I already wrote about esports three months ago when I admit that I’m fan of esports. In that blog I try to describe that “rising star” in general level and I’ll do that again. There are two reasons why I’m going to continue with the same theme – it’s so important one and I’ve visited two esports seminars in last few weeks (New York & Helsinki).
The total revenue from esports was over 900 M$ in 2018 and growth was almost 40 %. It seems that the same kind of development will continue also this year and it would mean that revenue will be 1,2 – 1,3 B€ this year. It’s not anymore just hobby of nerds at garages…
Sponsors have already found out esports and money from those pockets is increasing rapidly – last year the sponsorship growth was over 50 % and there are nowadays big companies like Coca Cola, Intel and Audi among those sponsors. The area which is increasing even faster than sponsorship is media rights. One challenge in esports is that fans are not used to pay about picture and media companies should find out new innovative ways to get money from customers. But there are huge opportunities ahead because there were 380 million people who were keen on following esports.
The most important bodies in esports ecosystem at this moment are game publishers (f.ex. Riot, Valve, Blizzard), platforms (YouTube, Twitch), competitions, teams, players, sponsors and of course fans. From my point of view one important and interesting body is missing from that list and it is of course Sports Betting companies. I’m sure that the importance of those bodies in esports ecosystem will change but I don’t know how but I would like to speculate a little bit.
At this moment the money to esports is coming mainly from sponsors, advertisers, media rights buyers and of course players/fans. As I already said the revenue from the three first bodies seem to increase all the time and I don’t see any reason why that development would stop – the speed of increase will reduce after some years. The more interesting question is what will happen to money coming from the big audience and what other income resources there will be?
Esports is so young phenomenon that real big audience hasn’t found it yet and despite of that there are already now that 380 M people who are interested in that sports and approximately 165 M real active fans. The number of active fans is by the way about 50 million more than ice hockey has. I believe that most of those fans have used to play esports (or video) games before and there is huge possibility that other kinds of fans might find out esports also in next few years. I’m sure that it will happen thanks to media companies who are going to show more and more esports in their channels. There are over 100 M ice hockey fans in the world and I guess that just minor part of them are former ice hockey players. Why the case wouldn’t be the same in esports?
Esports industry should concentrate more on two separate customer groups. The first one is “hobby players” who are keen on those games and things/features related to that sports. The business model for them could be extra elements to those games – they would be ready to pay for new kind of weapons or whatever is need in games which they are playing. That’s what game publishers are doing nowadays. The other more interesting group is fans of esports. Nowadays those two groups seem to be same group but quite soon there should be totally different business and service model for fans. Many of them are now former esports hobby players who have became too old to be active players anymore. But as I already mentioned there will be big group of fans who are not or haven’t been players by themselves at all.
Would the same business model which big teams are using in other sports work in esports too? I have heard that NBA fan is using about 20 times more money than fan of esports. There seems to be huge business potential but how to monetize that? Merchandise and tickets might be one traditional way? The other possibility is to develop extra services related to live feed like for example Formula 1 has done. Sports Betting and other type of gambling might be one solution. I’m sure that all those things will raise already this year but for some reason I have feeling that we’ll see something totally new in next few years…
I know that almost everyone in current esports ecosystem is thinking and planning about “something totally new”. We are also doing that because we believe on esports and would like to play bigger part in that “raising star” of sports. That’s the reason why my company is going to organize “Innovation Challenge Week” where the theme is esports next week. I’m sure that we’ll get interesting ideas from there and I’m afraid that I’m not willing to share those ideas with you – yet…!