The eSports market is set to explode in the next few years and this hasn’t gone unnoticed by companies like Facebook, Microsoft and Activision Blizzard.
The eSports industry might still be in its infancy but Wall Street firm Pacific Crest Securities believes that the market will grow tremendously, which bodes well for companies like Facebook and Amazon.com, who are starting to get more involved with eSports.
Pacific Crest Securities cited gaming research firm NewZoo in a note sent to their clients, which explained that almost 200 million people watch eSports regularly. That audience has the potential to fuel 50% or more year-over-year growth, elevating the 2017 revenue to $600 million. All this without considering the launch of Activision’s Overwatch League, which could provoke faster growth next year.
Pacific Crest analysts Evan Wingren and Andy Hargreaves wrote that “although eSports is still a frontier market, we believe its high growth, large audience, and attract demographics warrant investor attention.”
Last month Activision Blizzard launched the league version of their popular game Overwatch, which reached 30 million registered players in the first quarter of 2017. Leading bookies will have odds for this event, like bet365, review them before placing your bets.
The Overwatch League’s potential to make serious amounts of money for Activision Blizzard is evident. The company’s CEO Robert Kotick recently explained the math during a first-quarter conference call. Kotick stated that the NFL generates $12 billion in revenue from 240 million viewers and that all of them watch around 7 billion hours of NFL content. According to Kotick, “with hundreds of millions of people already watching eSports and playing our games, over the long term our goal is to create opportunities that we believe could be of a similar scale.”
According to Pacific Crest, the eSports market will benefit both publishers and platforms.
Activision Blizzard is winning the race so far because they’re already investing in the market while competitors like Electronic Arts (EA) and Take-Two Interactive haven’t made significant pushes in that area. Analysts think that if Electronic Arts (EA) enters the market it would drive their stock higher but they consider that Take-Two Interactive doesn’t have enough big game titles that are suitable for eSports.
Regarding platform providers, Microsoft has its Xbox Live service, but if they want to have an edge they have to add an eSports game that can be a hit on their console. The new technology from their recently announced Xbox Scorpio could allow them to compete and regain market share.
Nowadays, Amazon’s Twitch service leads the video game content streams market with more than 10 million active users who watch nearly two hours daily. Still, given Amazon’s size it’s not enough to drive the stock higher soon.
Facebook could be a force when it comes to streaming video games because of their Facebook Live platform. Robert Kotick wrote that “video is a key strategic focus for Facebook. eSports is a digitally native brand of content, so unlike moving traditional sports to Facebook video, this effort should be more seamless.”
Facebook’s push into live sports started with a deal with eSports squad Team Dignitas. They will stream games on Facebook in addition to Twitch.
A report in Forbes explained that Team Dignitas, which is managed by the NBA’s Philadelphia 76ers, hopes to access the around 650 million people who play games on Facebook each month.
The deal with Facebook is unusual for an eSports team, as most stream their games exclusively on Twitch.
As for Facebook, this is further proof of how live video is a growing business for them and it explains why they’ve been courting many professional sports teams.
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