With the rise of bitcoin has come the search for new ways to use cryptocurrencies and blockchain technology. Analysts have been trying to drive home to investors that cryptocurrencies are more than just digital coins that can be bought and sold. However, it’s still early in the game, so analysts are getting creative and suggesting ways businesses can use blockchain technology. But there is one industry that offers the perfect platform to use bitcoin or other cryptocurrencies: eSports.
It’s a new and growing industry just like cryptocurrencies and blockchain technology, and investors may be surprised to learn that according to one firm, “hundreds of millions of people” actually do spend time watching other people play games.
This week, Bernstein analyst Todd Juenger and team put together an in-depth report on eSports to showcase this growing opportunity for investors in the space, while Macquarie analysts highlight the way bitcoin and the blockchain are a natural fit with eSports.
eSports is growing fast
Believe it or not, eSports has been around since the 1970s, according to Juenger, but it remained a niche until about 10 years ago when professional players started competing in organized multiplayer games. He adds that the first major competition was in 1980, when Atari hosted the Space Invaders Championship, drawing 10,000 gamers.
However, what really made eSports take off was online streaming over the last 10 years, which enabled people to watch professional gamers play. According to the Bernstein team, there are about 143,000 eSports enthusiasts around the world, and Newzoo expects this number to hit 250 million by 2021. By “enthusiasts,” Newzoo is referring to those who watch competitive gaming on a regular basis.
Expanding this view to include those who watch occasionally, Newzoo estimates the total viewership for eSports at about 307 million viewers now and reaching 557 million by 2021. Interestingly, Juenger said there are now more eSports viewers in the U.S. than there are NHL viewers, and he expects it to surpass MLB by 2020, becoming the second most-watched sport.
eSports and bitcoin are a natural match
The Macquarie team explained in their reports on the blockchain and bitcoin that they’re a natural fit for eSports, which has already been using digital currencies for years because it is a digital format. Players use digital currencies to buy things in the games they play, and Macquarie analysts see several potential areas in which bitcoin or other cryptocurrencies would be useful.
They believe video game publishers could use cryptocurrencies to increase the average revenue per user and the shelf life of their titles. The challenge within the industry has been building a payment network that’s consistent and secure while supporting ownership of digital assets. However, they also think cryptocurrencies could fix this problem, providing a single platform driven by the blockchain that could be used by developers and gamers.
The Macquarie team also suggests that bitcoin or other cryptocurrencies could be used to facility betting on eSports competition, although for now, they feel it’s still poorly organized, lacks transparency and faces great regulatory risk.” They suggest that smart contracts could offer a good way to pay eSports players, noting that contract disputes have become a big problem in this area. They feel that smart contracts could fix the problems, offering more transparency on contracts with players in addition to “timely compensation.”
