The industry surrounding competitive video gaming — the scene commonly known as esports — is expected to generate $1 billion in annual revenue for the first time in 2019. A recent report from analyst group Newzoo predicts a 26.7% increase in esports revenue from 2018, bringing the projected annual revenue to $1.1 billion.
The big boost in income is largely credited to media rights deals, which are expected to grow by 41.8% to $251.3 million. The largest portion of esports revenue still comes from sponsorships; investments in advertising and other marketing deals are expected to provide a revenue stream of $456.7 million.
The revenue generated by esports is just a fraction of what the overall video game industry generates each year. SuperData reported that video games generated $87 billion in revenue worldwide during 2018. Esports reflect a smaller, more focused audience that is invested in competition and content based on specific games, like "Overwatch," "League of Legends," "Street Fighter," or "Super Smash Bros."
Sponsors expect esports organizations to capitalize on their young, predominately male audiences. North America is expected to remain the largest source of esports revenue in 2019, generating a projected $409.1 million. Newzoo reports there are 23.9 million esports fans in North America, defined as someone who will watch an esports event at least once a month.
Esports are even more popular in Asia and the Pacific Islands, where more than 110 million esports fans are expected to tune in each month. According to Newzoo, Asian fans make up the majority of the 454 million people expected to watch esports events during the year.
China is expected to generate $210.3 million in esports revenue during 2019, despite the Chinese government's strict regulations on new games and monetization. China remains the largest market for overall video game revenue and cities like Chongqing and Hangzhou are now embracing local esports organizations.
Because of the international reach of video games, esports organizations can build communities across continents and organize events online. The global success of esports reflect a basic interest in competition and the unifying effect of a shared experience. But as new styles of competition take root, esports organizations will also need to find new ways to turn their audiences' goodwill into sustainable revenue.
