structure — is playing a significant role in growing esports revenues.

Esports audience figures compared with major US sports, according to Goldman SachsThe report reads: “In the early years of esports, there was little organisation or infrastructure and, as a result, the massive audience of esports did not translate into meaningful revenue streams for players, team owners, etc.

“But in 2017, Riot Games created the North American and EU League of Legends leagues, while in January of 2018, Blizzard launched the Overwatch League.

We expect total esports monetisation will reach $3bn by 2022

“We believe these leagues created the requisite infrastructure that will allow esports to finally start to close the monetisation gap relative to other established sports leagues. In 2017, we estimate esports generated $655m in annual revenue, including 38% from sponsorships, 14% from media rights, and 9% from ticket revenue.

8Goldman Sachs’ estimates for esports revenue growth to 2022“But by 2022, we expect media rights to reach 40% of total esports revenue — comparable to the average of the four major Western sports leagues today — as massive audiences and associated revenue for established online video platforms like Twitch, YouTube, Douyu, and Huya will be able to support a growing pool of media rights fees paid to top publishers for their content.

“As media rights and sponsorship continue to grow, along with the formalisation of pro sports leagues, we expect total esports monetisation will reach $3bn by 2022.”

GS says its research indicates that the growing popularity of “survival-based games” (battle royale) such as Fortnite and PUBG, will help drive esports into the mainstream.

We believe the esports audience should continue to outpace the growth of traditional leagues

The report said: “Due to the growing popularity of survival-based games Fortnite and PUBG, we believe esports viewership is moving more into the mainstream, which should support a 14% audience growth CAGR for the next five years.

“Recently, Epic games announced that it would set aside $100m in prize pool for the first year of Fortnite esports tournaments, nearly the size of the entire esports prize pool in 2017. With growing incentives for esports players, and by extension more interest from the casual observer, we believe the esports audience should continue to outpace the growth of traditional leagues.”

Going mobile

The GS report also features a Q&A with Andy Miller, co-founder of NRG org. In the interview, Miller shares his thoughts on franchising, growth in China and mobile esports.

Asked if he thought mobile and console esports would become as popular as PC-based games, he replied: “I do think it will be big. I have a mobile background myself — NRG entered the founding franchise into the Clash Royale League.

“Mobile is more here in gaming than you think, because what are the biggest games people are playing right now? Fortnite, PUBG? They’re on mobile. Clash [of Clans]? Mobile. Hearthstone and games like that have been around for a while.

“So the question is — will they translate into good esports? I think that’s probably more a function of the game than the fact that it’s on mobile, so we’ll see. There will definitely be breakout games. I think the touch screens are capable now — there is a lack of latency, so I think the opportunity is definitely there.”


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