The Rise of Esports
Most people are familiar with traditional sports and how much money they generate. Sports can stimulate local economies and often feature athletes making millions of dollars. Esports are lesser known but growing fast.
What Are Esports?
Esports represent a portion of the video game industry in which players compete in different video games, such as League of Legends, Fortnite or Call of Duty, to achieve world rankings and prize money. Some competitions are held remotely, but the biggest competitions are held on grand stages, such as at the Barclays Center in New York.
How Popular Are Esports?
In 2021, esports generated approximately $243 million in revenue in the U.S. and about $360 million in China, according to data company Statista. To pull in that much revenue, the industry relies on fans worldwide.
The 2021 League of Legends World Championship Final in Reykjavik, Iceland, “was watched by a record 73.86 million peak concurrent viewers,” according to Statista. For context, the 2021 Super Bowl drew 96.4 million viewers. The large number of viewers for the League of Legends World Championship Final was no fluke. Athletic Panda Sports Editors reported in January 2020 that more than 443 million people globally watch esports tournaments on a regular basis.
One reason esports can draw such large crowds may be the variety of games. While League of Legends features player-controlled characters with unique sets of abilities that fight in battle arenas, games like Madden NFL are football-oriented and feature National Football League teams and players. The wide array of games allows players and fans to follow what they truly like.
How Do Teams and Players Make Money?
Esports teams and players generally compete for prize money, one of the more obvious methods of making money in esports. As of September 2021, the best paying game was Dota 2, according to an October 2021 post on The MC Byte blog. Dota 2, a multiplayer online battle arena video game, set the record for the largest overall prize pool with over $34 million, the blog reported. Although prize money can be substantial, many esports teams rely on sponsors for more stable incomes.
Adidas and Spotify are two recognizable companies that have become sponsors of esports teams and organizers. In 2020, Spotify announced its first-ever esports partnership with Riot Games, becoming the official audio streaming partner for League of Legends.
The National Basketball Association is another large organization investing in esports. In 2018, the NBA launched its own gaming league, the NBA 2K League, named after a popular video game series. The esports teams are owned by the same teams that play in the NBA, such as the Boston Celtics or Los Angeles Lakers, providing basketball fans an entry to esports.
Individual esports players can also drive revenue through their streams. Tyler Blevins, more commonly known as Ninja, is arguably the most popular streamer in the esports industry. According to Twitchmetrics, as of August 2022 he had the largest following on streaming platform Twitch with about 18 million followers, and Forbes said he earned $17 million in 2019. He has made most of his fortune from donations and sponsorships. Viewers of Ninja’s streams have the option to make donations while he is streaming live. These donations can range anywhere from $1 to $100 or sometimes even more. His sponsorships have included big brands such as Uber Eats and Red Bull.
How Do Esports Affect the Economy?
Cities compete to host esports competitions for the same reason they compete for the Super Bowl or World Cup matches: The competitions can stimulate employment and economic growth. Atlanta is a prime example of a city capitalizing on esports’ growth. Forbes reported that Georgia Gov. Brian P. Kemp called Atlanta the “esports capital of the nation” when he opened DreamHack 2019 in November—an esports event attended by 35,000 players and fans. Kemp further stated that esports employed 12,000 Georgians, and had an economic impact of $500 million.
Esports also influence the tech industry. Many colleges and universities, such as Ohio State University and the University of Missouri, offer esports scholarships to students willing to compete. This scholarship can help students pursue their passion in the technology field.
“On average, esports players score higher than other athletes on the math section of college admissions tests, and they tend to pursue degrees in science, technology, engineering and math, the so-called STEM tracks,” Bill LeVoir-Barry, then-chief technology officer of IBM esports, wrote a 2020 Forbes article. “Esports are helping communities adopt the most advanced technologies, and they’re providing a pathway to STEM education and the best jobs of tomorrow,” said LeVoir-Barry, who now heads up an esports consulting company.
Across many industries, esports have become a significant revenue driver with more people and organizations getting in the game.
This blog explains everyday economics, consumer topics and the Fed. It also spotlights the people and programs that make the St. Louis Fed central to America’s economy. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.