Esports are the new frontier of streaming

The esports ecosystem has boomed in the last 10 years and has become the real growth beast of the streaming world. There are plenty of reasons for this: high level of engagement through esports events, rise of streaming platforms like Twitch exclusively dedicated to gamers, competition in the market remains high because of constant entrance of new franchises, low entrance barrier (game developers can create their own games and then sell via larger platforms).

In 2019 – therefore in a pre-Covid world – the revenue numbers from the gaming business were already astronomical: $130 BN overall, including the revenue from the sales of consoles in addition to games. Tencent, Activision and Electronic Arts dominate the franchising business thanks to League of Legends, Call Of Duty, and FIFA 20 (respectively). The rise in esports is what is driving the market the most: in 2020 the projected global number is $1.1BN, up from $950 MM in 2019 (data from Newzoo here).

Three quarters of the whole revenue pie come from sponsorships and media rights.

There are multiple reasons why esports are the darling of the streaming ecosystem, and I’ll tackle them here in non-specific order:

1. Esports foster a higher level of engagement: unlike video content, which can be watched in groups or streamed at the same time but remains, essentially, a singular experience and the viewership modality has no impact on the content (e.g. a movie will end the same way, whether you watch it alone or in company), an esports game offers you the choice to be an active player or a passive viewer, therefore influencing the content and how it’s digested. In addition, esports offer plenty of opportunities to engage in cosplay (the practice of dressing up like a character from a videgame or anime, extremely popular in Asia).
2. Esports are highly inclusive: everyone can play, costs of game apps are not prohibitive, looks or physical skills don’t matter (unlike real world sports). In a world where technology has contributed to isolate us more from each other – way before Covid-19 upped the ante on isolation – esports have managed to bring really all people together, whether in person with events or virtually, but always fostering the interactivity of the players and the viewers.
3. Esports produce a massive amount of content: in addition to the actual game franchises, the esports ecosystem generates a multiplicity of tournaments, live events, tv shows. Organizing an event at the Barclays Center in NYC is certainly no joke. While this creates an obvious burden from an operational point of view for the franchisor companies, especially at the scale of 20 events/year for each major franchise, it also brings massive opportunity for customer (player or viewer) retention and, from a branding perspective, exponentially increases the touchpoints. These are priceless advantages for any brand/product.
4. Esports (and streaming games) are the perfect vehicle for business partnerships and new revenue generation channels: as mentioned earlier, most of global revenue in esports comes from sponsorships and media rights. In June 2020, Team Liquid, a famous gaming team, became the first team to officially partner with Marvel Entertainment for merchandise (their jerseys will feature Marvel themes, then the partnership will expand to other items).
5. Esports are the real gender leveling / representation media: not only women are a growing part of the game developing population in the world now amounting to roughly 25% (see the data on Statista here) but they are also a large component of the viewers/players population, especially in the gamer data, where they almost reach the parity with men at 46% (also from Statista, 2019 data).

All of these considerations are obviously amplified in a Covid-19 world, where engagement and inclusion are needed more than ever.