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Global Sports Industry Analysis: Esports to Showcase Stupendous Market Growth Backed by Sponsorship

 Published Date: 2019-06-12   |   Views: 52   |  Sports  

The global sports industry is foretold to have a strong potential for growth, although the growth rate may not be as impressive as expected. Esports has been at the top of the game in the global sports industry, with its fan base growing at a tremendous rate. Traditional and upcoming sports teams, brands, publishers, and media are predicted to make esports a top priority. Soccer, basketball, boxing, tennis, and cricket are some of the key sports generating massive amounts of revenue in the global sports industry.

Market segments such as digital media rights, sponsorship and advertising, licensing and merchandising, and participation fees are forecast to exhibit robust growth rate in the near future. Creating personalized content could be one of the important strategies adopted in the global sports industry. Personalized fan targeting and branded content for digital channels of rights holders and proprietary digital channels are key areas that sponsors are expected to concentrate on for improving ROI. In the next few years, the consumption of live video content, on-demand videos, and game highlights is prognosticated to grow strongly.

Technology companies could be at the forefront in the global digital sports media rights market. During the PwC Sports Survey 2018, 66.5% of the respondents said Amazon could be a dominant player in the market going forward. Google/YouTube and Facebook were mentioned as future dominant players by 47.1% and 40.2% of the respondents respectively. The survey further mentions that 28.4% and 26.3% of the respondents thought DAZN and Alibaba, in that order, could be dominant in the global digital sports media rights market in future.

Manufacturers Anticipated to Launch More Theme-specific and Innovative Offerings

Based in the US, Nike is a major sports equipment manufacturer. In June 2019, the world’s largest supplier of athletic shoes and apparel released its 2019 US Open-themed Golf shoes in the “No Denim Allowed” pack, which includes the Air Jordan XI Low Golf. In the same month, it introduced plus-size and para-sport mannequins in its London store to display sportswear.

ESPN, an American sports media conglomerate, owns a number of sports broadcasting assets. In May 2019, it partnered with Caesars Entertainment, a US gaming corporation, in a wide-ranging deal for sports betting content. In the same month, a multi-year agreement was signed between the XFL and ESPN for televising games starting with XFL’s 2020 season. The XFL signed the same agreement with Fox Sports.

Europe’s largest sportswear producer, Adidas manufactured over 5 million pairs of shoes using recycled plastic waste in 2018. For 2019, the company’s target is to use the same technique to manufacture more than double the number of shoe pairs produced using recycled plastic waste in 2018. A group of British subscription-television sports channels, Sky Sports is quite dominant in the UK and Ireland markets. According to Sky Group’s May 2019 press release, Sky Sports will launch Sky Sports Netball in July 2019. The first-of-its-kind women’s sport channel will provide coverage for all games of the 2019 Vitality Netball World Cup.

Under Armour is a popular footwear and sports and casual apparel manufacturer based in the US. In 2016, American actor and semi-retired professional wrestler Dwayne Johnson partnered with the company for his Project Rock. In May 2019, Project Rock introduced the Project Rock True Wireless In-Ear Headphones with Under Armour and JBL.

Traditional Sports Teams Expected to Develop Strategy to Enter Esports

Not many people are aware that the global sports industry is pretty broad. There are several important sectors such as sports equipment, sports nutrition, esports, sports betting, and sports media included in the global sports industry. According to researchers, the global sports equipment market is predicted to gain growth on the back of the rising use of sensor technology for recording biometric data, measuring motion, and monitoring the health of athletes. Demand for sports nutrition products is expected to increase due to growing consumption of dietary supplements, energy drinks, and protein bars among athletes, bodybuilders, and sportspersons.

Esports is probably the number one sports market in terms of potential for global revenue growth. During the PwC Sports Survey 2018, 70.5% of the respondents said they would create a strategy to enter esports while almost 18% said esports is too premature and that they would wait and see how it progresses. Sports betting could be one of the fastest growing markets in the global sports industry. Increase in digital connectivity and improving disposable income are among key factors driving the global sports betting market. Growing interest in sports and advancement of media technology are foreseen to augment the demand in the global sports media market.

Sponsorship to Take Major Share of Global Esports Market in Next Few Years

As mentioned in PwC’s Sports Survey 2018, the global esports market is expected to reach $1.58 Bn in revenue by the end of 2022, growing at a CAGR of 18.4% during the forecast period 2018-2022. Some of the chief drivers of this growth could be sponsorship, media rights, and streaming advertising.

Below are some key findings from the survey.

      Sponsorship is anticipated to account for a 31.7% of the total global esports revenues and earn around $500 million by 2022

    Media rights could take the second position in terms of revenue while accounting for a 28.4% of the total global esports revenues by 2022. It is projected to earn approximately $449 million by the same year

     Streaming advertising is forecast to collect a 20% share of the total global esports revenues and earn $316 million in 2022

  The remaining percentage share of the total global esports revenues could be secured by consumer ticket sales and consumer contribution by 2022

      Consumer contribution is foreseen to grow at the slowest rate among other revenue streams of the global esports market

Top 4 Trends of Global Sports Industry

VR and AR: Soccer, basketball, and now cricket have been key adopters of VR and AR technologies, bringing impossibly-close-to-the-court experience to fans at home. VR and AR usability in sports is projected to grow at a steady pace in the coming years. Sports programs before and after matches and also half-time programs are predicted to become more reward-styled and interactive.

Gambling and Betting: The overturning of the Professional and Amateur Sports Protection Act in May 2018 has opened doors for sports betting in US states other than Nevada. According to a press release, US casinos achieved fourth straight year of revenue gains in 2018 because of the legalization of sports betting. Sports gambling companies are prophesied to develop relationships with governing bodies and other betting institutions to ensure integrity and attain a position of strength in the global market.

Fan Engagement: With increasing use of data collected from fan loyalty programs and season ticket holders, fan engagement is expected to become more personalized and deeper than ever before. Sports leagues and teams are anticipated to increase their ability to use insights from fan data and analytical tools to meet the new demand for personalized fan experience.

Women’s Sports: Compared to men’s sports, it is observed that women’s sports are considered to be more progressive and inspiring, not just for fans but also the general public. Increase in the popularity of women’s sports could mean new revenue opportunities for sports marketers and companies.

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