What is the future for esports after Covid-19?

With the real world turned upside down it makes perfect sense that a competition best suited to indoor play reigns supreme right now.

As traditional sports and broadcasters scramble to fill the gap in the schedules from the coronavirus pandemic, the competitive gaming industry, while not immune to the current health crisis, has been able to continue comparatively unscathed.

Cancelled arena events aside, esports’ digital scope has helped shield it from the devastating effects of the coronavirus pandemic, with the big rights holders in the sector returning to their roots to stream live offerings for millions of fans worldwide.

Without their normal products to offer, traditional sports rights holders are following suit to try and avoid game over.

To name a couple, Formula One and Nascar have turned to virtual races featuring current drivers and various celebrities, with major broadcasters such as Sky Sports and Fox willing to air what is being served up. The World Boxing Super Series (WBSS), meanwhile, has also looked to the digital dimension to appease fans by simulating fantasy matchups through EA Sports’ Fight Night Champion title.

The results, so far, have been impressive. Julian Tan, Formula One’s head of digital growth and esports, revealed to SportsPro earlier this month that the series’ inaugural Virtual Grand Prix drew 3.2 million online viewers, with an estimated 1.2 million watching on TV. More than 900,000 viewers tuned in on Fox Sports for the first eNascar iRacing Pro Invitational Series. WBSS’ co-founder and promoter, Kalle Sauerland, hailed its esports experiment as a “huge success” so far and said it is growing, attracting more than 338,000 views on YouTube at the time of writing. Not bad for a title nearly a decade old.

In addition, clubs from major soccer leagues and the National Basketball Association (NBA) are all leaning on their respective esports operations across the FIFA and 2K titles to keep supporters onside.

It begs a multitude of questions. Notably, will this see leading esports titles, such as League of Legends, Overwatch and Counter-Strike, catapulted into the global sports conversation? Will traditional sports look to make gaming a cornerstone of their content strategy? Also, are there long-term lessons to be learned from the esports space as traditional sports properties try to cope with the months ahead?

The state of play

One only has to hark back to mid-March and the 72-hour period when coronavirus firmly made its unwelcome arrival into sports, laying waste to the calendar, to find a time when these questions were a lot less pertinent. Since then, as other properties floundered, esports has been doing better than most as it bids to thrive rather than merely survive.

“What’s been really interesting is seeing how quickly it’s adapted,” Phelan Hill, who specialises in esports as a senior consultant at Nielsen Sports, tells SportsPro.

“Now what you’re seeing is online tournaments still happening, people competing. If anything, it’s driving up audience numbers and there’s a greater level of engagement. More so than ever, esports is coming to the forefront.”

As a digitally native entity, esports is able to operate on a professional level unlike other sports. The popularity of gaming is measured in concurrent viewers and digital metrics over sold out arenas or TV ratings.

“We’re still able to provide that live experience even if players are playing remotely rather than in an arena,” says Torsten Haux, vice president, global media rights, at esports organiser ESL. “They may not be in a studio but we can still create a great atmosphere and offer a world-class product.”

The 2019 League of Legends World Championships was the most-watched esports event of the year, with more than 137 million hours of viewership

Be that as it may, esports has still been hit by postponed events. Fears are growing over standout competitions, particularly this year’s League of Legends World Championship, being affected. At present, the finals are still due to be staged later this year at the 56,000-seater Shanghai Stadium, home of the Chinese Super League’s 2018 soccer champions Shanghai SIPG FC.

With 137 million hours of viewership, not including Chinese platforms, the Riot Games competition was the most watched esports event of 2019, according to digital streaming data published by Esports Charts. It is fair to assume that whilst an audience creates a better broadcast product, the impact of a behind closed doors event on this year’s viewership figures would be minimal, even if the financial implications would likely be felt by organisers.

“A lot of the businesses that operate within esports are focused on events, leagues and people turning up to venues and watching. It hasn’t all been good news,” warns James Earl, partner at law firm Fladgate LLP, which counts several sports leagues as clients.

“Where [esports businesses] had tournaments in venues and stadia, they’ve been able to move to find alternative solutions. The ESL Pro League is a good example of that,” he continued.

“The key point is that esports hasn’t found it anywhere near as hard as some other sports will to maintain that connection with their fans while we go through this difficult time.”

The early signs, from a streaming perspective, appear positive, as die-hard fans continue to tune in to watch gamers playing from home. This includes the League of Legends European Championship (LEC), as Alberto Guerrero, head of esports for Europe at Riot Games, which develops the title, explains.

“The impact has been huge in terms of operations but 90 per cent of the content remains the same and our fans still get connected,” he says.

“We’ve seen that through the latest viewership data. We’ve seen in the last two weeks that we’ve been as healthy as we were in January, where we were, for the second year in a row growing by two figures year-on-year.

“What we’ve shown is the resiliency of infrastructure to keep running our business in a situation like this one.”

The conversation around esports is truly bigger than ever. Twitter alone saw a 71 per cent increase in competitive gaming conversations during the last two weeks of March compared to the two weeks prior when the coronavirus was yet to take hold globally. The platform Steam also broke its concurrent player count record last month, registering more than 19 million users.

With their seasons on hold, more soccer clubs are turning to their FIFA teams for content

A watershed moment

It is far too early to call, but this could be a defining moment for esports. Given the gaming industry at large is projected by market researcher Newzoo to generate revenues of more than US$160 billion in 2020 – a figure twice the estimated combined size of the global recorded music industry (US$19 billion) and worldwide film box office (around US$43 billion) – it is perhaps disingenuous to say competitive gaming could be stepping out of the shadows.

Further research from Newzoo – published prior to the worldwide spread of Covid-19 – suggests that global esports-specific revenues will grow by US$150 million in 2020 to reach US$1.1 billion, with sponsorships and media rights income accounting for three quarters of that total figure. Both are expected to jump to US$1.2 billion by 2023, thanks in part to a rise in awareness and audience numbers in emerging markets across Latin America, the Middle East and Africa, and Southeast Asia.

But there is a palpable sense that there is now untapped opportunity out there, for established esports businesses and traditional sports alike, to attract new fans through gaming and perhaps accelerate that growth process.

More than 900,000 people tuned in on Fox Sports for the first eNascar iRacing Pro Invitational Series

“Esports hasn’t had to rethink its entire model,” says Earl. “Twitch has had an increase in viewership of between ten and 12 per cent, and YouTube is up 15 per cent, which are very significant percentages if you measure it in terms of actual numbers. In Italy, live stream gaming has increased by up to 70 per cent.

“That [becoming more mainstream] was going to happen in due course and this situation will accelerate that. You’ve got to remember that esports is, to a certain extent, generational. Some traditional sports fans will never see esports as a legitimate element of the sports sector. Esports isn’t interested in trying to win over those people.

“What I do think is important though is that it was gaining more relevance. The tournaments were getting bigger. Now it will gain more legitimacy faster because of the current situation.”

Hill concurs, believing esports has been quick to capitalise on the current state of play and lack thereof from traditional sports.

“A lot of the teams are creating additional content and team members are doing additional streaming. People are stuck at home looking for more content to consume and esports is perfect for filling that gap,” he said.

“Traditional sports are being more proactive in driving new esports content. Sky Sports with the F1 Virtual Grand Prix had a primetime slot of 8pm. You’d never see that normally. But now there is a huge opportunity there not just for rightsholders and teams but also commercial brands to get involved.”

When asked if they had actively altered their strategy to usher in a new wave of supporters, Guerrero and Haux were a little more guarded. For them, focusing on the product remains essential.

“We’re in constant discussions with our broadcast partners over our schedules so they can produce programmes with a local feel,” says Haux. “We’ve always been committed to producing the best content for our existing partners, but yes we have seen a demand from new broadcasters who haven’t shown esports before.

“We’ve seen this already with Nascar, the Bundesliga and Formula One getting involved. They’ve been in the shadows of bigger titles, like League of Legends or Counter-Strike, but now they are being broadcast.”

For Guerrero, creating brand awareness is also a welcome boost, revealing “there is no specific goal” in terms of KPIs for Riot Games and LEC at this stage.

“We’re probably going to reach people who are unaware that we exist and this is a huge competition that is happening. So we’re probably going to expand the knowledge of what we are and what we do into non-endemic audiences and that’s great because it legitimacies what we’re doing.”

Sealing the deal

With new fans comes new appeal, specifically for sponsors and rights deals. With the lack of exposure and live content currently out there, could esports’ commercial outlook be set for another lucrative leap?

“There are half a billion esports fans and that’s rising. More and more traditional media are seeing that and working with us, even before the health crisis,” says Haux on ESL’s broadcasting future. “It’s a way for them to attract younger people who are hard to reach for TV broadcasters. It would be easy to say the current situation is a flash in the pan but I definitely do not see a significant decrease.”

“[The commercial forecast] could change,” admits Guerrero. “All the brands who work with us are very happy supporting the changes we’ve done and we know that some of them are participating in traditional sports that have stopped. For those brands that are with us, we are not their biggest problem at the moment.

“We don’t have any specific expectations of, let’s say, new brands or more traditional media coming to us looking for content. But this is happening in some ways and we are happy to listen.”

The absence of live sports action for viewers has led to major broadcasters such as DAZN and BeIN Sports withholding rights payments to traditional sports leagues. Affiliated brands too are failing to see adequate returns on their investments. Considering the dearth of exposure out there, Hill believes esports is in a prime position to capitalise.

Esports tournaments could be getting even bigger, attracting more fans and non-endemic brands alike

“Questions are being asked of rights holders in traditional sports,” he says. “Esports doesn’t have that same problem to such a degree. You still have games going on, geography isn’t a challenge for such a digital product.

“Brands can still get new content to leverage and engage and be seen to be relevant. It’s a great time in a way to be a brand in esports. Things are slowing down much more on a macro basis. But the way esports is set up means it can weather that storm” he continued, adding that brands could look to tap into competitive gaming’s expanding sponsorship inventory.

“Esports rights holders are really open and creative in what they do. They very much see themselves as a story platform. There are so many ways in the esports world that can be done.

“You have core areas such as live events and brand exposure. Beyond that, the guys in esports are very creative with their digital and social content, which fans really engage with. There’s streaming as well outside of live tournaments. You’ve got all these teams and players who’ve got their own following who are doing their own streaming and that’s another route for brands to engage with a loyal, young, dynamic fanbase.”

The unhappy scenario traditional sports have found themselves in has led to senior figures across soccer and broadcasting to tell the UK’s Times newspaper that rights will suffer a marked drop in value in a post-coronavirus world. Those gloomy predictions follow industry assessment that the Premier League, the leading global sports property, had now seen its domestic rights value peak and fall into decline with the most recent tender.

The younger generations don’t need something like a Super Bowl to be attracted to content. They follow influencers and streamers, guys who are at home in their room.

Alberto Guerrero, Riot Games' head of esports Europe 

It remains to be seen if esports can ride the wave of any fallout from the traditional sports world. But casting an eye to the sheer scale and consistency of competitive gaming’s content suggests linear and digital broadcasters may look to increase their outlay in that space in order to ensure a greater guarantee on investment, and at a better value too.

Earl, who asserts that esports is “one of the fastest growing and potentially most profitable areas of the sport sector”, is also quick to single out gambling as another revenue stream it could exploit through betting partnerships. 

“This is where esports is going to be potentially a big winner longer term,” he says. “Imagine if you had ten platforms all competing against each other for consumers’ eyeballs. Now you’ve got one. That won’t last but who in a million years would’ve dreamt a scenario where every single piece of sporting content people normally go to isn’t there? It’s incredibly unique.”

Streamers such as Tyler ‘Ninja’ Blevins are enjoying bumper viewing figures 

Lessons to be learnt

If esports really is a shining light in these dark times, what can its traditional counterparts learn and adopt going forward? For so long, competitive gaming has been sidelined, certainly commercially, in favour of more established real-life competitions and leagues. Now the tables may have turned as the whole industry anxiously looks towards the post-Covid-19 future.

“The younger generations don’t need something like a Super Bowl to be attracted to content. They follow influencers and streamers, guys who are at home in their room chatting or streaming a game,” notes Guerrero.

“We are showing with much less budget that big esports will keep offering content for millions of fans. This could be a big reality check for a lot of sports rights holders, even the Olympic Games.”

“It [esports] is a much more open community than you can really be a part of and interact closely with,” adds Haux. “Having worked in traditional sports for decades now and having worked two or three years in esports, I see it’s a clear difference and the USP esports has. It’s something traditional sports can learn from us in the future.”

For Hill, the key takeaways for other sports will be to focus on content and engagement, pointing towards esports’ “personal relationship” with fans.

“It’s something you can’t really do so much in traditional sports. Looking at the agility, the level of engagement, the content, the creativity around that content, that for me is a great lesson,” he says.

Left to right: Alberto Guerrero, Torsten Haux, Phelan Hill and James Earl

It is that flexibility under pressure, particularly in unprecedented times like today, Earl also highlights.

“Take rugby, for example,” he begins. “They have to be playing matches and they want people to turn up. That is the entire business model of a rugby club. I don’t see that as something that they will be able to change. If you are subject to a very disruptive event like this, what is your alternative? How good is your relationship with your fan?

“Everybody talks about fan engagement and the case for that has only been made stronger because of what’s happened. They will need to focus more on what happens off the pitch because that has become increasingly important.

“I wouldn’t say the coronavirus pandemic will have done any lasting damage but it will certainly ask some long-term questions within brands as to what their sponsorship strategies should be. If a traditional sport has only got certain things to offer, there isn’t much they can do about it, so they might start to think about more flexible sports platforms to work with.”