Goldman Sachs published a note projecting eSports viewership would outdraw Major League Baseball and the National Hockey League in 2018 and grow to 276 million viewers by 2022, which is roughly the size of the NFL’s audience. The note cited increasing prize pools, the ubiquity of live streaming and improved infrastructure for pro leagues as reasons why the global esports audience would grow 14% YoY for the next 5 years. Goldman analysts added that “total esports monetization will reach $3 billion by 2022.”
Howie Long-Short: It’s hard to argue with any of the points Goldman made. The $100 million Fortnite prize pool recently announced rivals “nearly the size of the entire esports prize pool in 2017”, Epic Games and Activision Blizzard (ATVI) have both built out infrastructure for competition (see: North America and EU League of Legends leagues, Overwatch League) and ATVI has a $90 million streaming deal in place with Twitch. There’s also plenty of room for growth, as NewZoo data indicates that just 5% of the 2.2 billion gamers worldwide currently watch eSports.
Tencent Holdings, Inc. (TCEHY), which owns 40% of Epic Games (think: Fortnite), is also invested in online video platforms Doyu and Huya. The company reported Q1 ’18 net profit rose 61% YoY (to $3.6 billion) on $11.5 billion in revenue (+48% YoY), with mobile (revenue +68% YoY) gaming and video streaming (revenue +75%) driving the growth. PC gaming revenues were flat, but that’s mostly indicative of impressive Q1 ’17 figures and the fact the company has yet to monetize “PlayerUnknown’s Battlegrounds” or Fortnite in China. Asia’s 2nd largest publicly traded company recently released a 5-year plan to develop a $14.6 billion domestic (China) eSports business that includes electronic gaming centers and theme parks across the country.
While we focus on public equities at JWS, there’s plenty of private money being pumped into eSports too. In fact, the $1.4 invested YTD represents a 90% increase over all of 2017.
Fan Marino: Steelers WR JuJu Smith-Schuster has signed a 6-figure endorsement deal with HyperX, becoming just the 2nd NFL player with a gaming based endorsement (Nyheim Hines, Colts was 1st). You may recall, back in March we noted that Smith-Schuster joined Drake, Ninja and Travis Scott in Fortnite competition. The group set an all-time, non-tournament, record for concurrent viewers on a single individual’s (Ninja) Twitch channel (628,000, previous record 388,000). As part of the deal, Smith-Schuster will wear HyperX headsets during live streaming sessions, participate in marketing campaigns and appear at fan events.
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