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Would eSports turn out to be a threat for traditional sport leagues in the future?

July 11, 2017

 

Revenue Growth in eSport

eSports refer to a class of competitive games that are played on electronic platforms. In general, they are large multiplayer video gaming events that professional gamers across the world participate in. The popularity of eSports has grown tremendously over the last few years, with revenues expected to reach USD 1.5 Billion in 2020 - about three times that of what it was in 2016, USD 493 Million.

 

 

 

From our experience in the industry, with the amount of digitised data being captured in eSports, we strongly believe that these revenue numbers would be even higher as fans and player engagement levels are being taken to new heights through advanced analytics.

 

 

 

Attendance and Viewership 

eSports viewership has been growing steadily over the last few years. Though a fairly young industry, the 2017 Intel® Extreme Masters World Championship that was held in Katowice, Poland, saw a live attendance of more than a 170,000, more than twice that of Super Bowl LI which saw a live attendance of 70,807. Moreover, the online attendance crossed more than 46 Million unique viewers, that is approximately 30 Million more viewers than the live TV Broadcast of the Trump inauguration.

 

 

To put things into perspective - the TV Broadcast of Super Bowl LI had a viewership that crossed 111 Million, more than twice that of Intel® Extreme Masters World Championship - however, this is an age-old tournament we are comparing to a new one.

 

 

 

Why is eSports attractive today?

Demographics

 

So, to summarize, eSports

  • has a diverse fanbase to whom numerous products and services could be marketed

  • provides brands with the reach the need to hit high-growth markets

  • fans are big spenders and spend a lot of time and money on the eSport gaming experience

 

Investment Opportunity

As I mentioned before, more than half of eSports enthusiasts are from Asia. Asia has an extremely high potential for growth when it comes to sports - leagues such as the IPL (India) and NPB (Japan) rake in revenues comparable to American and European ones and newer ones such as ISL (India) are springing up faster than ever. As such traditional sport bodies from the west are also making significant investments to grow their respective sport and brand in the region - take the 76ers for example. They are planning to launch their own NBA 2K eSports league later this year, and, acquired two mature eSports teams, Apex and Dignitas, last year.

 

Brand investment from all sectors is rapidly increasing to capitalize on this opportunity. Noticing the growth of eSports in the competitive gaming landscape, publishers are growing their franchises to spectator sports with the help of organisers, and the increase in game revenues are significant enough indicators to show the potential of eSports as a large new business within gaming.

 

Marketing Opportunity

eSports has brought about a large viewership that has created a massive marketing opportunity for publishers. There are a large group of content creators who upload gameplay and other gaming video content, on online platforms such as YouTube. This has proved to be an effective marketing engine for publishers. Content around eSports competitions has helped publishers engage their fans better and create fan groups around their games, thereby increasing both their popularity and lifespan.

 

Growth in Revenue per Fan

In 2014, the average revenue per eSports fan per year was USD 2.2. This year, it is expected to reach USD 3-4 based on various metrics and hit USD 5-7 by 2019. This is a far cry from the numbers produced by top traditional sport teams such NBA’s Chicago Bulls who hit USD 20 per fan per year in 2016, but the growth is still significant considering how young the sport is.

 

 

 

eSports vs. Traditional Sport Leagues

With massive sponsorship and large cash prizes being made available to gamers, we are bound to see eSports grow exponentially over the next few years. So, what does this mean for traditional sport leagues?

 

While eSports viewership is growing, the overall revenue generated by traditional sports is far greater today than eSports.

 

 

 

 

There is also a lot more emotion involved in traditional sport - we have seen major arguments between family members at the dinner table over why their team is better than any other:) I personally see this happen within our organisation every other day. With the growth of off-field technologies, traditional sport leagues are also employing newer and more creative means of fan engagement that are driven by technology. We have seen massive gains from employing such technologies to understand fan behaviour and emotion enabling sport organisations to predict future behaviour and tailor actions to keep their fans happy while maximizing revenue through ticket and merchandise sales at the same time.

 

So - will eSports become a hurdle to traditional sport leagues? Unlikely. Are there overlaps when it comes to games being played and watched and their fans? Yes, certainly. However, eSports and traditional sports are completely different things with very different elements that keep fans entertained. In a world driven by digital technologies such as big data, the winners will differentiate themselves from the losers through the application of such cutting-edge technologies. We just don't think that for eSports to win, traditional sport leagues have to lose or vice versa. Both will see tremendous growth over the next few years with the right application of technology.

 

 

 

Sources:

  • https://www.forbes.com/sites/paularmstrongtech/2017/03/16/46-million-watched-live-esports-event-10-million-more-than-trump-inauguration-broadcast/#5017adfe91f4

  • https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Technology-Media-Telecommunications/gx-tmt-prediction-esports-revenue.pdf

  • https://www.esportsbettingreport.com/esports-fan-demographic-research/

  • https://newzoo.com/insights/articles/esports-revenues-will-reach-696-million-in-2017/

  • http://www.philly.com/philly/sports/sixers/Philadelphia-76ers-new-nba-2k-esports-league-launching-Dignitas.html

  • https://www.esports-conference.com/wp-content/uploads/2016/05/NEWZOO_Free_2016_Esports_Market_Report.pdf

  • https://newzoo.com/wp-content/uploads/2017/02/Newzoo_Esports_Revenue_Growth.png

  • http://static3.businessinsider.com/image/58d0274cd349f91f008b58cc-2357

 

 

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