Esports are drawing in multi-million audiences, but not everyone is sure what it is and why it matters to businesses. Don’t worry though, we’ve got you covered.

Esports are organised multi-player video game competitions, typically involving professional players. Although organised video game competitions have been part of the gaming industry for several decades, the trend of professional gaming did not emerge until the late 2000s.

It is fair to say that it has been a roaring success so far,

How do esports work?

Esports tournaments are built around specific games. Video games like Dota 2, Counter-Strike, Overwatch, Fortnite, and Rocket League are just some of the many games that have attracted audiences in the millions, professional players and huge sponsorships. Major multinational brands, including Coca-Cola and BMW, sponsor teams and events.

Not only has it become so popular that game developers and publishers now design game titles specifically for esports, but the tournaments are watched by more than 400 million people worldwide. The global audience is estimated to reach 641 million by 2025, according to gaming industry statistics company Newzoo.

In other words, not only do these games highlight the capabilities of tech developers, but they also provide huge advertisement opportunities for businesses.

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Add to that the fact that the global gaming market is expected to be worth $321bn by 2026, according to PwC’s Global Entertainment and Media Outlook, and it is easy to see why businesses should take these tournaments seriously. It should also be mentioned that those market expectations have been made despite the fact that video game sales have slumped this year.

The tournaments have a defined set of rules for the participating teams and players to follow. These tournaments run on 5G or local area networks, with high bandwidth cables or wifi networks connecting the gaming devices. The games are displayed on large screens at the venue, and broadcast live over TV and streaming platforms for viewers at home to enjoy.

Esport tournaments are typically location-based events organized in large stadiums. Many sports stadiums host esports, while esports-specific stadiums (e.g., Esports Stadium Arlington) are being built in several cities.

Who is the audience?

Esports are most popular among young males. Audience measurement company Nielsen’s Esports Fan Insights study found that the average esports fan was 25 years old. More than three-quarters of fans are males. That being said, women are joining the fanbase in droves. There is a higher percentage of females among the newest fans. In 2021, the female fan base expanded by 19%, while the male fan base grew by 12%, according to the Nielsen report. Esports enthusiasts take every opportunity to watch their favourite games, teams and players perform in tournaments and leagues.

The online audience is of vital importance to esports. Popular games such as League of Legends, which the founder of the collapsed cryptocurrency exchange FTX was reportedly a fan of, and Fortnite attract millions of viewers who watch millions of hours of game footage online. This allows esports companies to generate revenues through in-game purchases of merchandise and virtual goods (e.g., Bits on Twitch) used to show support for players.

What is the future of esports?

Esports are witnessing rapid growth in both awareness and investments.

However, as esports expands, it will face several challenges. These include diversifying its audience, demonstrating its ability to provide a return on investment, and providing a process for converting amateur gamers into professional athletes.

Another key challenge will be the lack of uniformity. Currently, most esports events are governed individually by game publishers. As a result, the industry suffers from the absence of uniform policies ensuring common rules for every game title, irrespective of the organiser. This creates ambiguity for teams preparing for, and participating in, tournaments.

Industry consortiums such as the International Esports Federation, and the World Esports Association are trying to bring uniformity to esports. However, they’ve made little progress so far, and governance remains in flux. Adding to the confusion, several countries – including South Korea, Japan, and India – have also created regulatory bodies to govern their domestic esports industries. This has resulted in further fragmentation, with gaming rules varying from country to country.

Esports need an international governing body similar to those found in traditional sports like football, cricket and rugby, as outlined in a recent report from research firm GlobalData. As the industry grows, it will require global leadership to develop best practice guidelines and uniformity, which will add to its legitimacy as a mainstream sporting activity.

GlobalData is the parent company of Verdict and its sister publications.