Esports, short for “electronic sports”, is the growing business of playing video games competitively in front of a viewing audience.
For most people, the concept of esports may be foreign. It seems strange that people would rather watch someone playing a game than play themselves. However, for the current generation of children and young adults, spectating video games has become a notably popular activity, one that could conquer the landscape of traditional live media, sports, and entertainment.
Credit: GeekWire. March 14, 2018.
Credit: Epic Games.
Credit: Blizzard Entertainment.
Credit: Riot Games.
Game livestreaming, whereby “streamers” broadcast their gameplay live via web platforms, has taken the original form of entertainment -- the games themselves -- and allowed for a “second derivative” mode of consumption. The digital immersiveness and interactivity of games has made this second derivative an exciting and popular form of new entertainment. Per SuperData, more people watch gaming than HBO, Netflix, ESPN, and Hulu combined.
Esports is a large and rapidly growing cross-industry segment, with total revenues in excess of $50 billion. The esports market continues to earn an increasing share of the $2 trillion media and entertainment industry, and is well positioned for the coming decades.
Source: Newzoo, BITKRAFT Esports Ventures
Esports viewership continues to increase, and premier titles like Riot Games’ League of Legends (“LoL”), are challenging the incumbents of traditional sports.
Source: Goldman Sachs Global Investment Research, Nielsen, Rentrak
Source: Goldman Sachs Global Investment Research, Newzoo
Gaming is the fastest-growing form of entertainment globally, with revenues increasing at 9%+ per year. By 2022 the global video game market is expected to surpass $190 billion in revenues. Esports stands to directly benefit from growth in the broader gaming industry.
Source: ©Newzoo | 2019 Global Games Market Report
Roundhill believes that esports and video games are the future of live media, sports and entertainment.
The number of gamers globally, including 2 in 3 Americans.
The amount the average Fortnite player spends inside the game.
2019 earnings for popular game streamer, Ninja.
The number of registered users for popular mobile battle royale, Free Fire, which has surpassed $1 billion in lifetime revenues.
Unique viewers for the 2019 League of Legends World Championships.
Awarded in esports tournament winnings and prize pools for 2019.
Source: Newzoo, Forbes, The Esports Observer, Lendedu, Sea IR, Riot Games
Roundhill has identified four primary types of public companies that provide exposure to the esports ecosystem — games, media, hardware, and broad-based.
Games companies are primarily involved in the business of developing and distributing gaming software. In several cases, these companies own and operate competitive esports leagues.
Esports media companies operate livestreaming platforms, entertainment properties, and / or esports events. These companies may also own or operate esports teams.
Gaming hardware companies produce peripherals (e.g. headsets, keyboards), gaming devices and processing units. These companies may act as endemic sponsors for popular streamers and esports organizations. As gaming becomes more competitive and increasingly popular, the hardware sector may benefit from increased demand.
Broad-based companies are stakeholders in various segments in the esports value chain.