Earlier in May, Forbes released its list of the top 10 esports franchise valuations. The 10 most valuable esports companies are worth a combined $3.5 billion, up 46% from the last edition in December 2020.

But certain key events in the interim have swung valuations and caused investors to look at the business models behind esports franchises.

In October of 2021, FaZe Clan revealed that it was planning to go public through a SPAC merger. While the announcement was a surprise, the valuations attached to the deal were even more staggering.

At the time, it was announced that FaZe was already worth $650 million and would reach $1 billion with the money it raised in the deal.

The deal valued FaZe Clan comparably to the MLB’s Miami Marlins ($990M) and the NHL’s Detroit Red Wings ($990M). The valuation surpassed the $305 million Forbes had estimated FaZe Clan was worth just 10 months earlier.

The monumental valuation was also a signal that the esports industry had resumed its growth trajectory after a few years when team values had largely flatlined and revenue growth stalled.

Fast-forward to 2022, and the narrative has changed. Certain fundamental issues have been raised concerning FaZe Clan’s business operations.

In an amended SEC filing last month, FaZe Clan revised its forecasts downward, with many skeptics pointing to the company’s $36.9 million net loss for 2021.

Regardless of the isolated FaZe Clan issues, the esports market is back and looking to continue its strong growth trajectory.

• In 2022, the global esports audience will grow +8.7% year-on-year to reach 532 million. Esports enthusiasts — those who watch content more than once a month — will account for just over 261 million.
• The number of esports enthusiasts will grow to 318 million in 2025, with a CAGR of +8.1% (2020-2025). In 2025, the total audience will surpass 640 million.
• Esports will generate nearly $1.38 billion in revenues globally by the end of 2022. China accounts for nearly a third of worldwide esports revenues.
• Digital and streaming are the two fastest-growing revenue streams for esports, with 2020-2025 CAGRs of +27.2% and +24.8%, respectively.

Want to learn more? Check out the full Scouting Report here.

ICYMI: Last month, we published another Scouting Report on the impact of the crypto market crash on existing sports partnerships. You can access that report and our other research at Pro HQ