TRENDS, REVENUES

& AUDIENCE

TOWARD 2019

ESPORTS

2016

2016 GLOBAL

ESPORTSMARKET REPORT

1. Introduction, Scope & Definitions 3

2. Global Esports Trends 11

3. Esports Events 23

4. Global Esports Audience 2015-2019 29

5. The Esports Economy & Key Players 44

6. Global Esports Revenues 2015-2019 58

7. Value of the Audience & ROI 67

8. Methodology 73

9. Appendix 76

ESPORTS 2016 CONTENTS

2

INTRODUCTION2015 WAS ANOTHER GROUND BREAKING

YEAR FOR THE ESPORTS INDUSTRY

This was another huge year for esports with

the industry garnering an increasing amount

of attention from press, publishers,

broadcasters, investors and advertisers

alike. Following the huge interest in last

year’s Global Growth of Esports Report, we

are back with the second edition. To keep

up with the rapid developments in the

space, this annual report has evolved into a

service that also includes quarterly updated

reports and a dataset with granular

audience and revenue figures. 2015 also saw

many generalist research companies jump

on the esports phenomenon.

Peter Warman

CEO Newzoo

ESPORTS 2016 INTRO

1

1.1

As a company, we always aim to be ahead

of the curve on trends that impact the

games market and, in this case, the media

landscape as a whole. Looking back, our PC

Gaming. Power to the People report,

published in 2013, kicked off our focus on

esports. Our esports intelligence now

includes consumer research in 27 countries

and the Esports Audience and Revenue

Model that has grown in data sources,

industry support and granularity ever since.

3

ESPORTS 2016 INTRO

ESPORTSCompetitive gaming in an organized

format; an event or league, organized

by a third party, with a specific goal

(i.e. winning a tournament or prize

money), with a clear distinction

between players and teams who are

competing against each other for a

chance to reach that goal.

This report aims to give a reliable and realistic overview of the current status and future of

esports. Multiple data sources were used in shaping the Global Esports Audience and

Revenues model, one that is continually updated. When it comes to audience, we have taken

viewers of (online) amateur leagues and championships into account, but limited the Esports

Enthusiasts numbers to the frequent viewers and active participants. For revenues, we have

focused only on the professionally organized esports teams, leagues and events.

SCOPE OF THE REPORTAUDIENCE & REVENUE SCOPE & DEFINITIONS

ESPORTS ECONOMY

A model that incorporates five key

components that are not mutually

exclusive: Channels, Publishers,

Leagues, Events and Teams. Revenues

from Brands and Consumers feed this

ecosystem.

1.2

4

ESPORTS 2016 INTRO

ESPORTS AWARENESS

Gamers who have heard of esports,

including both the group of gamers who

are aware of esports but no longer view

it and the Esports Audience.

ESPORTS AUDIENCE

Gamers who watch and/or participate

in esports.

5

ESPORTS ENTHUSIASTS

Gamers who watch esports more than

once a month and/or participate in

(amateur) esports leagues.

MOBA

Multiplayer online battle area, a game

genre that includes League of Legends,

Dota 2 and Smite.

OCCASIONAL VIEWERS

Gamers who watch esports less than

once a month.

ESPORTS 2016 INTROESPORTS 2016 SUMMARY

KEY TAKEAWAYSNORTH AMERICA LEADS THE CHARGE IN

REVENUE GROWTH

• There were 112 major esports events in 2015 and they generated an estimated $20.6

million in ticket revenues.

• The total prize money of all esports events held in 2015 reached $61.0 million, a 70%

year-on-year increase.

• The global Esports Audience was 226 million gamers, a YoY growth of +11.2%, and the

number of Esports Enthusiasts reached 115 million in 2015, a YoY growth of 27.7%.

• Global revenues in 2015 reached $325 million, a YoY growth rate of 67.4%. North

America accounted for $121 million of this.

• Online advertising was the fastest growing revenue segment, up 99.6% on a global scale

compared to 2014.

• The average revenue per Esports Enthusiast was $2.83 in 2015.

ESPORTS AUDIENCE GROWTH 2014, 2015, 2016, 2019 | GLOBAL

ESPORTS REVENUE GROWTH 2014, 2015, 2016, 2019 | GLOBAL

1.3

6

MEDIA RIGHTS, MERCHANDISE

& TICKETS, ONLINE

ADVERTISING, BRAND

PARTNERSHIPS, ADDITIONAL

GAME PUBLISHER INVESTMENT

OCCASIONAL VIEWERS

ENTHUSIASTS

8

ESPORTS 2016 METHODOLOGY

73

AUDIENCE MODEL 2.0NEWZOO’S APPROACH & METHODOLOGY

We have vastly improved our esports viewership model from our last report. The new model

uses a number of different inputs and checks. But how does it work? Our esports audience

numbers are estimated using a unique top-down and bottom-up approach. Our Global

Games Market Report model tracks and projects population figures, economic growth,

company financial performance and numerous other growth-related KPIs across 130

countries. Parts of this model and its KPIs are used as top-down view in the esports

audience and revenue model.

Next, our annual consumer research gives us insight into the exact degree of esports

engagement across 27 countries across all major regions of the world. Specifically, we ask

respondents whether they are aware of the esports phenomenon, and if so, whether and

how often they watch or participate in (professional or amateur) esports. This allows us to

size the Esports Audience within a country, as well as distinguish between Esports

Enthusiasts – those who watch or participate in esports at least once a month – and

Occasional Viewers. This also provides insights into the popularity of esports across the

different global regions.

However, consumer research is not enough and extrapolation needs to be approached

cautiously. What people understand to be esports differs tremendously between cultures,

and different socio-economic circumstances can make it difficult to get an accurate

understanding of the average individual in less developed regions. Therefore, we match our

estimates with actuals from the traffic of popular streaming websites such as Twitch, Azubu

and Zhanqi. Where needed, regions are adjusted, but always within the bounds of either our

consumer data or our streaming sites data.

As a result of these extra checks, we have made some adjustments in comparison to our

previous report. More specifically, we have lowered our audience numbers in the Middle

East, Latin America and China due to a large discrepancy between our consumer research

and actuals from streaming sites. Meanwhile, Western Europe, Eastern Europe and Oceania

audience numbers have been boosted to reflect the incredible amount of traffic originating

from these regions. In order to forecast this data until 2019, our model creates trends based

on our historic and current consumer and streaming data. Each quarter, we reevaluate the

data and adjust the forecast if it proves necessary.

ESPORTS 2016 METHODOLOGY

74

REVENUE MODEL 2.0NEWZOO’S APPROACH & METHODOLOGY

We have also expanded our revenue model. We have worked on feeding more actuals into

the model, allowing us to build up revenues from a granular point of view, and provide

opportunities to verify growth rates every quarter of the year. Firstly, our regional divisions

are clearer and more isolated. We have split up “Rest of West” into Europe and Latin

America, allowing a more direct comparison of North American and European Revenues.

“Rest of East” is now Middle East & Africa, Oceania and the rest of the Asia-Pacific countries,

and will be further split in later updates.

For Merchandise & Tickets, we keep a record of as many esports events in the world as

possible. For these events, we calculate the amount of tickets sold, the price point of an

(average) ticket, the location, game, prize money and many other variables. To generate

regional ticket revenues, we simply add the ticket sales and multiply them with the average

ticket price of the event. Data points on merchandising is gathered from our partners. The

results presented in this report already show that ticket sales across Europe ($15.3M) are

much higher than we had anticipated last year, and even higher than ticket sales across

North America.

In terms of Online Advertising, we have made two advancements. Firstly, our audience

model now doubles as an input for this model. By providing the share and growth of the

Esports Audience, we have a clearer picture of where the advertising income is being

generated. This data is combined with regional differences in CPM to provide more informed

online advertising estimates. Secondly, we have been pulling data directly from streaming

platforms, allowing us to compare their growth both in terms of unique users and total hours

watched.

For Brand Partnerships, we keep a record of the highest performing teams and the

sponsorships these teams have attracted, while our partners provide us with information

about the average worth of these sponsorships. Meanwhile, Media Rights and Additional

Game Publisher Investment will continue to be monitored through insights

ESPORTS 2016 METHODOLOGY

75