eResearch| Asked if 2021 would be the year of Esports, a panel of industry insiders at PGC claimed it is, in fact, the decade of Esports.
Maybe there is some truth to that statement, as according to Business Insider, over the past decade Esports has climbed from relative obscurity to a projected billion-dollar industry in 2021. Esports is a broad term that covers title owners, promoters, and teams.
PHOTO 1: Danny Lopez
The audience is arguably more global than soccer, aka “football”. Asia accounts for more than half of the viewers, followed by North America and Europe.
Since a game’s intellectual property is owned and controlled, the Esports business differs considerably from traditional sports. Sponsorships and gameplay permeate all levels of an Esport, from amateur to professional.
Building revenues
According to Statista, the majority of Esports revenue comes from advertising and sponsorships. A panel of industry leaders, moderated by Sam Cooke of Esports Insider, discussed how the current revenue structure limits the industry and possible ways around that issue.
Danny Lopez, Guild Esports (LON: GILD), commented how content creation might be a significant area for revenue growth. Content creation could include social media promotions, training programs, or Twitch (NASDAQ: AMZN) streams.
Guild Esports is a publicly listed global Esports business based out of London, UK. David Beckham is a co-owner and public figure, bringing expertise from his career.
PHOTO 2: Tyler Bond
However, Tyler Bond of Akolyte, remarked that audiences receive high-quality free entertainment. Charging for a broadcast might be a possible avenue to monetize further.
Regardless of the solution, as Esports sheds the nerd stigma and enters mainstream culture, more revenue is likely to follow.
Building a support system
The same panel highlighted emerging Esports organizational best practices — key strategies to look for when evaluating a potential investment.
Many Esports teams suffer from turnover – hurting fan engagement and loyalty. Typically, elite gamers tap out in their mid-twenties because of boredom. Playing and training on the same game for endless hours causes gamers to lose interest. The panel noted that boredom, rather than slowing reflexes, led to more retirements.
Look for coaches, psychologists, physiotherapists, and sleep consultants to fill out the staff on Esports teams. Support professionals will work behind the scenes, with the goal to create superior gamer performance and retention.
Teams are building talent pipelines too. Academies, like those found in European football, will recruit and train burgeoning young talent. Imagine a Lionel Messi of League of Legends – scouted at a young age and outfitted with the best technology… the story writes itself.
Esports Partnerships
Esports partnerships are rising in complexity and novelty as visibility and viewership increases. The past year saw many notable collaborations, as discussed by Inder Phull of Graphite Music.
- Lavazza, Fortnite, and Fnatic – While Italian coffee usually goes with biscotti, Epic Games created Lavazza themed skins and map elements on their Fortnite game as part of a collaboration in Esports team Fnatic.
- Gucci (EPA: KER) and Tennis clash, a mobile game from Wildlife Studios: This collaboration builds on a pattern of major fashion brands creating skins (costumes) virtually along with the matching physical merchandise.
- Dmitri Vegas and Mortal Combat: A playable Dmitri Vegas character was released along with a music track, generating buzz for both the game and the artist.
This past year saw us spend more time online. The evolution of gaming and Esports is blending our physical and digital worlds.
PHOTO 3: Lavazza, Fortnite, and Fnatic Branding
