Economics

Print
eSports Grows to Estimated $600 Million, Dives into Travel Market

19 Oct, 2016

By: Michael Popke

These days, eSports represent big crowds, big arenas and big money. Don’t believe us? Consider that in late July, Twitter livestreamed its first eSports competition by covering the semifinal and championship events featuring teams playing the first-person shooter videogame Counter-Strike: Global Offensive. In a partnership with the professional eSports organization ELEAGUE, Twitter tapped into a diverse group of gaming fans. And just in case viewers didn’t want to stream the competition, which was held at the Cobb Energy Performing Arts Centre in Atlanta, TBS also provided coverage.

Want more? The finals of the League of Legends eSports competition drew 45,000 fans to a South Korea soccer stadium in 2014, and 38 million more watched online. Experts predict that event eventually will sell out Madison Square Garden in New York City and Staples Center in Los Angeles.

In January, ESPN announced plans “to aggressively cover the sport of playing video games,” beginning on its website and apps, according to an article in the Los Angeles Times. Whether people actually classify this as a sport is immaterial. eSports competitions have exploded into an estimated $600 million global industry over the last few years, as millions of people watch online or turn up at arenas, stadiums and convention centers to see players go at it with game console controllers or computer keyboards. In fact, it’s one of the hottest segments of the travel market right now.

Apparently, the Philadelphia 76ers don’t need any additional convincing. In late September, the NBA team became the first professional U.S. sports franchise to enter the eArena. 

According to SportTechie.com, the team partnered with venture capital firm NextEquity to purchase a majority stake in the eSports franchises Team Apex (a successful League of Legends team) and Team Dignitas in a deal that Forbes.com says is worth between $7 million and $15 million. The two teams will be combined under the Team Dignitas name and operate separately from the 76ers.

“I think that an organization that has an operating relationship with an NBA team has a distinct competitive advantage in terms of resources, access to corporate partners and database brand experience,” 76ers CEO Scott O’Neil told SportsBusiness Journal.

There’s no doubt execs see eSports as a rapidly proliferating opportunity and are eager to jump on the bandwagon.

“We have an infrastructure of a mature business that’s going to be laid on top of an incredibly attractive business with a growing fan base,” O’Neil said told Forbes.com. “We think the missing ingredient in making this growth on the fan side and player side is the actual infrastructure. We will put dedicated staff on the business. We have built a reputation over time as a group that does big, innovative deals and a group that has relationships throughout corporate America.”

The SportTechie article also notes that team executives will assist in sponsorship sales in addition to helping Dignitas create and distribute content, which will be seen as an important revenue stream for the eSports franchise. Additionally, “a number of current and former NBA players have also entered eSports, including Brooklyn Nets point guard Jeremy Lin recently endorsing a team and Boston Celtics forward Jonas Jerebko purchasing a franchise. In May, current NBA analyst Shaquille O’Neal invested in NRG eSports.”

The announcement about the 76ers was the first to involve an entire team, but individual executives are getting in on the gaming action, too. The very next day, SportTechie reported that Team Liquid, an eSports franchise, sold the controlling interest of the team to an ownership group called aXiomatic that includes professional sports owners Peter Guber, Ted Leonsis and Magic Johnson.

And the day after that, Steve Kaplan, co-owner and co-executive chairman of the Memphis Grizzlies, increased his stake in the gaming team, Immortals.

No wonder, ESPN.com has already rolled out a section devoted to articles and videos about professional leagues and tournaments.

Print

Subscribe to SDM