eSports: Fashion or the Future? This is a commonly asked question today and a relevant topic in investments and business. But let's step back and explore the evolution of organized electronic gaming competitions. The origins of eSports date back to 1971 when a group of students at Stanford University held a match in one of the first video games, Spacewar. Today, 50 years later, when we examine the development of eSports, we can identify numerous factors that have contributed to the explosion in revenue and investments.
For example, the eSports market, as a vital segment of the gaming industry, reached a value of $1.1 billion in 2020, with projected growth to $1.6 billion by 2023, positively impacting all market participants. Who makes up this comprehensive ecosystem? Primarily, fans attend live or online competitions, passionately supporting their teams/players. In 2020 alone, there were 495 million global viewers, positioning eSports ahead of some significant baseball games in America. Additionally, the strong interest from sponsors across various industries has been driven by the popularity of this form of entertainment, especially considering that nearly half of the fans are aged between 10 and 35, the so-called "invisible" generation that lives without traditional media (TV, radio, newspapers). However, the pillars of this ecosystem consist of game developers, event organizers, and teams/players actively involved in creating content for electronic competitions, shaping trends that have successfully integrated into global culture for years. eSports has significantly impacted this stratosphere due to the social component of live game streaming. Video game streaming platforms like Twitch and YouTube Gaming provide fans with direct connections to players and teams, while various popular social networks have facilitated the growth of these connections. An interesting statistic reflecting the popularity of platforms and eSports is the hours spent watching eSports activities, which reached a staggering 6.3 billion hours on Twitch in the first quarter of 2021. Much like traditional sports, the popularisation of esports has enabled esports teams/players to gain owners, franchises, sponsorship contracts, tournament winnings, and much more, contributing to their overall valuation. The highest-earning player in the world is valued at $7 million.
It's indisputable that such a trend is rapidly spreading worldwide. Just imagine how often you've heard that children "never get off" their computers or mobile phones, while parents are often unsure about what they are watching. In many cases, it's gaming or eSports, one of the first signs that eSports is among us. In Serbia, several organizations are working on developing and introducing these trends. Still, two factors that will impact the growth of eSports are undoubtedly the regulatory environment and increased investments (capital or sponsorships). One of the biggest challenges in the esports market is the undefined regulatory framework, such as the unregulated status of esports players who are not recognized as professional athletes and need clarification regarding tax payments. In this segment, the involvement and willingness of the state to support the development of eSports and the gaming industry are of great importance. Take Poland as an example; in just a few years, they established gaming and eSports as a national brand. This allowed Poland to turn its smaller cities into eSports hosts and open doors to other sectors, such as education and new business positions related to hardware/software development. By creating a secure environment, the state will stimulate numerous innovations and investments as tools for market entry. Today, multiple ventures and private equity funds are investing in eSports and well-known figures like soccer player David Beckham and basketball player Michael Jordan. It's clear that whoever is the first to embrace the rapidly growing eSports industry in Serbia, becoming a "first mover," will gain a crucial competitive advantage and capture the largest market share in our region. But, to begin with, it's essential to understand what eSports truly is and continuously follow the trends of this dynamic industry to invest in the right place at the right time and achieve desired outcomes.