A new report by IHS Markit, while noting that eSports grew by 19 percent in 2016 to 6 billion hours, and includes an audience of perhaps 7 million Americans for high interest tournaments, such as the League of Legends World Championship, is miniscule compared to mega sports events such as the Super Bowl, which attracted 100 million views in February. But then again, eSports are not competing with real sports.
The report studies claim that eSports is challenging traditional sports and concludes that they are usually based on “an apples-to-oranges comparison of both digital-to-linear TV and global-to-national audiences across eSports and sports.”
However, there is a kernel of information that could prove worrisome for traditional sports: Several times more of the millennials watch eSports compared to the four largest U.S. sports. More compelling from an advertising standpoint is the fact that China is by far the largest consumer of competitive video gaming, 57 percent of the total, with the U.S. being the second largest market, but with 25 percent or less of China’s share.
The Telegraph recently reported that Tencent, the China-based internet conglomerate that dominates the Asian eSports market, has announced that it will soon launch an eSports TV channel, ESPTV.
The IHS report considers the eSports industry in its infancy, but with immense potential once it reaches maturity. Currently advertising revenues in the industry are about $280 million annual, but that figure is expected to quadruple within five years.
Gambling on eSports is a smaller but growing segment of that industry, says the report. Legal bookmakers offer wagers on eSports tournaments. The amount wagered is likely to increase as the industry grows, says the report.
In the UK, the first example of a prosecution of an eSports site for illegal gambling occurred earlier this year against the website FutGalaxy, which allowed gambling using virtual currency. Worse, it allowed minors to do so and was caught on video.
Since 2014 the British Gambling Commission has contacted 100 unlicensed sites, of which 16 involved using virtual currency to bet on eSports tournaments.
The Commission is now focusing on the issue of young people being drawn into gambling on online tournaments, wagering with virtual currency, or even using digital “guns” and “knives” as substitute chips.
Ian Smith, the first eSports integrity commissioner of the Esport Integrity Coalition (ESIG) in the UK, told the Telegraph, “Lots of young people learned how to gamble in a way they would not have done with other sports.”
His organization works to “put up barriers” to discourage illegal activities. “Where the markets get big enough eSports betting will become interesting to the type of people we don’t want it to be interesting to,” he said. He added that the industry is especially vulnerable to illegal gambling because, it is “not a coherent industry,” adding “ESIG is as close as it gets to some form of regulatory body.”
The UK Gambling Commission is working with MasterCard and Visa, which have agreed to refuse to process payments to illicit eSports gambling websites.
Amazon has thrown its corporate backing behind improving the integrity of eSports. Three years ago, it bought the gaming video platform Twitch. Markit noted that this was Amazon’s first “media not directly tied to Amazon’s retail footprint.”
