Who would’ve thought twenty years ago that playing video games could make you serious money?
The internet has enabled gamers to unite across the globe and to challenge each other in an exciting industry that has gained a tremendous amount of prominence in the last decade.
Otherwise known as electronic sports, eSports is a form of competition by using video games.
The sport has elevated to such a high level that participants are referred to as professional gamers. Multiplayer online battle arena, first-person shooter, digital collectible card games and fighters are some of the most common video game genres associated with eSports.
Some of the popular eSports titles include League of Legends, Call of Duty and Counter-Strike.
eSports has gained a lot of prominence in the last decade, but many people will be surprised to discover that the sport’s origin dates back to the ‘70s.
Many people recognize the first official eSports competition on record to be the Stanford University (SU) held one on October 19, 1972. Since then, the sport has come a long way and contributed tremendously to global wealth.
The students at SU gathered to compete in Spacewar, a space combat game first developed in 1962. The top prize was a one year’s subscription to Rolling Stone magazine. The winner was Bruce Baumgart. (14)
How Popular is it?
The sport has become so popular that Goldman Sachs analysts have voiced their projections about it.
A Goldman Sachs analyst wrote that the eSports industry had a larger audience than Major League Baseball, excluding China.
A New Zoo, gaming market researcher, survey indicated that 167 million people were competitive eSports gamers at the end of 2018 and that the figure would rise to 276 million by 2022. (1)
Here’s who leads the pack in eSports prominence:
“China has been ahead of the curve on this; all of Asia really,” says Menashe Kestenbaum, CEO of Enthusiast Gaming in Toronto. “If you see an arena jam-packed with gamers, it’s probably somewhere in China or South Korea,” he says.
The sport has become so popular in China that the country is building the world’s largest gamer theme park. (2)
The park is currently under construction and set to be the size of an average Six Flags Amusement Park and slated for completion in 2022.
The global games market generated over $138 billion in 2018. China had over 700 million gamers, making it a prime destination for gaming companies. (2)
One of the main reasons that eSports has taken off is due to the support of the Chinese government, which believes that eSports is the future of gaming.
The Chinese government has taken the industry seriously since its gaming market contributed $32.5 billion in 2018 to the economy. (3)
The thriving gaming industry started off in South Korea, but it’s China that has seen unprecedented growth.
China’s massive expansion meant that it surpassed the U.S. market.
Businesses have seen the impact that eSports has on the economy and have tried to get their share of the pie. Newzoo data revealed that the eSports industry generated $660 million in 2017 with China making up 16% of that. (4)
The global market had a revenue of $900 million in 2018.
Price Waterhouse Coopers has estimated that the global revenue from eSports will be $1.6 billion by 2022. (5)
While China’s gaming industry booms, the rest of the world is playing catch-up.
Japan is another market that contributes greatly to the gaming market. Japanese gaming companies contributed $19.2 billion to the country’s economy in 2018. Sadly, revenue from Japan’s eSports market in 2018 was only $44.2 million.
Although the comparison of eSports contribution to the economy was less than 1% of the gaming industry, the country’s eSports revenue was $3 million in 2017. (13)
One of the problems that the eSports industry in Japan has faced is legal restrictions. Legislation such as the Penal Code, the Premium Act and the Fueiho Law have gotten in the way of the industry’s prosperity. (13)
Does it Pay?
South Korea is the sixth biggest eSports market, but many people consider the country to be the pioneer of eSports.
Lee Sang-hyeok (Faker) at LoL World Championship 2013
Lee Sang-hyeok, a South Korean eSports world champion, demands a salary of $3 million annually. Lee Dae-ho, a professional baseball player, receives an annual salary of $2.5 million by comparison. (5)
The average annual salary of a South Korean professional gamer was $150,000 in 2018. (6)
A government report stated that South Korea’s eSports industry increased by 4.2% in 2017 to $87 million. (6)
The United States Strives to Compete in the World of Gaming
The U.S. is hot on the heels of China.
Although the gaming industry in the U.S. was making money off video games since the ‘90s, it was Blizzard Entertainment’s release of StarCraft in 2010 that catapulted eSports in the country.
Major League Gaming (MLG) is one of the most prominent eSports organizations in the world and helped to pioneer the sport in the country.
The company’s latest tournament, Call of Duty World Championship, invited 32 of the world’s best teams to compete for $1.5 million in prizes. (7)
How’s that for prestige mode?
The highest-earning player in the U.S. made just over $3 million. The second highest-earning player made $2.98 million. (8)
The good news is that you don’t have to be the best player in the country to make a good living from eSports. Thanks to certain leagues, the average eSports competitor can live off of playing video games.
Riot Games’ League of Legends was the first league to provide salaries for every starter in 2013. The company’s goal was to offer stability that no other eSports could rival. Numerous North American professional players make an average annual salary of $320,000 by playing League of Legends alone. (9)
“These days, now that the path to pro is well established, and there are nearly 1,000 pros globally making a living off of playing League of Legends professionally, we look at player salaries continuing to rise and new player benefits (insurance, 401k, etc) as evidence of a healthy ecosystem,” said Chris Hopper, head of North American eSports at Riot Games.
The average annual salary of the pros in the League of Legends averages the same salary as an athlete in the Major League Soccer clubs.
If the salaries for professional players isn’t enough, they can make up for it in the competitions. Xiao Hong, the Dota 2 operator in China, said that the TI9’s prize pool would be $25.5 in 2019. (10)
Chinese teams finished first or second at the Dota 2 competition for the last few years, resulting in the country netting $18 million from the four-team placements. (11)
The average age of players who made the most money was 25.
Professional players can make money from lucrative competitions only if the organizers have audiences to show their advertisements to.
A report that Penguin Intelligence released stated that eSports viewers would grow to 350 million in 2019, a 10.6% year-on-year increase. China’s share of the market would be around 75 million fans.
The report also stated that the growth in China’s audiences would create a market of $2 billion by the end of 2019. The growth stems from income generated from tournaments, sponsorships, media rights and money that the players will earn.
Some of the predictions include that 600 million viewers will watch eSports by 2023, an increase of around 79% from 2017, which recorded 335 million viewers. (12)
According to Activate, 62% of U.S viewers were aged 18-34, and 58% had a positive attitude towards partaking in eSports. (12)
Other statistics revealed that Gen Zers were more open-minded toward eSports than other generations. The statistics stated that 56% of US Gen Z men (aged 13-21) said that non-traditional sports were relevant to their generation, and 44% stated the same for traditional sports.
Salaries and competition prize money isn’t the only way that the eSports industry benefits, as sponsorship revenue reached $359 million in 2018. (12)
That is a 53% year-on-year increase.
The increase in viewership and sponsorship has propelled high profile figures to get involved. The sport has taken off so much that celebrities couldn’t resist investing in it. Basketball legend Michael Jordan and platinum-selling artist Drake have invested in the eSports industry.
Figures prove that eSports is becoming more popular every year. Not only are players making more money than previous years but businesses have profited by getting involved as sponsors.
More professional players have emerged due to the large prize pools, and celebrities have become investors in the industry.
With global audiences increasing annually, eSports is set to become the next big sporting event.
You don’t have to take my word for it.
All you have to do is look at the salaries of professional eSports competitors. Some of them are making more money than professional athletes involved in traditional sports.
Games like League of Legends have attracted some of the best players in the world, and the organizers have filled up stadiums with fans.
Although you might have outgrown video games as Michael Jordan and Drake have, isn’t it worthwhile to look at the investment opportunities?