The world's most profitable entertainment product
Today, Engineer Explains takes on the most overlooked billion dollar industry (valued at $131 billion, expected to reach $300 billion by 2025) which has shook the world with its sudden rise and now, e
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What Is the most profitable entertainment product ever? Marvel’s Avengers: Endgame? Avatar? Game of Thrones?
Not even close! The world’s most profitable entertainment product is a game whose name you’ve probably heard, GTA V, which earned more than double that of the highest-grossing movie of all time (Avengers: Endgame) at $6 billion in sales.
Today, Engineer Explains takes on the gaming industry, the most overlooked billion-dollar industry (valued at $151 billion, expected to reach $300 billion by 2025) which has shaken the world with its sudden rise, and now, everyone wants a piece of this pie. The highly controversial industry has been facing criticism of veteran investors (like Mark Cuban) due to a plethora of reasons but has made its place in the heart of millions of zoomers. Its extreme popularity knows no bounds as the biggest of the organisations have millions upon millions of fans and followers around the world and their influence is spreading like a virus. (No, not like that of the Coronavirus.)
Gaming is a very wide term used for all things (streaming, esports, casual gaming, etc.) related to a game whereas esports is a particular aspect of it, which includes competing in tournaments professionally, as a full-time job. Often, the teams participating in these tournaments are signed up by these esports organisations who look to capitalize on their skills and popularity, just like in conventional sports. These organisations handle the travel and accommodation expenses, provide salaries, and other necessary expenses for the team and the staff.
The gaming industry and the esports scene blew open one night when suddenly Drake (a casual gamer who hit his gaming chair after a tiring day) hit up Tyler “Ninja” Blevins, for partnering up for a Fortnite session. Partnering these two were Travis Scott and NFL superstar JuJu Smith-Schuster. This streaming session peaked at 635k concurrent viewers, a record yet to be broken 2 years after the stream. And thus began the boom of the gaming industry!
Before Ninja’s stream, gaming and streaming was just a recreational activity in the eyes of a person, unknown to the gaming scene. But after it, he became a household name by going on to popular talk shows like The Ellen Degeneres Show and the Tonight Show starring Jimmy Fallon and brought home deals worth millions of dollars not only for himself but set the scene for similar organisations and the skilled players! Ninja is known to have his own clothing line, sneaker collection partnered by Adidas, and his own skin (a paid aesthetic feature in a game). He even signed up a deal with Mixer (a streaming platform owned by Microsoft) worth $30 million and after Mixer closed down, he was rumored to have been offered to sign up with Facebook gaming for $60 million!
Some of the biggest esports organisations have been valued north of $100 million, before the coronavirus pandemic. These organisations include Cloud9, Team Liquid, FaZe Clan, Team SoloMid (TSM), GenG, Immortals, etc. It has been rumored that only 1-2 of these organisations have made profits so far in their existence, but the sheer revenue they generate along with the following they have is enough to keep bringing new investors and to keep them believing. Some of the biggest names to have invested in these organisations are Drake (100 Thieves and FaZe Clan), Post Malone (Envy), Offset (FaZe Clan), Will Smith (GenG), Michael Jordan (Team Liquid), Shaq (NRG), and many more. The Astralis Group became the first esports organisation to go public in Dec 2019 aiming to raise $20 million.
The humongous fan following, record-breaking streaming numbers, and these big names have brought some of the biggest names in the world to sponsor gaming organisations such as Nike, Intel, Coca-Cola, Mercedes Benz, Nissan, Audi, Honda, Redbull, Airbus, US Air Force and even the Disney powerhouse Marvel!
The streaming industry in itself is a behemoth, with a global audience of 450 million strong youngsters and is expected to reach 600 million by 2022. The average viewer is a 12-24-year-old individual, belonging to the middle class or higher. These individuals are the ideal target audience of those looking to market new products, which shows in the marketing and sponsorship revenues of these events and individuals. Marshmello and Travis Scott are some of the few artists who had their virtual concerts in the Fortnite game, with Travis even releasing a new song and setting a precedent for a new kind of event.
On the back of these huge investments from such popular personalities and a worldwide fan following, these gaming organisations have transcended into lifestyle brands as well, partnering with clothing brands such as Champion, GUCCI, Louis Vuitton, PUMA, H&M, etc. By partnering up with these organisations, the apparel industry giants have seen their flash sales running out in literally 10 seconds and these pieces selling like hotcakes. The resale market of these goods is just on another level, something beyond the scope of this article.
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