I was reading this report from UBS Investment Bank today (my former employer). It was talking about esports viewing habits, per a survey they conducted.
They found that about 30% of gamers view esports on a monthly basis. Seems lower than I would imagine, but then again, when I’m playing in public match making, often the folks I’m playing with have never heard of some of the pro competitions I follow, so, I can see some consistency between these results and my informal polling.
The average time spent watching esports (per person) continues to grow, according to the same survey. The report shared the following result on the change in amount of time viewing esports over the last 12 months:
This tells me that the upside for market growth, is huge. As esports becomes more main stream, and more of the people who become aware of it, are watching esports at an increasing rate, there are multiple points of uplift for the market.
The runway for monetization of content is still long. I think we are anywhere from 3–5 years away from seeing a major shift away from this expectation that content will be produced for free. Right now, esports fans expect to buy a game, play it, pay for skins, and then watch the pros play for free.
This is changing. The games are moving to free-to-play, streaming services, (Gaming as a Service), and eventually the content will be paid, or partially paid content, instead of mostly free, as it is today.
Just look at the number of people who are willing to pay, to cheer for their favorite Overwatch team in Twitch chat, by buying single-use emojis (purchased via “bits”). The willingness to spend money in this market is much larger than most people think, and it is just the beginning.
The ability of the fan to spend, is increasing rapidly and will continue over the coming years. The average demographic in the esports fan base is still very young and often pre-discretionary income. As that age group (18–25 yr olds) has more discretionary income in the next 3–5 years, there will be more willingness to spend money that would have been spent, in a prior generation, on cable TV, to see premium esports content.
The hard part about investing in this thesis, is that as a VC, often being too early is the same as being wrong. I’m committed to investing in this thesis, even if I have to hold out for longer than expected to see the market come to this model.