iGaming has long since developed into one of the largest entertainment industries thanks to the Internet and smartphones. Virtual sports – known as eSports – have also been gaining ground for a few years now, filling arenas and screens. The fact that iGaming is also about (a lot of) money opens up a whole economy between investment and gambling. The regulatory grey area surrounding cryptocurrencies will further fuel this segment through real and fake projects. Caution is advised.
eSports is still a relatively young segment with very impressive growth rates but not yet clear definitions on what exactly it is. Sure, it’s about computers and igames. Single gamers or teams fight each other in highly remunerated igaming tournaments. Despite its virtual nature, those esports (iGaming) tournaments literally fill big arenas all over the world. The market research company NewZoom, for example, counts the competition of players in such organized tournaments as eSports, while playing outside these tournaments is not considered as eSports, but as “ordinary” iGaming.
The large media groups, clubs, and brands have long since entered the eSports business.
eSports Livestreaming Attracts The Masses
More than 2.3 billion people worldwide will play online in 2018 and there are almost as many iGamers and e-sports people as Smart Phone owners.
Evidently, a good deal of those who play are interested in watching others play. Live streaming platforms around iGaming and eSports are therefore exploding with spectacular growth rates.
Amazon has purchased the gaming and eSports-focused live streaming platform Twitch.tv for just under USD 1.1 billion in 2014. In August 2018, Twitch.tv recorded more than 15 million active users who each spent around 95 minutes there daily (Source: Expanded Ramblings). More than 830 million hours were broadcast in August 2018 with an average of 1.1 million viewers online at any one time (Source: SullyGnome). Compared to 2017, Twitch’s relevant metrics have grown by more than 50% (source: TwitchTracker), making the platform a media giant of the digital lifestyle. While Amazon’s Twitch is the leader in eSports and iGaming live streaming, Facebook, Twitter and Microsoft are also investing massively in this market segment.
in the U.S., the median age of viewers is 28 years old, with 60 percent in the 25-to-39-year-old age range. And 58 percent of those 25-year-old-and-older fans have kids at home. Streaming media watchers are also likely to be college educated: about 50 percent of fans in the U.S., and about 70 percent of viewers in China. (VentureBeat)
The business model of these Live Streaming platforms is simple. Gamers and game moderator broadcast via their own channels with the aim to sell subscriptions. Top esports athletes like American Tyler BLEVINS manage to sell hundreds of thousands of subscriptions and earn up to $500,000 a month according to the New York Times.
High Prize Money for Next-Generation Athletes
Athletes in attractive sports such as golf, tennis or football earn a lot of money. The more spectators a sport attracts, the bigger the sponsorship deals. This is no different in the eSports segment – only bigger, much bigger. Every privately playing iGamer is part of the global target group for sponsors. It is, therefore, a logical consequence that global brands such as Red Bull have long since entered the eSports segment as sponsors.
iGaming and eSports events are already a huge business with incredible growth rates and the demographics in their favor. Apparently, it’s more likely that kids start to play some games on their smartphones than soccer or tennis, right?
The big eSports tournaments already attract more spectators than traditional sports events like the Tour de France (cycling), Wimbledon (tennis) or U.S. Open (golf). The 2017 League of Legends Championship tournament in Beijing attracted more than 106 million peak viewers. That’s more than Wimbledon, Tour de France, and the U.S. Open altogether.
Large prize money is at stake for the esports athletes. This year’s DOTA 2 tournament, for example, was already endowed with USD 25.5 million. More than twice as much as the best golfers in the world could win at the 2018 U.S. Open. More and more gamers can make a living from it and new jobs are created for non-playing people. The esports jobs website HitmarkerJobs.com recorded 3,574 job applications in July 2018. eSports is becoming a mass phenomenon. The market research company NewZoo predicts that eSports sales could reach around USD 2.4 billion in 2020.
Disruption in Sports Betting Industry
Traditional sports clubs like West Ham United or VfL Wolfsburg are already extending their football activities towards eSports and setting up their own eSports football teams to attract the target group of iGamers and eSports athletes.
And of course, eSports also brings traditional sports betting providers onto the scene. The sports betting industry smells the big business. Market researchers at Eiler and Krejcik Gaming forecast a global betting volume of USD 12.9 billion for 2020.
Cryptocurrencies and eSports
Sports betting is classified as a licensed business in many countries with the license difficult to obtain in some of them. Therefore, many eSports providers are currently experimenting in the largely unregulated grey area of cryptocurrencies. The eSports people were also among the first to exploit the ICO hype for fundraising. The eSports Observer listed 13 ICO’s in December 2017, looking for a total of several hundred million dollars from investors.
UK-based VELTYCO, for example, not only operates its own licensed sports betting provider Bet90 but also develops the Berlin-based eSports AG. This eSports AG (www.esports.com) has conducted an ICO with rather moderate success in 2017 and issued its own cryptographic currency ERT (ERC 20 token). It was supposed to be possible to use this ERT token for sports betting as well. In the meantime, eSports AG has withdrawn this offer. The ERT has disappeared from the homepage www.esports.com and can only be found via a rather hidden link in the footer. Apparently, the ERT is currently a sort of community-currency and loyalty token but concrete applications can’t be found at eSports.com. The ICO of eSports AG was heavily criticized by the experts at that time and was also called a scam. In any case, the original concept of an eSports betting token does not seem to have worked.
In addition to eSports and Blockchain, functioning innovative sports betting providers such as the Austrian startup HeroCoin have also emerged. This company also took advantage of the ICO hype, carried out an ICO in 2017 and, according to its own information, collected 6,000 ETH by issuing the ERC20-based HEROcoin. The HEROcoin can be used for a new generation of sports betting for eSports events.
We expect new investment schemes around eSports over months and years to come, especially in connection with cryptocurrencies. It seems obvious that cryptocurrencies are used for betting in the eSports area. But also the financing of eSports teams via cryptocurrencies could be an interesting area.
With NEXUS GLOBAL, a crypto-MLM scheme has already been developed that will use MLM investors’ money to invest in eSports and eSports betting as well.
As exciting as the development in the field of eSports may be, investors are advised to be cautious. Some of the eSports ICO’s have already turned out to be scams, others will follow. We will continue to monitor and report on the eSports ICO’s and the rapidly growing market.
Image: Wikipedia by Patar knight