Why is Esports Successful? Charting the professional gaming industry’s growth

Headshot for Jehan Moorthy, CEO of New Frontier Esports & Entertainment

Esports is a booming global industry where skilled video gamers play competitively.

In the same way that traditional sports have competitions in baseball, basketball, and football, esports encompasses competitions across a variety of video game platforms. Contrary to common perception, Esports is not simply a phenomenon occurring in the basements of unemployed twentysomethings or just in Asia; the industry is real and growing globally due to industry awareness and adoption via acquisitions, mergers, and brand partnerships.

While the complex Esports industry may be daunting for those on the outside, we believe it is a space to stay tuned to for the foreseeable future.

In this article, we’ll dive into how Esports has grown over the decades, key areas of revenue generation, and why brands should pay attention. And while you’re here, bookmark our article on what Esports is, and why you should take it seriously.

Charting the Esports Industry’s Growth

At New Frontier, we’re excited that 2022 shows great potential for more brands to integrate Esports as an aspect of their digital strategy.

We’re also excited that Esports is bouncing back as a rival to spectator sport with the return of live in-person entertainment. All in all, Esports and the gaming sector have solidified themselves as serious players in the entertainment space.

The Esports industry has seen incredible growth over the last few years, both in terms of structure, viewership, and revenue.

Why you may ask? The Esports industry is the most technologically driven sport the world has ever seen. Esports’ continuous popularity trajectory has been a result of the audience being digitally connected. As is with technologically disruptive industries, Esports is fast-paced and scalable because of its reliance on digital platforms. Esports lifts the ceiling with the opportunity to perform in infinitely scalable dynamics.

Could you imagine running a tournament in the real world with over 300 competitors in a single day? No. But we can with Esports.

As data analysis platforms like Neuzoo suggest, consumers [gamers] are spending more time than ever on the streaming platforms engaging with the Esports ecosystem. At New Frontier, we have defined the ecosystem in Canada as revenue-generating verticals derived from Esports consumerism.

It isn’t that viewership is generating revenue alone. Rather, Esports has become a consortium of business activities ranging from brands, venture capitalists, and start-up founders investing in the Esports market, both directly and indirectly.

So then why have you only just started hearing about the Esports sector? It’s because of the sheer rapid growth this industry has seen over the last few years.

Before we move on, we have to debunk the notion that competitive video gaming is primarily an Asian phenomenon. According to Neuzoo, only 51% of Esports enthusiasts are in Asia. In fact, North America and Europe have taken a prominent place in the global Esports and gaming ecosystem. As a company, New Frontier exists to help organizations, including you, understand Esports and gaming culture’s path to prominence today.

There are four reasons why an activity deriving from video game culture has entered the mainstream:

#1 – Leveraging Generation Z

First and foremost, the power of Esports and gaming has become synonymous with a generation of users who are native to an environment of technology immersion.

Over the past few years, Generation Z, and now Generation Alpha, have been networking, socializing, and consuming hyper-social crowd-based entertainment in the form of live streaming. Brands that look to cultivate loyalty and awareness through Esports are successfully leveraging a connection with young people within the predominantly Gen Z category.

It took two months into 2022 to start seeing large activations between Generation Z-focused Esports entertainment brands and non-endemic Esports companies (brands outside Esports).

Look no further than the recent partnership announcement between the National Football League (NFL) and FaZe Clan. Or, more recently, the merchandise collaboration between FaZe Clan and the LA Kings National Hockey League Club.

If you missed out on my article about why sports brands are doubling down on the Esports industry, it explains this phenomenon in detail. Generation Z, who have the future in their hands through their immense purchasing power, are readily engaging on technology platforms like Twitch, Youtube Gaming, and Discord.

Brands and marketers today without a doubt should already be factoring strategies in which to appeal to Gen Z and now Generation Alpha through Esports integration. Generation Alpha? It’s the demographic born after 2010. For the last two years of the pandemic, the meta verse of the gaming world was their playground!

#2 – Leveraging Millenials

The next key audience that is owed a great deal of credit for the success of Esports and gaming culture are Millennials. We would be remiss to not do a deep dive into this particular demographic.

What makes this generation unique is that they are deeply engaged in gaming today as a result of immersion in a strong decade of exposure to products from intellectual properties (IPs). This includes Nintendo Pokemon, Playstation, Sega, and concepts that we would classify today as popular culture.

All of these IPs to this day (minus Sega) are still making products in their newer generation formats. Notably, Pokemon came out with a new game 26 years after its first iteration on the retro handheld Gameboy. Remember those things with the 8-bit game format? According to a survey conducted by our team in early 2021, over 54% of Millennial-aged respondents average 100 minutes per session of consuming streams on platforms such as Twitch, Discord, and Youtube Gaming.

Yes, young adults and professionals engage in gaming-related content as much as they would sit down for a live sports game.

In fact, over 45% of millennial respondents also indicated they would be interested in or if not, already travel to Esports and live gaming-related entertainment events in person (i.e. tournaments, comic cons, gaming conventions, and expos). Does this generation enjoy reveling in nostalgia or are they genuinely interested in this field of entertainment? It’s partly a mixture of both.

To us at New Frontier, Millennial audiences strike a chord as yet another demographic who no longer follow traditional entertainment consumerism.

#3 – The Pandemic & The Switch to Virtual

The third reason Esports has been entrenched in the mainstream has to do with the pandemic.

While the Esports market faced challenges during this time with the pause on live events, it also saw considerable growth and expanded into markets and audiences where there had previously been little activity. Over the course of the pandemic, people turned to gaming culture while at home. Both as a social pass time and to absorb tips from professionals.

The pandemic led to viewing spikes across all live streaming platforms. But, most importantly, it provided time for people at home to buy the tools and infrastructure needed to engage in Esports and video gaming from the safety of home. Entry-level console systems such as the Nintendo Switch saw considerable success being a hot commodity over the course of the pandemic.

Further, two of the largest consumer products within the gaming space were the Playstation 5 and the Xbox Series X. Both of which were the most sought after items by the public during the course of the pandemic.

#4 – The Democratization of Participation

Someone holding a phone and playing a mobile game

The last aspect of Esport’s popularity stems from the unique way that a player’s success is independent of how tall, strong, thin, or fast they are.

Though there is certainly valuable insight linking good physical health to enhanced gamer performance, it is ultimately inconsequential whether the gamer looks a particular way. Irrelevant of how they are or look externally, a gamer can excel at the highest levels of League of Legends, CS:GO, Dota 2, Call of Duty, or any other game.

Esports can further level the playing field for factors such as gender, culture, and location. This democratization of participation contributes to Esports’ allure and its generation of a globally engaged fan base. Over the last decade, we have seen the creation of dedicated Esports’ fandom created as a result of the accessibility of this entertainment format.

Key Takeaways

An esports arena, with a man standing up and cheering, holding his fist up in the air

Esports has become a prominent spectator sport globally. Through this viewership and adoption of Esports as a viable entertainment platform, a business ecosystem has since emerged. This encompasses the management of players, teams, and franchises complete with their own advertising, event ticket sales, licensing, media buy rights, sponsorships and merchandising.

Organizations like New Frontier have emerged to assist brands with learning how they can place their first foot into this emerging industry in the most authentic way possible. The prominence of Esports has led to the creation of dedicated investment through infrastructure, support and even legislation by government bodies.

As wild as it sounds, this was the first year that a US state (Georgia) was allowing an Esports tax credit to be created. Specifically, this relates to the fact that Esports has been actively converging with fields like education, tourism, hospitality and the overall economic rejuvenation of the state.

At New Frontier, we predict the second half of 2022 will be especially profitable for Esports/gaming industry.

With a growing dedicated viewership, combined with live entertainment opportunities and a never before seen precedent on Esports within mainstream culture, it won’t be long until Esports becomes a prominent source of consumed entertainment.

Look out for news on live Esports events generating some hefty prize money or see if you recognize any of the brand partners posted to Esports organizations and events. Entertainment is slowly transforming. We’re here for it and we hope you are too.

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