Gaming tends to be a divisive industry in the modern world. Some see it as a social activity, others, as a great way to let off steam (there’s a pun in that sentence for the gamers out there). Some think it’s a waste of time and others would go as far as to say that the graphic, violent and solitary nature of gaming is damaging our society.

However you feel about gaming, the world of eSports has seen an astronomic rise in the last decade as people have blended video streaming, social media and online gameplay into a new sporting sector. The movement has become so radical and progressive, that even the International Olympic Committee has been forced to take notice, and there are calls to introduce eSports into the Olympic Games.

‘I’ve never heard of eSports’

In general, eSports still finds itself on the fringes, so let me give a brief synopsis of eSports in 2017.

eSports is a form of competition played out across gaming systems or consoles. Individuals, or teams, play one another on popular gaming titles in official tournaments, sometimes for large sums of cash.

When most people think of ‘gaming’, they think of popular titles such as FIFA or Call of Duty, which have found their popularity as console titles and command huge followings. However, eSports is generally dominated by the large PC titles. PC gaming hardware was up by over 64% whilst console hardware spending was down by nearly 27% in 2016. This shows a serious transition towards hardware that is not dominated by the likes of Sony (PlayStation), Microsoft (XBox) and Nintendo, which will allows for new disruptive players. The console platforms are fighting back hard, with games like Destiny 2 and Overwatch being released with much less focus on solo campaigns and much more focus on competitive online gameplay.

The global gaming audience is suspected to be around 2.2 million to 2.6 million people and the consumer spend on gaming in the UK totalled around £4.33bn in 2016 – that’s some serious currency going into, what is essentially, an entertainment industry. Likewise, there are increasing wages for the sports stars, the top five by earnings being: Dota 2 ($126m), League of Legends ($49m), Counter Strike: Global Offensive ($37m), Starcraft II ($23m) and Counter Strike ($10m), which is some equally serious currency coming out of the industry. These figures represent the combined earnings by players across the history of each game.

Now, that may sound like a lot of money, but if we compare this to other popular sporting industries then it puts it more into perspective. Last year’s football Championship playoff final (a single game), for access to the English Premier League, was worth an estimated £290m to the winning team and wage bills across the five biggest teams in world football also totalled a measly (feel my eyes roll here) £1.3bn for the 2016/17 season.

This, however, is probably a little unfair, as I’ve started by comparing an acorn with an oak. If we compare this to popular Olympic events, such as track and field, eSports suddenly looks to be a comfortable earner for it’s top athletes.

Big in… South Korea

eSports also has an extremely large global following. Twitch TV, one of the world’s largest streamers on gaming content, has more than 10 million daily active users. And this following doesn’t exist only online, with many live tournaments attracting large audiences.

In South Korea, the bastion of eSports, there are several TV networks dedicated to eSports, attracting many millions of viewers who tune in to watch the contest or check the results – just like one might do with any sporting event. The 2014 League of Legends final was held at the Seoul World Cup Stadium in front of 40,000+ spectators. Likewise, in 2016 more people watched the League of Legends World Finals than watched the NBA Championship Finals. Now, while I strongly believe basketball to be one of the duller sports to come out of the US of A, many would disagree with me (they would be wrong), which makes this an impressive feat from the eSports crowd.

South Korea is also home to many local gaming centres, known as PC Bangs, where gamers can hole up for hours on end playing each other on LAN networks for a small hourly fee. These gaming houses are spreading. In the UK, we’re seeing growth in eSports bars across the country, with people mixing their love of online gaming with alcohol and good food. A good example of this would be somewhere like Meltdown in London. We have some long strides to take before we catch up with the Koreans, but the first tentative steps are being made.

Cross-platform gaming

We’re also starting to see an amalgamation of conventional sports and eSports, with many of the world’s largest sports teams investing heavily in gamers. This is important, because traditionally, sports have found themselves in fierce competition over viewing numbers and participants, but what we see here is growing support from the sporting bourgeoisie for the sporting proletariat.

In the interests of fairness, I do have to point out that eSports isn’t all killstreaks and boss battles. As with any sport, competitiveness can have seriously negative side effects. South Korea is currently facing a gaming addiction epidemic that is so serious, there are clinics dedicated to the treatment of sufferers. For those outside the loop, the addiction seems strange, but the hormonal response these patients have towards their games is similar to those experiencing drug highs. As an industry, it’s important that these issues are tackled from an early stage and groups are popping up to help those experiencing addiction issues.

So, why does all this matter to you? Well, as investors, we should be keeping one eye on the present and one on the future. eSports is an industry that looks to be very much on the up and could be an attractive space for investment. In the UK, the industry is less developed than its US or Asian counterparts, which could pose a huge opportunity for those trying to develop this tech within the country.

The global industry is still young, and acquisitions in the area remain few and far between, but the big gaming companies of old are making strategic moves. Companies like Activision Blizzard (a company whose roots go all the way back to the 1970s) are purchasing large media platforms (Activision purchased the MLG – Major League Gaming – back in 2016). As such, we can expect to see more and more M&A activity in this space in the future.

However you feel about gaming, it’s sky’s the limit for an industry defined by connectivity and inclusiveness. It may well be time to pick up a controller and give it a go…