ESports is big business, and it's only getting bigger.
At the Game Developers Conference in San Francisco, the rapidly growing industry -- where the opportunities lie, and just how much it's really worth -- was one of the main topics for the game enthusiasts in attendance.
To date, most eSports investment, as well as revenue, has been focused primarily in the U.S. and in Asia. According to the gaming industry analytics firm NewZoo, global eSports revenues will exceed $1 billion for the first time in 2019, with most of that number derived from sponsorship, advertising and media rights. The global eSports audience is estimated to reach 453.8 million this year, representing a year-over-year growth of 15%.
As the industry balloons as a whole, emerging eSports markets such Latin America -- which are under-invested in relative to their share of esports players worldwide -- are ripe for opportunity, pointed out Twitch partnerships manager Pablo Montero.
"Latin America generated about 5% of global game revenues, but only 1% of investment," he said. "We have a wide open field."
Game publishers such as EA (EA) - Get Report or Activision-Blizzard (ATVI) - Get Report (creator of eSports favorite Overwatch) and tech firms like Amazon (AMZN) - Get Report , which owns Twitch, are staking their positions in the booming eSports market -- whether it's through game licensing, broadcasting, or orchestrating events around the world.
But others are expressing caution that the current economics of the eSports industry aren't sustainable.
Frank Fields, a sponsorship manager at Corsair, told an audience at GDC that the hype around eSports in recent years, and a rush of investment mainly by venture capitalists and traditional sports organizations, has helped to generate a valuation bubble where costs like player salaries are outpacing revenue.
"Everyone is focused on making the scene bigger, not smarter," he said, describing a current reality of multimillion-dollar investments in eSports teams going disproportionately to player salaries, while sponsorship revenue has lagged. "My biggest theory is that [investors] are trying to be the next Los Angeles Lakers...but them putting money into the scene is affecting it in a negative way."
To make eSports more attractive, and more profitable, to a broader range of stakeholders, expenses like salaries need to be better tied to revenue rather than speculative investment, he said. In addition, more innovation is needed to create independent revenue streams for the teams that are the industry's main draw.
"Sponsors cannot continue to sustain the scene by themselves," he added.
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