Esports Industry: Opportunities, Challenges, and Growth Drivers
With over 17 Mn users, $68 Mn Aggregated revenue collected in FY20, ESports is one of the most booming global industries where skilled video gamers play competitively.
What do you mean by Esports?
Esports or electronic sports is a video game- based sports competition. It can be described as an organized, multiplayer video game competition, where professional players, mostly take part either individually or as teams.
India’s Online Gaming Market
India’s Online Gaming Market is estimated to reach $1.6 Bn by FY23 with a compounded annual CAGR of 21.7% since FY14.
India’s online gaming market saw a splendid volume of over 365 Mn online gamers and the market was astoundingly valued at an estimated $742.2 Mn in FY20.
Out of the total online gaming market, ESports accounted for around 4.5% of total users and 9.2% of aggregated revenue in FY20.
Esports Market Globally vs India
The Indian esports market is at a budding stage. It’s ok to say that only a minority of the overall smartphone user base is esports enthusiasts, yet the number of smartphone users is growing faster in India than in any other country.
India’s contribution was estimated to be around 9.8% to the global esports market in 2020, with aggregate revenue of $95 Mn in FY21.
Covid: The force behind Esports exponential growth
While covid created a lot of havoc for the whole world, it triggered a new wave of growth in the esports industry. Lockdown compelled a lot of young people to spend time at home and spend time on esports.
Some Interesting Highlights:
>People in the age group of 15–24 are spending 34% more time on esports.
>April 2020 saw an 11% increase in users per week.
>Esports live streaming consumption increased drastically.
>Time spent by each user increased by 21% to 191 minutes.
#BackedbyUnicorn Gamerji registered a spike in its daily active users from 12000 -15000 pre-covid to 40000–50000 during the lockdown
The Growth Divers
1. Development of Digital Infrastructure
i. The number of Smartphone users in India increased at a CAGR of 15% over 2015–2020.
The growth of digital infrastructure has provided a much-needed stimulus to esports consumption
ii. The Number of Internet Users Grew at a 13.8% CAGR Over 2015–2020
The entry of Reliance Jio into the Indian Telecom Market has ensured wide internet access and made data consumption affordable for the entire population.
2. Growth of Favourable Demographics
The number of Online Gamers will be growing at a 13.1% CAGR over FY18-FY22. The online gamers count is expected to reach 440 Mn by FY22
Online gaming has now reached people of age over 37 years making the median age 28.
3. Rise of Startup Investments
As demand for Esports is increasing in India, the country is attracting adequate investor interest. There have been substantial investments coming from the Gaming companies to develop the ESports ecosystem in India.
There has been a rise in Funding with a CAGR of 49.8% during 2015- 2019.
4. Growing Prize Money in Esports
Organizers and Platforms attract Indian Gamers by announcing huge prize money. Due to the increase in prize money, Esports today is also seen as a viable career option.
According to AFK Gaming, the total amount of prize money grew from INR 7.7Mn in 2016 to INR 38.4 Mn in 2018.
Opportunities in Indian Esports Market
1. Amateur Tournaments
Amateur Esports tournament will allow players to gain the experience needed to dominate major tournaments.
It can be the stepping stone for hardcore gamers to chase their dreams of becoming professional gamers.
2. Fantasy Esports
Fantasy sports boomed in recent years, with ever-evolving leagues and competitive formats. The simple concept of creating your perfect virtual team and competing against others has grasped the attention of millions of users. Esports is slowly creeping into the fantasy sports domain with titles being picked up by providers left right and center.
The concept of fantasy esports is fairly straightforward. You select a virtual team from a pool of potential real-life players and compete against other peoples’ team picks. Based on the real-life performance of the select players your team earns points which are then compared against other players’ teams to determine the winner.
3. Merchandising through Personalisation
Merchandising is a way to show the world that you’re a fan of a team and a part of that community.
However, Esports is all online and a way to show fandom can be through weapon and armor skins of a team, character upgrades, etc.
4. Eliminating Broadcasting Barriers
Live streaming events at an individual or team level has triggered a lot of growth in the esports industry.
With a lot of influencers streaming daily using different platforms shows there could be a big opportunity around esports live streaming.
5. Taking Esports to the Streets
As the sports industry was developing, a lot of infrastructure around it started to get build such as training centers, grounds, equipment, etc showing the need to build infrastructure for the esports industry.
6. Bringing Esports to Live
There has been a constant growth in live viewership of esports tournaments which drives the need for fully equipped venues for gaming fans.
As there has been the introduction to technologies like VR, it can provide a new viewing angle.
Challenges in the Esports Market
i. Gaming Frauds and Ethical Concerns
There has been a steady rise in terms of gaming frauds and ethical concerns.
Esports frauds can be of many types, like match-fixing, manipulated speed runs, manipulated betting, e-doping, technical cheating, hardware and software crash, etc.
ii. Absence of Formal Recognition
Even though Esports has gained mass popularity and seen some big corporations like Airtel, Paytm, etc joining this space, It’s yet to be recognized as an official sport.
Esports has been receiving good support all across the world, whereas, in India, Esports is yet to be seen on the government’s agenda.
iii. Monetising Users and Viewer Bases
Monetising the Users is still one of the biggest challenges for ESports companies.
As only a fraction of Indians hold Credit Cards, and high processing fees act as a further deterrent.
iv. Health Hazards of Esports
Esports has health hazards the same way as other sports have.
Dr. Zwibel said that 42% of gamers report neck and back pain, 56% eye fatigue, 36% wrist pain and 32% of esport athletes experience hand pain.
Why Did Unicorn India Ventures invested in Gamerji?
Gamerji presents an opportunity to tap into the nascent e-gaming platform business. The gaming industry is growing at a breakneck speed, with high profile sports properties extending their virtual avatars into the gaming world.
Also, the ban on Chinese games like PUBG will give birth to more Indian gaming content and tournaments along with other global properties. “That’s why Gamerji is an attractive investment for us.
We will be covering about the Insurtech Industry and why Unicorn India Ventures invested in Finsall and Fedo.ai in our next blog.
(We at Unicorn India Ventures are always striving to uncover different perspectives in life. We would love to hear your thoughts in the comments below. To hear more from us, follow @unicornIndia on twitter and follow our company page on Linkedin)
