Esports: Too Big to Ignore
Esports, or electronic sports, is the playing of video games competitively, in an organised format, with spectators. Generally speaking, esports will refer to the teams and players at professional levels, but is also used to describe competition at any level.
It would be fair to suggest that esports’ ability to attract huge global audiences continues to baffle many. Just like traditional sports, millions of fans will religiously tune in to watch their favourite esports athletes compete — or even just play — through online stream broadcasts or in sold-out stadiums.
According to Newzoo, global esports audiences will grow to 453.8m this year, a +15% year-on-year (YoY) growth. For context, esports audiences can be placed into the following categories: Esports Enthusiasts and Occasional Viewers. The former will regularly consume esports content, keeping up-to-date with teams and players competing in their favourite titles; this category will reach 201.2m (+16.3% YoY growth). Occasional Viewers, on the other hand, refers to those that will consume esports content about once a month; this category will reach 252.6m (+14% YoY growth).
The future of esports, if you didn’t already know, looks incredibly promising. The number of tournaments are growing, prize pools are getting larger, and generally, people are becoming aware of the wider opportunities esports brings. With the global gaming population exceeding 2.5 billion in 2019, it is unsurprising to see that the global awareness for esports will exceed 1.5 billion this year!
The game is changing. Brands are becoming aware of the rising viewership and awareness of esports, with many endemic and non-endemic brands adding the channel to their marketing mix. In 2018, publisher of the most popular Battle Royale title in the world, Epic Games, committed $100m to a Fortnite World Cup that saw over 40m players participate in the competitive circuit to qualify. This demonstrated Epic’s intent to embrace the competitive element for the Fortnite game, providing opportunities to players around the world. What’s more, it was only a few months ago that a 16 year old became a multi-millionaire, and one of esports’ highest earners in just four hours!
So, why should you pay attention?
With esports proving to be more lucrative than ever, it is no wonder the number of dedicated esports venues are on the rise too. If we look to the east, Asia are completely embracing the esports culture, with esports complexes and training facilities, amongst educational provisions widely accessible. In comparison, though, there are fewer than 10 stadiums are operational in the US today; this is significantly lower right here in the UK. Whilst there is quite a clear disparity between esports in the east vs in the west, esports fever is certainly spreading.
The majority of readers here will probably know of a pub, or bar, that offers gaming of some sort: either through casual tournaments, or simply just a console or two for players to have fun. Why is this? Because many are realising the benefits of tapping in to such an engagingly dynamic scene, which is why it is highly likely there will be at least one esports venue in every major city in the next 10 years.
Esports is no longer a case of just simply “playing games.” At the same time, however, the industry’s fragmentation obscures the ability to truly understanding its potential. For those outside the industry, its vastness is enough to provide a crucial barrier to understanding its potential, which could, in essence, decelerate its mainstream acceptance. Recently, we have seen this in the news with many citing video games as the root of violence amongst adolescents, or even the term “gaming addiction” carelessly thrown around.
Yet, for Intergalactic Gaming (IG), one of our chief responsibilities will be to facilitate that overall understanding of the space — in doing so, we will facilitate the overall understanding of IG’s value proposition.
The Esports Ecosystem
Nicolas Besombes provides a simplified overview of the varying stakeholders within the esports ecosystem, clearly outlining their relationships, or the flow of value, for each. In this section, we will initially provide a generic description of how each (excluding brands and investors) contribute to Besombes’ model. Thereafter, we will focus on brands and investors with a specific view on points of entry for non-endemic brands and sports teams with a view on the benefits entering esports brings.
The video game industry, which will be recorded at $152.1bn this year (Newzoo Global Market Reports), is central to the esports ecosystem. The intellectual property of these video games are owned by game developers and publishers. The competitive video games are in essence disciplines within esports, which can be played on various platforms (mobile, PC and console).
Games can be categorised into genres, with each genre and game having its own nuance. This is important to note as it is these nuances that enable the appeal of gaming to different audiences.
Fans and Spectators
Fans of particular esport titles will contribute to this model by often playing their favourite video games. Fans and spectators may donate to their favourite teams or players during streaming sessions, buy merchandise, event tickets, or subscribing to media outlets that broadcast such events.
As we have seen with popular free-to-play titles, like Fortnite and Dota, fans also contribute through in-game purchases of skins and cosmetics. Specially in the case of Dota 2, a portion of the revenue generated from these purchases subsequently contribute to their tournament prize pools.
Franchises, Teams and Players
Players of these video games will represent teams and/or franchises to compete in organised formats.
Tournaments and Leagues
As Besombes points out, there are two key competition models within esports: league orientated and tournament orientated. Leagues are organised in championship formats, involving a set of teams that will play the others; all teams will play an equal number of matches. Each team will gain as many points as possible, and final rankings will be determined by the total number points at the end of the league.
It is important to note that leagues can be broken down further. Either traditional leagues, where teams either face promotion or relegation, or franchised systems where league spots are permanent and often purchased. There are pros and cons for each, but more often than not, the game publishers will be the organisers of the top tier competitive leagues.
Conversely, tournaments are distinctive from leagues as victories will result in winning teams and players forming quarter-final, semi-final and final rounds; losing teams are subsequently eliminated.
There are a variety of tournament formats, some of which include aspects of a league. This will involve teams taking part in preliminary group stages to qualify for main event tournaments. Here, it is common for game publishers to delegate the organisation of certain stages to third party tournament organisers that specialise in hosting esports events.
Broadcast and Media
League and tournaments are broadcasted on streaming platforms, like; Twitch, YouTube, or Mixer, which again, fans will subscribe to. In recent years, traditional sporting broadcasters, like Sky Sports, BT Sport and ESPN have also begun to televise esports events.
Points of Entry
The infographic below consolidates Besombes’ model, clearly showing the points at which brands and investors can invest into the landscape.
Why is Esports Attractive for Non-Endemic Brands in Particular?
Historically, endemic brands have been the leading investors for esports, but with the recent esports boom, the number of non-endemic (outside the esports space) brands joining the landscape has risen.
The brands above are a few of the many non-endemic brands that have, in some capacity, invested into esports; either through competitions, teams, or player investment. Whilst these brands have already established global audiences, the ability to tap into such a vast audience is too good of an opportunity to pass on — data is extremely valuable after all.
As esports audiences continue to grow, brands entering the space will find the ability to offer data-driven personalised marketing, tapping into the interests of audiences globally. Most recently, world-famous Fortnite streamer Ninja signed a partnership deal with Adidas, which opens Adidas to an entirely new demographic.
The same can be said for sporting teams entering esports, as we have witnessed a record number of sporting clubs join the impetus. This year saw the inaugural ePremier League season, Italian car giants Ferrari made their esports debut and Celtic FC signed their first Call of Duty team — and next year will be even bigger!
Sports Teams Entering Esports on the Rise!
Sport has dominated entertainment for years. Like esports, its highly dynamic nature will draw in enthusiasts and occasional viewers. Moreover, both have the ability to bring those together that compete for the love of what they do. Yet looking at audiences, there is a clear discrepancy between the average age groups of fans across both, which for the most part, is potentially detrimental to the longevity of sporting teams.
For instance, the average Major League Baseball fan is 53 years old — only 29% of fans are between 18 and 34; NFL and NHL fans have similar audience profiles. The NBA, whose fan base has an average age of 37, is slightly younger, but still considerably older than the average esports fan that has an average age of 26 years old. If we consider the importance of audience awareness and data-driven marketing, then we can clearly see why sporting teams are entering esports.
Significant value flowing through the esports ecosystem offers the opportunity for alternative streams of revenue for these sporting teams and institutions. We have seen many sporting organisations already partner with sports simulator games; La Liga (among other top tier leagues) with FIFA, the recent launch of the ePL and Juventus partnering with Konami’s Pro Evolution Soccer. This, for many, can be considered a primary avenue for entering esports, bridging the gap between esports and traditional sports.
Technological developments have also allowed sporting organisations to become more integrated in esports. Earlier on in the year, an F1 driver was beaten in a time trial by an esport driver on a real life track. Instances like these are resulting in a new found respect for esports athletes.
That is not to say these sporting teams will solely field rosters in titles that specialise in their chosen sports, though. On the contrary, these teams will enter titles like Call of Duty, Fortnite, Dota and Apex, allowing them to capture and potentially convert a much younger demographic. This will especially be the case for certain sports that are already quite niche, like F1 and other simulation racers.
As this article has demonstrated, esports is gaining significant momentum, and is showing no signs of slowing down. It has been in the mainstream arena this summer, with many more gaining an awareness of the fact that esports is more than just “teens that hide away in their rooms gaming too much.”
Non-endemic brands, sports teams and even notable influencers have realised this, and will continue to diversify their esports portfolios contributing to its overall rise. This year, we have already seen global superstars Drake and Meek Mill announce their interest in esports, with the former investing into professional organisation 100Thieves. It won’t be long before many more begin to join the party…
Through our platform, we will provide a space to educate. The IGGalaxy will position competitive gaming as a driver of connecting many with similar passions across the world. Whether you’re a gamer, coach, manager, spectator, or as explored in this article, interested in a wider non-endemic capacity, our platform will house all these stakeholders under one unified umbrella, underpinned by transparency, integrity and reward.
Is gaming as bad as people say it is?
The next article to follow on from this will focus on the perception of gaming from varying perspectives.
To keep up to date with developments, please follow us on our various social media channels: