The Evolution of the Esports Market

Risks and Opportunities for Digital Sports Companies

Esports have transformed dramatically over the past several decades. What began as a niche gaming hobby in the 1990s is now a cultural and economic powerhouse, sitting at the nexus of trends in brand sponsorships, influencer marketing, and streaming proliferation.

Set to hit a global revenue of $4.8 billion in 2025, the esports market is expected to grow at a compound annual growth rate (CAGR) of 5.56% and hit $5.9 billion by the end of 2029.

As digital sports continue to gain popularity, native streaming capabilities and the proximity of social media personalities are opening new avenues to reach audiences and gain visibility. But these same characteristics also give rise to new challenges around financial verification and talent management. 

Through their partnerships with brands, teams, influencers, and players, esports businesses are pioneering new frontiers in customer engagement, talent management, and technology risk mitigation. Success in these early stages could open the door to reputational and revenue growth, but will require a clear understanding of how the industry has developed, where it is set to go, and what risks and opportunities it brings.

From Niche to Noteworthy

The seeds of esports as they are known today were planted decades ago in gaming cafes. Then, as now, their core draw was the promise of connection and accessibility. Players only needed access to a computer or a console to connect with others over a shared passion. 

Since then, two major shifts have pushed the industry forward. The rise of online streaming platforms is contributing to steady growth in interest and viewership, and deeper monetization has made it possible for membership within a competitive gaming team to be a career, not just a hobby.

Adding to this organic momentum is continued interest from the initial generation of fans who frequented those gaming cafes years ago and still retain a sense of nostalgia for those early days. That nostalgia creates a personal draw toward esports that stands alongside their business considerations. It could even open new marketing avenues for esports companies seeking investment, if they can successfully emphasize this personal connection in their communications. 

Emerging Opportunities in Esports

Competitive gaming is showing clear signs of maturity and staying power. Thirty-one percent of people aged 18 – 29 report an interest in esports, and the global audience is set to reach over 865 million people within the next three years. The competition model is gradually shifting from individual entrants to team-based organizations that participate in tournaments, with rosters of players tied to specific games. Large brands are increasingly seeking partnerships with esports companies to host competitions, finding new and innovative ways to bring players together. 

Because digital sports do not require whole stadiums, companies can take advantage of greater flexibility when planning events. For example, an esports company could partner with a retailer to host a competition within a retail location, each gaining access to the other’s customer base and audience. 

Professionalization is also increasing. For many players, especially top teams, playing is their full-time job. Like traditional sports, this professionalization also generates a need for supporting staff and infrastructure and potentially opens new job creation avenues.

Cross-pollination between digital and traditional sports is also creating hybrid opportunities. For example, the National Basketball Players Association’s (NBPA’s) 2023 partnership with the NBA 2K League allows NBA players to officially promote the 2K League and its esports teams. Other examples of mainstream breakthrough include Saudi Arabia planning to host the inaugural Olympic Esports Games in 2027 and the Esports World Cup’s recent announcement of the industry’s largest ever prize pool, totaling over $60 million.

Hurdles to Overcome

The democratized, digital, and diffused nature of digital sports is part of their appeal, but it can also give rise to unique hurdles that companies are still learning how to manage.

For example, the prevalence of social media influencers and self-made esports teams — and the absence of governing organizations like those found in traditional sports — can create significant talent management risks. Unlike in esports, traditional sports athletes, coaches, and other high-profile staff typically have extensive media training. They understand that events like post-game interviews or even television appearances are part of the job and know how to conduct themselves on camera. While esports audiences like the idea of receiving an influencer or player’s unfiltered thoughts, these individuals may not always speak with the best interests of their partner in mind. Esports companies that host events in conjunction with a streamer, for instance, should proactively vet and scrutinize their potential partner, setting clear expectations and parameters before committing. Those parameters should extend across channels, covering both traditional media coverage and online communications, which account for the bulk of influencers’ contact with their communities.  

Companies can also experience challenges around data or revenue validation. Because the esports market thrives on digital engagements, certain payments are contingent upon reaching click or viewership benchmarks. However, many companies rely on third parties for engagement metrics, which can be difficult to verify. Verification typically requires a robust auditing infrastructure — a significant upfront tech investment for companies still in their earlier stages of growth. Absent such infrastructure, verification must be done manually, which can be time-consuming and more vulnerable to human error. To offset this burden, some companies may consider enlisting external assistance with the knowledge and resources to help implement best practices and support verification efforts. 

Primed for Growth

Despite some challenges, esports is an emerging industry that is here to stay and will only grow more prominent. Expect to see the ways that audiences engage and connect with players through streaming and social media continue to deepen. Over time, as events and competitions proliferate, more formal organizations may emerge, bringing with them new levels of professionalization and accountability. 

For esports businesses seeking assistance in maturing their processes, technology, or risk mitigation strategies, BDO’s Gaming and Leisure professionals can help. Our teams have deep familiarity with the digital sports landscape and a pulse on how the market is developing. We can help design comprehensive risk management frameworks, formulate a growth roadmap, and build a reporting and data verification infrastructure to help foster trust and reliability.

Esports companies, ready to mature your business? Contact our gaming and leisure team to learn more.