Video games are big business: more than three billion people play video games globally, including 60 per cent of UK adults ¹. In the UK, a growing esports scene generates more than GBP 111.5 million and reaches an audience of more than 1.2 million viewers ². 

With an estimated global value of USD 1.4 billion in 2022 ³, the esports market is still a small segment of the USD 200 billion video game industry ⁴, but it is growing rapidly with increasing cultural importance. For prospective investors, there’s a range of potential opportunities which could prove advantageous – areas such as esports teams, ancilliary services (nutrition, performance, AI), and then the video game developers and publishers themselves.

So, how are esports entrepreneurs shaping the future of the video games industry? And, how is the esports market disrupting traditional sports and entertainment sectors?

Understanding esports

For as long as there have been video games, there has been competition. The first gaming tournament is believed to have been held at Stanford University nearly fifty years ago. But it wasn’t until the 1990’s and later that esports began to gather wider mainstream appeal. Where once video gaming was seen as a solitary or small-group pursuit, it’s now developing into a visible international sport. 

Many esports tournaments see teams of players compete in huge arenas with sellout crowds. Events are live streamed to a global audience on platforms such as Twitch and Youtube, with audiences watching from homes around the world. 

As a result, there has been a rapid professionalisation of the esports space; for players, large international prize pools and sponsorship deals have turned esports into a potentially high-earning career.

Seizing an opportunity

As esports audiences continue to grow, so do revenue streams and investment opportunities. From sponsorship and advertising, to merchandise and streaming, the potential for revenue generation within the market is considerable. Indeed, the global esports market is projected to grow to USD 5.48 billion by 2029 - at a compound annual growth rate of 21 per cent ⁵.

Disruptive entrepreneurs

Driving this growth are high-profile esports entrepreneurs building businesses across a wide range of areas, including artificial intelligence for skills improvement and developing competitive strategy, performance-focused nutrition and exercise businesses, video game hardware, esports teams, commercial space hire and creative production services; not forgetting the tournament organisers building the leagues esports are played in.

Britain plays host to a number of teams, including the Shoreditch-based EXCEL ESPORTS. EXCEL has grown from a bedroom-based operation founded by Kieran Holmes-Darby and his brother Joel at University, into a globally recognized esports brand, which continues to build an inclusive roster of esports competitors whilst expanding internationally with a new HQ in Berlin. 

Innovators such as EXCEL are part of a thriving scene of entrepreneurs who are building on the UK’s gaming heritage to accelerate the growth of the video game industry. And that’s why HSBC has become EXCEL ESPORTS’ Official Financial Services Partner and Financial Health Provider. This two-year partnership will help the UK gaming and esports community to build financial health, make better financial decisions and improve their financial literacy.

“There’s always been competitive video gaming, but esports saw a particular injection of growth in the UK through the globalisation and expansion of major video games and esports franchises like Call of Duty, CS: GO, FIFA and the League of Legends European Championship (LEC) which was founded by Riot Games,” says Ed Cave, Associate Director, HSBC Private Banking.  

“Several UK teams have competed, including EXCEL. Since then, they’ve grown from being run by two brothers, to getting private equity investment, and then owning their own training facility in London – that's happened very quickly. It's been enabled by the franchise leagues, which provide reliability to game schedules and revenue streams. It’s really helped esports grow, and could impact how traditional sports leagues are structured going forward.”

By taking video games from the bedroom to arenas and live streaming platforms worldwide, esports has significantly transformed and widened potential market opportunities. Investment interest continues to grow as a result. 

In part two of this series, we’ll next look at the growth of the wider video games industry, and examine the burgeoning use of video game technology within businesses seemingly unrelated to games.

HSBC Private Banking specialises in keeping investors and entrepreneurs up to date with the important trends shaping future industries. If you are interested in discussing technology investment opportunities, please contact your Relationship Manager.