Technological developments creating an impact on our lives is nothing new – and the sports industry is no different. Video games, while by no means a new development, are increasingly finding their way into the mainstream sports market, driven by a rapidly growing audience and continued investment in the area.
Revenues for the global market have exploded in recent years: Reuters reports that total revenues for e-sports is predicted to reach over US$1 billion in 2019, representing a 26 per cent growth in revenue from 2018. This revenue is driven by advertising, sponsorship and licensing transactions, with interviewees noting, “There are a lot of entrepreneurs pouring their own money into e-sports.” This points to a significant amount of private money coming into the market.
Growth is seen in a wide variety of metrics for the market, ranging from the number of tournaments, numbers of viewers of events, and the number of professional gamers. As one practitioner noted, “There are probably more people watching e-sports than the Olympic Games at the moment.” Consulting firm Activate projected in its 2019 report that viewership of e-sports globally will rise to 520 million viewers in 2022, as the market continues to gain traction.
The challenge for investors and companies is how to translate these high viewership and participant numbers into revenue – traditionally a problem, perhaps due to the nascent stage of the market. However, there is an increasing focus on subscription services targeting casual and professional gamers, with developments in cloud gaming broadening the market to include those who don’t have gaming hardware. Another driver for increasing the gaming market generally has been the rise of mobile gaming, which only requires a smartphone. These games often rely on in-game purchases, another source of revenue for developers. The combination of an increasing focus on subscription services, mobile gaming and developments in cloud gaming promise to develop not only audiences, but also diverse revenue streams.
Despite the innovative technology being used, and the myriad differences between e-sports and traditional sports, practitioners are noting significant similarities among these two types. One affirms, “The same old-world problems are in the new world,” with traditional legal problems still arising. This applies to not only structuring of sponsorship deals, licensing and setting up e-sports organisations, but also anti-doping, employment disputes and athlete exploitation. Another interesting facet is the lack of a regulatory body for e-sports – although with the growth of the market and significant amounts of revenue at stake, it may only be a matter of time before such an organisation comes into existence.