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Future of Video Games & Esports Q3 2023

Opportunities and challenges in the esports business game

iStock / Getty Images Plus / Yaroslav Astakhov

Jake Nordland

Features Editor, Esports Insider

Esports business boomed during the pandemic, benefiting from extra eyeballs — and investors. But in 2023, it has challenges ahead. How can it solve them?

The numbers in esports — competitive video gaming — can’t be ignored. Viewership figures in the millions. Prize pools in the tens of millions. Team valuations in the hundreds of millions. Brand sponsorship deals from the likes of Gucci, BMW, Mastercard. Global leagues that stretch from Seattle to Stockholm to Shanghai.

The world of opportunity in esports

Esports has attracted attention from all corners of the world as video games have morphed from a belittled bedroom hobby into big business. League of Legends World Championships draw several million concurrent viewers, featuring guest performances from Imagine Dragons and Lil Nas X in often sold-out stadiums.

Marketers seek to tap into its valuable audience, one billed as increasingly hard to reach via traditional advertising channels thanks to adblock and ad-blindness. The core esports audience is largely made up of Gen Z and millennials, who are tech-savvy digital natives — an advertiser goldmine.

Most esports teams and leagues are still
searching for ways to balance the books.

Funding and revenue challenges

The rapid growth of esports as a spectator event in recent decades saw it billed by many as the future of sport, and investors pumped billions in as a result. But not all is rosy in the much-touted world of esports business. Venture capital funding runways are keeping large parts of the industry afloat as, despite their cultural clout, most esports teams and leagues are still searching for ways to balance the books.

The reasons why many of these newfound media empires are unprofitable are numerous and complex. Among the challenges faced by the industry is an alarming scarcity of the kind of valuable media rights seen in sports and an overreliance on sponsorship revenue amid a looming economic downturn.

Esports gaining recognition

Yet, away from the shiny lights of world championships, a booming tertiary sector is building infrastructure to bring esports to the vast majority of casual gamers, potentially widening esports’ total addressable market severalfold.

Interest in esports among schools, colleges and universities, inside and outside curriculums, is booming. The Olympics are turning to esports to help shore up viewership among younger viewers, and even governments are starting to take note of esports.

It is against this backdrop that the industry will congregate this year at ESI London, a business conference that convenes industry leaders and stakeholders. Brands, teams, educators, game developers, lawyers, government stakeholders and more will come together to solve problems, discuss opportunities and analyse industry trajectories as esports defines its future.

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