For those that grew up in an era that regarded video games as sub or counter-culture, the rise of esports is a triumph. We now have the opportunity to watch gamers enjoy fame and fortune all due to a hobby the media—and many of our parents—overtly and covertly expressed was not only worthless but also confounding.
Is Esports As Big As They Say It Is?
Listening to some of the hype regarding esports is more than occasionally surprising. It’s downright shocking. Frankly, some of the assertions seem to be a little too good to be true. Like, the fact that a League of Legends tournament drew in more viewers than the Super Bowl. Or, that the esports industry will soon outpace viewership for the NBA, NFL, and revenue for all of wrestling.
Perhaps, this is why we should have known it was too good to be true. Some experts worry that esports has been outrageously overvalued. They worry that it’s been so overvalued that the associated influx of cash has given rise to several bubbles, bound to eventually burst.
With esports, simply, everyone thinks the industry is worth a whole lot more than it really is. Kotaku spoke with seventeen e-sports experts that backed up the concern.
One complication is that esports has also injected an influx of cash into numerous peripheral industries. For example, betting on esports is already a multi-billion dollar industry. This is for betting on an industry projected to pull in “merely” a billion in 2019.
Has the Influx of Cash Been a Good Thing?
But how could this happen?
The tremendous influx of cash—and hype—has led investors to flock to the industry as they sense there’s good money to be made. Teams are worth hundreds of millions of dollars. Players enjoy premium housing paid for by their organization.
It’s also expensive to be a franchise—$10 million to $13 million alone just to get into many leagues.
Everyone seems to agree that there is major money to be made. But, while investments soar revenues lag. Of course, a billion dollars is nothing to turn your nose up at it. It’s just that the investments into the industry far exceed the revenue it’s currently pulling in.
Some experts think this will soon come to a head, especially if nothing changes. Then, it’s likely that some of the first investors into the latest esports craze will lose a lot of money.