Research firm Newzoo BV has released a report predicting that the rapidly growing esports market could reach over $463 million in revenue this year, an increase of over 42 percent from last year.

According to Newzoo, a large portion of that growth is coming from within the US and Canada, and it predicts that well over a third of the total esports market will come from North America. Meanwhile, Newzoo expects nearly a quarter of this year’s esports revenues to come from China and South Korea, and the remaining 61 percent of the market will come from the rest of the world.

“2016 will be pivotal for esports,” Newzoo CEO Peter Warman said in a statement. “The initial buzz will settle down and the way forward on several key factors, such as regulations, content rights and involvement of traditional media, will become more clear. The collapse of MLG was a reminder that this market still has a long road to maturity and we need to be realistic about the opportunities it provides. In that respect, it is in nobody’s interest that current market estimates differ so strongly.”

Warman is referring to Activision Blizzard Inc’s recent purchase of Major League Gaming (MLG), a previously well-established esports tournament organization, for $46 million.

Image courtesy of Newzoo BV

Gambling “does not flow into the esports economy”

Warman noted that a number of other reports predicting esports revenue this year are much higher than Newzoo’s estimate of $463 million, but he explained that the higher reports also include esports gambling in their predictions.

“Luckily, when zooming in on the highest market estimates of more than $700 million, the difference is explainable by an in-depth look,” Warman said. “This estimate only differs in the revenues generated in Asia (Korea in particular), and by taking betting revenues into account.”

“At Newzoo, we believe betting on esports should not be mixed into direct esports revenues as the money does not flow into the esports economy. Similarly, sports betting is not reported in sports market reports.”

Revenue per fan still lags far behind traditional sports

While the esports industry is still rapidly expanding, it has a long way to go before it catches up with traditional sports, especially in terms of the amount of revenue generated per “enthusiast” (i.e. fans).

According to Newzoo, basketball fans provided a value of $16 per fan in revenue last year, and sports fans in general provided over $54 per fan. Meanwhile, esports fans provided only $2.83 per fan, and Newzoo’s report expects that amount to rise to only $3.30 this year.

Newzoo said that its most optimistic prediction for esports revenue expects the amount of revenue generated per fan to reach only $11 by 2019, but it more realistically expects it to reach only $6 per fan by that year.

Still, even reaching $6 would be a nearly 100 percent increase in a period of only 4 years, and Newzoo notes that the revenue earned per fan will continue to increase as the industry matures.

Image courtesy of Newzoo BV

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