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The Sports Business ramifications of eSports

8th November 2019

Technology has had an enormous impact on sport during the past twenty-five years; altering every sport in all kinds of ways, but perhaps the most seismic change is yet to really hit home

It is the shift of a certain fan base, from traditional sports to eSports- defined as ‘the codified confrontation of players during video games’. The affect is most likely to be felt as Generation Z (born 1995 to 2012) begin to decide where to direct their new- found disposable income. Will they be consuming and spending with traditional sports, or will eSports take a demonstrable chunk out of the sports business pie?


Setting aside the philosophical argument of whether eSports should be classified as ‘sport’, it is undeniably ‘entertainment’, and is therefore competing for the ‘free time’, vicarious purse. 2018 research from Newzoo suggests that eSports will not just grow the sports business, but will affect the pecking order of ‘sport’ consumption (and therefore sponsorship and broadcast rights revenues). Categorising eSports as a sport for the time being, it is the fastest growing sport in the world: The Newzoo report predicts a 5 year (2016-21) compound growth in revenues of 14% for audiences (to 307m) and an astonishing 27% for revenues (to $1650m).


Interestingly for sponsors, it has a young and, compared to most sports, a high female demographic. Last year Tencent reported that 24% of players in China are female, of which 69% are categorised within the 21 to 30 age brackets. Newzoo reports that women account for 38% of the global viewing figures. It is important to point out that eSports can complement traditional sports- and become a stepping stone into understanding the rules and personalities of that sport. But eSport are dominated by non-traditional formats such as Fortnite, Dota2 and League of Legends. None of the top 20 eSports are mirror video versions of traditional sports. At least 5 times as many players play Fortnite as play FIFA.


Due to the appeal that eSports has with the hard-to-reach, young demographic: consuming currently predominantly via various social platforms (Facebook 9m reach, Instagram 13m followers, YouTube 13m subscribers) brands such as Coca Cola, Mastercard. Intel, Red Bull, Nike and Adidas are beginning to recognise the commercial opportunity in this space and have become the first band of non-endemic sponsors. 61% of sponsors are currently based in the US; 21% of them are tech companies. This group is only set to expand. The sponsorship money will be coming out of the pot that, in the past, was tapped into by traditional sports and entertainment. The pot isn’t growing, so there will be financial casualties.


To showcase a specific team, as detailed by the Sportel eSports report: Team Natas Vincere is based in Kiev. It has 34 players, playing in 7 leagues: Dota2, CounterStrike, Battleground, Apex Legends, Fortnite, Paledins and Rainbow Six. It has more sponsors than any other team- 13, and revenues per year of $6,400,000. An increased ‘Leagues and Teams’ fan base inevitably means that the media rights market will mature, and that eSports events will gravitate toward traditional consumption platforms such as free to air and PPV- most likely via the likes of Amazon and Netflix. They will also move towards purpose-built, fan orientated stadiums (such as The Prudential Centre)- an obvious opportunity for sports architects and the stadium and event suppliers that follow their labours, like seagulls behind a trawler.


While 2 nd and 3 rd tier traditional sports are desperate to be welcomed into the commercial warmth of the Olympics umbrella by the IOC, eSports has no such financial concerns. Perhaps, for the first time in its history, the IOC are keener to begin a relationship with a nascent sport, than the sport itself! The IOC is doing all it can to reach the younger demographic flocking to eSports, conscious that they need to keep the Olympics relevant to future generations and maintain its power of brand association for its TOP sponsors. eSports are the AirBnB; the Uber of the sports world. They bring a whole new paradigm and are growing organically and without and over-arching global governing body, which makes their growth and the level of disruption difficult to predict.


As technology advances and the traditional definition of sports changes, the possibility of eSports becoming a dominant force in the future remains speculative, but undeniable.