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Why Gaming is on Pace to Become a Billion Dollar Industry

Apr 3, 2018

Gaming has exploded in recent years and morphed into a competitive “sport” (the use of quotes denotes my unwillingness to classify gaming as a sport, but that’s an entirely separate debate).

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Gaming has exploded in recent years and morphed into a competitive “sport” (the use of quotes denotes my unwillingness to classify gaming as a sport, but that’s an entirely separate debate). Projections show that gaming is on track to become a billion dollar industry by 2020. Hard to believe. But there are many factors contributing to this rapid growth. Let’s dive in.

  1. Gaming is Social

I’ll be honest – the image that jumps into my head when I think of gaming is someone sitting in their basement, alone, playing video games. I don’t imagine gaming to be a social activity, but my own pre-conceived notions are inaccurate. On a non-professional level, gaming often consists of battling against other gamers, via the internet, who are geographically located anywhere in the world. You can engage, talk with or taunt these other gamers in real time – while you’re trying to kill them (in a virtual sense, of course).

Esports tournaments, on the other hand, are often streamed live to the web, reaching millions of at-home viewers. Those viewers can engage with the live gaming content, share the stream on social media, and interact with other viewers – anywhere in the world – via chat features within the live stream.

The digital nature of gaming and esports creates huge viewership numbers, which means advertisements reach a larger audience, thus more potential for ad revenue.

  1. High Viewership of Live Streams

Live streaming for gaming content works in a similar manor to live streaming professional sports. Certain leagues have exclusive broadcast partnerships with specific carriers. In the world of esports, those carriers are often Twitch or YouTube. The sale of broadcast rights has proven to be a big revenue driver for the gaming industry.

On the flip side, the streaming platforms themselves can monetize gaming content by charging membership fees. Twitch, for example, is largely free, but they offer Twitch Prime subscriptions starting at $12.99/month. Some esports live streams have been known to generate millions of viewers. So in the case of Twitch, even if a small percentage of those viewers are paid members, at $12.99 per person, you’re still generating a lot of revenue from a single gaming event. And if your viewers aren’t paid subscribers, you’re still able to monetize the “free” stream through ad sales.

  1. Big Sponsorships Opportunities With Gaming

If you’ve ever watched an esports event, you’ll notice teams wearing jerseys with corporate logos adorned on the back. Sponsorship is another revenue driver for the gaming world. There are not only opportunities to sponsor specific teams or players, but opportunities to sponsor specific events, tournaments and live streams.

Some professional sports teams and sports leagues – like the NHL and some European soccer clubs – have started to sponsor esports teams and individual gamers. The idea being that by exposing players to your own professional sport through video games, you’re increasing the likelihood that those players will become fans of the actual sport. For example, if the NHL sponsors a gaming tournament in which gamers are competing against each other in EA’s NHL 2018, you’re exposing those gamers to the world of hockey – even though it’s virtual – thereby increasing the likelihood that they’ll get invested in NHL players, teams and the league itself.

  1. Young, International Demographic

The unique thing about esports and gaming is that it’s a global phenomenon – and a trend that doesn’t have western roots. The demographics for fans and gamers themselves tends to skew lower, which is a target demographic that advertisers have long been hungry to get in front of. The global reach and key demographics of esports make it a very attractive avenue for advertisers. They have the opportunity to not only reach a key demographic, but they have an opportunity to reach them on an international level.

  1. High Pay Means More Gaming Competition

If you’re skilled enough to play esports competitively, you have the opportunity to make a stupid amount of money. Some gaming competitions have paid out as much as $24M. Keep in mind that this gets split among your entire team, but still… I’d take ¼ of $24M. Some leagues have even started paying their players an annual salary, which is on top of whatever prize money these professional gamers pull in. In a recent interview with CNBC, one of the top gamers in the US – Tyler “Ninja” Blevins – claimed that he pulls in $500k in revenue per month. That’s $6M in revenue annually. From playing video games. Sign me up.

With prize pools and sponsorship opportunities continuing to grow, it creates a case for more people to pursue gaming as a career. And the more people who want to turn “pro”, the more competitive the landscape becomes. Just like with pro sports – you want to be the best of the best at your specific position. And the best-of-the-best make the most money and pull in the most fans.

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Despite any of your own individual opinions or biases against esports, it’s hard to deny that the gaming industry is exploding. And for all the reason’s outlined above, it will continue to do so.

No Comments
  • Andrew Ryback Reply
    2018-03-07 21:55:41

    We're glad you found this to be useful, Margaux. Let us know if there's anything we can help with.

  • Margaux Ford Reply
    2018-03-07 05:57:06

    I appreciate the tips on hiring a production staffing company to have more time to focus on the creative aspects of the project. Hiring a production crew is a tedious task, and can take up much of your time. We're currently working on a huge production, and I'll share this article with my boss so he'll consider on delegating the recruitment to a staffing company. I like that you mentioned that staffing company can ensure to have the right team onboard for the project. Thanks!

  • Robert McWilliams Reply
    2017-10-31 19:05:18

    Todd:I have an ad agency in addition to our production company. We put one of our clients on OTT two months ago up in Nevada. Seems to be working!Thanks again for the work earlier this month.Rob

  • Nicole Rohde Reply
    2017-05-27 22:28:45

    Hey Andrew, Any word as to whether or not the Jokers will be back for Comic Con this year? Please let me know. Thanks!!!

  • Aaron Estabrook Reply
    2017-02-23 16:26:57

    I'll be tuning in for sure!

  • David Patton Reply
    2015-01-16 13:16:02

    Interesting blog post Andrew. For those who are nearly ready to cut the cord, but still want access to key channels such as ESPN, I'd recommend checking out Dish Network's new service, Sling TV. It provides access to a handful of channels for $20/month.https://gigaom.com/2015/01/15/sling-tv-details-price-devices-networks-resolution-bandwidth/

  • Andrew Ryback Reply
    2015-01-13 14:44:19

    Go for it! I'll admit that I was a little apprehensive about pulling the plug at first, but honestly, the transition away from DirecTV has been seamless. The only missing link is live sports, but there are a few work arounds depending on what sports you watch. Good luck!

  • Gregory Hart Reply
    2015-01-13 06:35:00

    While I am part of the 55 year old demographic that still has TV boxes and does TV viewing, I do my viewing using DVRs and networked PCs playing video files from an in-home server. I too have noticed that I view a handful of shows on a regular basis and have found various other sources for these shows. And now it has gotten to the point to where I am seriously considering ending my very long relationship with DirecTV and going streaming. Working in the TV industry also helped to open eyes to this as well. This transition from "old" TV is coming and the networks (Les Moonves, I am looking at you!) had better plan for it.

  • Gary Reply
    2013-08-08 09:44:39

    You've left out a HUGE part of this story by not mentioning Howard Stern's effect on the Sharknado buzz! #siris-ly

  • Marybeth Harrison Reply
    2013-08-07 14:46:29

    I can almost hear the theme song from Jaws as I read your post!