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Esports: Opportunities for Casino Revenue

Esports: Opportunities for Casino Revenue

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October 27, 2017
Casino Technology
Heather Monteiro, PhD - heather@hickoryridgegroup.org

©2017 Hospitality Upgrade
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There is growing interest in converging esports with the integrated resort and gaming industry to capitalize on two favorite millennial activities: playing video games and watching live streaming of other people playing video games. Esports may help solve the problem of the aging casino guest by attracting a younger crowd, a demographic which hasn’t warmed to slots and casinos as previous generations. The esports market is expanding and forecasted to continue expansion with multiple potential revenue streams. 
Esports events are of particular interest to casinos and integrated resorts, especially those with convention and event facilities large enough to host. Esport events are typically a marketing opportunity to promote a particular video game. While they are often not profitable for the game publisher, the number of events and quantity of money floating around these competitions is quite astounding. Prize money is quite impressive. Ticket revenues was calculated at $32 million in 2016. There were 424 events worldwide awarding an estimated $93.3 million in prize money in 2016 alone.
In terms of overall revenue, globally esports generated over $350 million in total revenue in 2015 with a forecasted $670 million in 2017 and projected $1.5 billion in 2020. North America received the most revenue per esports enthusiast fan, with the highest consumer spend per enthusiast worldwide.
The 2017 global esports audience is estimated at 386 million individuals; 191 million of whom are considered enthusiasts. The number of enthusiasts is expected to grow to 286 million by 2020. While there has been significant regulatory concern about the young age of esports fans, 80 percent of male and 93 percent of female esports enthusiasts are 21 years of age or older. More generally, more than 70 percent of esports enthusiasts are male, and more than 50 percent of males are between 21 and 35 years old. Most of these enthusiasts are employed full time with a greater than average income. 
While a considerable amount of esports content and play is available for free, estimated consumer spending in 2017 for tickets and merchandise is $64 million, which shows room for growth when compared to other sports. 
Esports Betting
There is hope in the integrated resort sphere that esports will converge with the casino space, becoming a feature set of events in areas like Atlantic City and Las Vegas and providing a way to legally bet on esports competitions. The market size for gambling on esports is estimated at $3 billion in 2017, with forecasted growth to $12.9 billion by 2020. 
Esports betting is a hot topic in the gaming industry as a way to reel in the digital native/millennial generation. Traditional sports betting is a far bigger industry than sports media rights, consumer revenues and sponsorships combined. Many expect that esports betting will be larger than the current esports revenue generation and should be considered a part of a comprehensive revenue generation plan pending regulatory approval. There are other revenue streams integrated resorts and casinos can take advantage of aside from esports betting. 
Esports competitions draw thousands of spectators including competitors and audiences and serve as marketing for game publishers. The International 2015 in Seattle had an attendance of 10,000. 
Tickets sold out in less than one hour and the event had 20 million online viewers. In 2016, ticket-only revenue amounted to $32 million. While attendance will bring along ancillary spending, many of these events are purely for marketing purposes and are intended to increase purchase and use of video games, and in most cases are annual or one-off events. The numbers indicate that the vast majority of audience is still online.
These events are primarily marketing events for video game companies. For the resort which may host these events, revenue will be generated by events and ticket sales, but most revenue for resorts hosting events will be generated by ancillary sales. 
Ancillary Sales 
With 10,000 attendees to an event that attracts a young crowd, thousands of rooms, meals and snacks and other potential entertainment spending will likely occur. While any number placed on this ancillary spending would be speculative, ancillary spending should be considered.
Incorporating an esports area into the casino floor or resort for daily play will attract locals and regional tourists to the casino and could develop more consistent revenue. While esports betting and events are currently the most talked about dimensions of esports, this quieter, lower capex revenue stream holds significant promise for the bottomline of integrated resorts. 
Dr. Heather Monteiro can be contacted at heather@hickoryridgegroup.org.

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