eSports is a hot topic in the sports industry at present and when you consider the rate of growth it is easy to see why.
In the course of last year alone, eSports revenue ballooned 52% (source: newzoo) to almost USD500million. However eSports still has a long way to go and is dwarfed by the value of the traditional sports industry, estimated by Deloitte to be worth c. USD150 billion.
Understanding the eSports boom
eSports includes any competitive video gaming played online or at a live event and till now has centered on multiplayer combat games such as League of Legends. However recently more traditional sport simulation games such as the FIFA franchise have been making their mark.
eSports has really come of age in the last 18 months, entering mainstream consciousness as more and more organisations and athletes placed, in some cases, big bets on it. Some notable milestones in the past 18 months have included (in no particular order):
- Turner launching its own eSports league as well as, more recently, the French and Dutch football leagues creating their own eSports leagues
- Sports clubs like the Philadelphia 76ers partnering with, acquiring or establishing their own teams (click here for a full list of sports clubs who have already got involved)
- FIFA highlighting eSports as a key area for the organisation to engage with and grow new audiences (see “FIFA 2.0: the vision for the future”)
- EA Sports creating an eSports events division (called the competitive gaming division) in recognition of the growing potential of live gaming events and the value of premium gaming content
- Many athletes and sports business investors backing eSports teams (e.g. three-time NBA champion Rick Fox bought an eSports team).
eSports versus traditional sports
Specialist market research company Newzoo reported recently that 76% of eSports fans claim eSports viewing is taking away from their traditional sports viewing. Newzoo also predicts eSports viewership around the globe to jump 11.2% (based on a CAGR from 2014) to 345 million by 2019.
It’s not all a bed of roses for eSports. A number of challenges exist, many of which traditional sports resolved long ago. These include:
- a lack of rules or regulations to combat match fixing (monitoring systems will need to be developed that alert competition organisers and authorities to suspicious results and betting patterns)
- a lack of clarity regarding ownership of media rights (in terms of event content, in-game content and data (offline and in-game))
- a lack of measures to combat doping (substances to enhance player concentration are considered by many to be prevalent in competitive gaming circles)
Despite the challenges, traditional sports clubs are increasingly getting involved in eSports for a number of reasons. Namely,
- growing audiences of young, hard-to-reach males (eSports represent a good opportunity to grow the clubs brand on- and offline)
- increasing interest from the commercial sector
- high levels of engagement (eSports can be a valuable source of content and viewers watch live eSports content online for long periods of time)
How can professional sports clubs get started in eSports?
Sports clubs can enter the eSports field by joining an established eSports league like the Celtic eSports League, by partnering with an existing eSports player or team and/or organising their own tournaments.
Many sports clubs are in a test and learn phase. But what could be the end goal? As illustrated in the eSports Pyramid below, clubs need to consider the long game i.e. how can eSports contribute to driving commercial revenue and sporting results? To achieve this, clubs will need to build internal eSports competences (which can be exploited to the benefit of the traditional sporting side of the organisation) and leverage eSports to connect the clubs brand with new audience segments. This is a utopian vision of course and most clubs are currently at the base of the pyramid in a test and learn phase.
Looking to the future
2017 promises to be an interesting year. A year when the eSports industry will further mature. We can expect:
- The integration with virtual reality to grow
- More traditional sports clubs to enter the eSports space
- Greater diversity of revenue models (e.g. data exploitation, in-game revenue, online subscription etc)
- A proliferation of slick, professional eSports events
- Greater attempts to regulate competition and greater scrutiny of non-licensed competitions by the platforms, game publishers and related rights holders
- New titles to emerge
- Increasing competition amongst gamers and rising standards as prize pots increase
- More eSports tournaments connected with traditional tournaments
As the eSports space evolves at lightning speed, it is impossible to predict what will happen beyond 2017. For example, who today would bet against eSports making an appearance at the 2024 Olympic Games?
About the authors of this post:
David is a Chartered Marketer with more than 15 years’ experience in international sports marketing roles. You can follow David on twitter (@davidgfowler) or connect on LinkedIn (linkedin.com/in/davidgfowler).
Geoff runs his own Sports Consultancy, working with clients such as FIFA, UEFA and FIBA across the world. He is also on the board of Tourism Northern Ireland. You can follow Geoff on twitter @geoffwnjwilson or connect on Linkedin at linkedin.com/in/geoffwnjwilson.