According to Aristotle, there is a fundamental irreconcilable split between the world’s process of being and becoming. Being connotes the part of nature that is static while becoming points to the ever-changing fluidity of the world. Today, in the technological era, our process of being, in terms of industrialization, has ended and our process of becoming, in terms of digitalization, has begun and is accelerating faster than ever. The global expansion of the web has flattened our world and made us more connected than before.
This February, during the NFL’s 52nd Super Bowl, the Philadelphia Eagles beat the New England Patriots 41 to 33 in front of 103.4 million viewers from across the globe. American Football is the most viewed sport in the U.S. and has lost 7% of its total average users since 2017. In the meanwhile, the League of Legends World Championship Finals held on October 21st, 2018, was able to garner a total of 200 million viewers worldwide. The up and coming Electronic “Sports” market is taking the world by storm and has already gathered crowds larger than those within some tradition sports leagues. According to Statista, the eSports market is expected to generate $905 million in revenue by the end of 2018 and $1.65 billion by the end of 2021; the sector is expected to grow at a CAGR of 38%. Currently, about 80% of this revenue is coming from sponsorships and advertising and the other 20% is coming from eSports betting, prize pools, tournament ticket sales, and merchandise.
Companies like Activision has already generated nearly $1 billion in revenue off capitalizing on the eSports trend by selling off 12 Overwatch teams last year to sports team owners/supporters across major cities. This start-up Overwatch league has been a huge success so far, generating lots of money across multiple different tournaments, and will set them up next wave of team sales at higher prices. Take-Two Interactive Software also capitalized on this growing eSports trend by creating an NBA 2K League, where 17 of the 30 NBA teams would be represented.
Aside from the gaming companies, traditional technology giants have also been plotting plans to enter into the lucrative eSports market. Companies like Amazon acquired streaming platforms such as Twitch in 2016 in order to tap into the eSports market. Now, Google and Microsoft have recently announced efforts to let people play big-budget, visually complex games on internet connected devices without them having to spend too much on devices such as Xbox or PCs. The game-software sector revenue rose 59% since last year to $121.7 billion and is expected to reach $134.9 billion by the end of the year.
Game-Software growth and eSport’s market growth carries huge growth opportunities for other parts of the tech industry as well. Demand for cloud and high-speed internet connection is expected to increase as a result of eSports because of the need to constantly integrate data at lighting speeds. During tournaments, a delay of even a quarter of a second can heavily skew the outcome of a game being players. This will accelerate demand for 5G networks once telecom companies start to role it out. Also, increased demand in gaming and 5G networks will also increase the demand for semiconductors which will benefit companies with Advanced Micro Devices and Nvidia. The semiconductor manufacturing industry is currently generating a revenue of $54.6bn with an annualized projected growth rate of around 2.2% per year over the next 5 years according to IBISWorld Research.
By Waiho Zhang - TMT Director, Baruch IMG