COVID-19’S POSITIVE IMPACT ON THE E-SPORTS INDUSTRY
In a way it seems strange that the global pandemic, which shut down so many sports events and gyms, would cause a dramatic upturn in the e-sports industry. And yet, that is exactly what happened since the last half of 2020.
Let’s explore the current state of e-sports, and examine the reasons why Covid-19 had such a positive impact on the e-sports industry.
E-sport industry overview in 2021
To be clear on the definition, most of the industry considers ‘e-sport’ to be any competitive video game that can support a tournament scene. Over the past year, the number of games that fit that definition has grown dramatically.
One look at streaming services like Twitch tells us that there is room for a lot of different kinds of fans and players. Money tournaments take place on a daily basis, ranging from online Blitz Chess, to games like Escape from Tarkov that haven’t even left the beta testing stage. Deloitte’s EU-wide breakdown1?from 2020 shows a very even distribution of viewership in the e-sport industry, with the top four categories (shooters, racing, sports simulations, and multiplay online battle arenas) ranking within 2% of each other.
This universal appeal explains some of the recent trends seen in the e-sports market across the globe. As “Business Insider” reports2, the e-sports audience is due to double over the course of the next six years. With the U.S. market alone collecting an estimated $226 million worth of ad revenue in 2021, expect continued, steady ad growth over the next few years.
But in a lot of ways, ads are just the tip of the iceberg. More e-sports franchises have been getting into product marketing as a major source of revenue. This can manifest as branded products such as team clothing, gaming chairs, and hardware. Or it can drift more in the direction of affiliate marketing, as e-sports team members use product placement and hardware promotion to sell everything from mice, to keyboards, to computer furniture, to entire gaming PCs.
But this revenue model begs the question: Why didn’t the loss of big arena events hurt the e-sports industry as much as one might imagine?
How Corona Affected the Success of e-Sports
Some of the biggest corporate sponsorships in the e-sports industry simply did not happen in 2020 and early 2021 as their arena events were cancelled due to the pandemic. So the likes of Monster, Red Bull, Intel, and half a dozen major betting firms didn’t have the chance to make their huge ad spends at live events.
That should have caused revenues to plummet. Instead, they grew. In fact, according to Newzoo’s predictions3, e-sports will generate more revenue than rugby in 2021.
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This was due in part to a shift in the way people get their entertainment. More and more folks open up a web browser to watch streaming content, rather than sitting in front of a television. And with so many people staying home due to the virus, the likes of Twitch, Facebook Gaming, and YouTube Gaming became the big winners in the e-sports industry.
Just how big? Well, according to StreamLabs4: Streaming platforms saw 7.46 billion viewing hours recorded in Q3 of 2020, compared to 3.89 billion hours in Q3 2019. In a single year, the consumption of streamed content nearly doubled. And a huge chunk of those streams were e-sports-oriented.
The e-sports industry quickly adapted to quarantine in ways that traditional sports could not. They made all of their events online rather than in person. They shifted from arena ad sponsorship to streaming advertiser revenue.
Investors took notice. One popular e-sports team, Fnatic, raised $17 million in new investments in May 2021 alone. That effort was led by Japanese conglomerate Marubeni Corporation. In March, Nuverse spent $4 billion to acquire Moonton for their game ‘Mobile Legends: Bang Bang’, the hottest mobile e-sports product on the market.
People in the know are not shouting about e-sports from the rooftops. They are quietly acquiring everything they can get their hands on before the gold rush really gets started.
The Future of e-sports After Covid-19
In lots of ways, the e-sports genie is already out of the bottle and there is no forcing him back inside. Hundreds of millions of new fans have contributed an extra three and a half billion viewing hours in the last year alone. Entertainment habits, once formed, are not easily reversed.
Newzoo expects the industry to be worth $1.6 billion by 2023. That kind of growth in the e-sports business is only achievable if the big hitters in media get involved. Which they currently are. Comcast Spectacor, ESPN, Disney XD, and Netflix Esports have all secured franchise deals with various major e-sports leagues and tournament series. Expect them to leverage the transition of post-Covid consumers from the computer room to televisions in the family living room.
And the living room is where the cross section between older demographics and younger ones meet. Younger generations follow their favourite influencers, who have been sitting at home streaming games for the past year and a half. When teens become breadwinners over the next five to ten years, their entertainment habits will not be formed by last century’s media trends. They will be streaming their content, and a good percentage of that content is likely to be e-sports.