How eSports Could Transform Activision
A $1.5 billion market by 2020
Although researchers have come up with different estimates of the size of eSports industry, they are united that the industry is growing at a rapid pace. Early movers like Activision (ATVI) and Tencent-backed (TCEHY) Riot Games could have a lot to celebrate in the coming years.
According to Newzoo, a global leader in eSports intelligence, the eSports economy could be worth $696.0 million this year and could double to $1.5 billion by 2020. Newzoo’s estimate of the eSports market comprises spending advertising, media rights, sponsorships, and ticket sales.
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A $5 billion market by 2020
Macquarie analysts are more bullish on the prospects of the eSports economy. In a research note cited by the Financial Times, Macquarie forecasts that the eSports industry could be worth $5.0 billion by 2020, up from ~$892.0 million in 2016. Macquarie has a broader view of the eSports economy because its estimates include sales of media rights, advertising, sponsorships, ticketing, merchandise, and betting.
The firm also believes that Activision’s model of intercity teams could accelerate the expansion of the eSports market.
Boost to Activision’s financials
Activision generated more than $6.6 billion in revenue in 2016, compared to $4.7 billion in 2015. A breakthrough in the eSports market could lead to a tremendous boost to the company’s financial strength and bolster its competition against Electronic Arts (EA), Take Two Interactive (TTWO), GameStop (GME), and Zynga (ZNGA) in the video game publishing business. The chart above contrasts Activision’s annual revenues and net income since 2013.