“All the ways the NFL makes money and grows revenues–that’s how these eSports companies are also currently bringing in money, but it’s going to grow exponentially over time,” said Michael Cohick, Senior ETF Product Manager at VanEck.
Demographic of Youth and Affluence
ESPO will look to capitalize on an eSports industry that is dominated by a younger demographic that is willing to open their wallets—43% of eSports enthusiasts have annual household income of over $75,000 and 31% of eSports enthusiasts have an annual household income of over $90,000. Furthermore, by instilling brand loyalty at a young age, these gaming companies have the potential to build long-lasting relationships.
“The proliferation of social media and the general millennial experience, we see video gaming and eSports as a way for advertisers and big brands to connect directly with their customers,” John Patrick Lee, Associate ETF Product Manager at VanEck, told ETF Trends.
“A huge part of the story is that it’s a young demographic,” added Lee. “The average person who watches eSports and plays video games is 28, 29 years old.”
Lee went on to mention that ESPO is “looking at a young, engaged demographic who is actively looking to participate in the community we got a situation with kids, young adults and regulars are watching and interacting with these eSports superstars and it’s transitioning to what we think are the sports of the future.”
Investor Interest on the Rise
The rise in eSports has provided the necessary funnel for investment capital from not only large companies like Amazon and Alibaba looking to acquire smaller companies that already operate within this nascent space, but also public institutions like colleges that are willing to inject more resources to proliferate the competitive video gaming space.
“We see colleges investing in eSports arenas and computer labs,” said Lee. “And they’re granting scholarships to the top eSports athletes.”
The rise of eSports is not relegated to the United States, but its presence is far-reaching globally and that is expected to continue as technological enhancements in video gaming continue to add fuel to the proverbial flame. This will only dwarf the size of traditional entertainment moving forward and the numbers are already reflecting that eventual change.
“The global box office receipts was $40.6 billion,” said Lee. “The video game revenue in 2017 was $120 billion–roughly three times the revenue of box office receipts and that is not necessarily an apples to apples comparison, but you get a size and a sense of the scope of the market.”
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