The attractive payouts have led many teenagers and young adults to consider developing a career within the eSports industry. For instance, following the conclusion of Dota 2's The International 2019, Johan N0tail Sundstein has now collectively gained USD 6.88 Million in earnings, making him the highest earning player in eSports history. While Sundstein's earnings is highly appealing, players cannot expect to become top tier athletes overnight.
Initially, Sundstein earned about USD 2,000 in earnings from playing Heroes of Newerth. However, due to the declining player count, Sundstein decided to transition to Dota, where he began to make the majority of his earnings. The rate the eSports market has grown over the past several years positions the market to become a disruptive global force. According to data compiled by Infoholic Research, the global eSports market is expected to triple by 2025, reaching a value of USD 3 Billion. Additionally, the market is expected to exhibit a CAGR of 20% during the forecast period from 2019 to 2025. UMG Media Ltd. (TSX-V ESPT), Take-Two Interactive Software, Inc. (NASDAQ TTWO), Activision Blizzard, Inc. (NASDAQ ATVI), QUALCOMM Incorporated (NASDAQ QCOM), Oracle Corporation (NYSE ORCL)
Each year, eSport tournament payouts drastically increase. For instance, Dota 2's The International 2018 boasted a prize pool of USD 25.53 Million, but in just one year alone, the payout increased by another USD 8 Million. Typically, most companies generate the prize pool from in-game player purchases or also known as microtransactions. Generally, most microtransactions are purely cosmetic, however, in some instances microtransactions can give players a competitive advantage. Valve Corporation, the developers and publishers of Dota 2, released battle passes that player can purchase in-game for a price of USD 9.99. The battle pass is based on a tier system, which requires players to complete a series of challenges in order to advance. Each time players tier up they are rewarded with prizes such as cosmetics or emoticons. Valve said that 25% of the revenue from battle pass sales go directly back into The International's prize pool. Moreover, players are much more inclined to purchase the battle pass because Dota 2 is a free-to-play game. Most of the top eSport games are free-to-play games like League of Legends and Fortnite. According to eSports earnings, Dota 2 has paid out USD 216.23 Million in prize pool since its inception in 2013. Meanwhile, Fortnite has delivered USD 73.08 Million in just two years, while League of Legends has cashed out USD 68.79 Million since 2009. Statistically, free-to-play games are much more appealing to consumers even though the qualities may lack compared to pricier options. Since the game is free, more players are inclined to try the game, driving a large user base, and in return, there is a larger opportunity for players to purchase in-game products. While microtransactions can be controversial, it is a major driver of a Company's revenue which allows it to boast lavish tournaments. As a result, the media around eSports is increasingly growing each year as players are captivated by the high level of skill and the exhilarating rush at tournaments. Gaming, specifically competitive gaming (also called eSports) has started to grow at an astounding rate. Traditional sports franchises and even Netflix are worried about this new competitor, as live streaming and in-person events continue to encroach on their territory, said Brett Schafer, Co-Founder of Market Brothers Media. Whatever you think of eSports personally, you cannot deny how big it has gotten, and will become. We are still in the early stages of this new industry, one that should continue to grow over the next two decades. It could pay off handsomely for any investor that decides to get in early.