Despite the fact that eSports seem to be one of the few activities within the entertainment industry that has not collapsed due to the pandemic, the effect of the global crisis may strangle its sources of financing, posing problems of survival in the short term. term for many companies in the sector.
Confinement has been a severe blow to all leisure activities, even different eSports games. It has had a particularly dramatic impact on the world of sport. With empty stadiums and suspended championships and leagues, the sector bleeds with millions in losses. And the spectator of sporting events has had to face, for the first time in his life, the most absolute emptiness, having to settle in the best of cases with the repeat telecasts offered by television networks. However, in the midst of this bleak panorama, electronic sports -as the RAE likes to call them-, more popularly known as eSports have continued to carry out their activity, although without the great mass events that surround them. Ultimately, the pandemic has transferred all the entertainment that this format has been able to take onto the networks, and video games are no longer a digital native product, whose natural habitat should be the internet. Let’s find out more.
What’s Happening in the eSports world?
Electronic Sports of eSports are an increasingly widespread and lucrative activity. Their growth in terms of followers has been remarkable throughout the past decade – especially in Asia, but also in the United States, and more modestly in Europe – although still, at least in the West, its audience continues being niche, mostly young and with a profile closely associated with a passion for video games.
Although in a more limited way, competitions based on electronic games have continued to be held, albeit behind closed doors. Unlike other forms of leisure dramatically affected by the health crisis, eSports will not only withstand the stoppage of activity, but will also emerge reinforced from it. But these are statements that will have to be clarified and clarified, since, among other things, the cancellation of mass events can endanger the continuity of sponsorships, the main source of income for the sector.
Where is the future of eSports headed?
The latest big phenomenon around the video game industry is eSports, which, based on successful multiplayer games, become tournaments held as live spectacles for crowds in stadiums, and are even broadcast on television. The most prominent competitions move huge amounts of money and the public, since they are treated in the media as a soccer World Cup or an Olympiad. The most famous contests in the world are the game Dota 2 (The International); the League of Legends world championship, the one on Battle.net that starts from the games StarCraft II, World of Warcraft and Hearthstone: Heroes of Warcraft, and also the Intel Extreme Masters. A lot of people have been moving to America from different parts of the world to play in lucrative eSports leagues.
How many people watch eSports tournaments?
A survey carried out by Hootsuite and We Are Social yielded the figures that on average 22% of the world’s Internet users watch eSports tournaments, a percentage that rises when analyzing Asian countries – where the phenomenon originated and where it has taken root more strongly—; up to 40% in China, 33% in Vietnam or 29% in the Philippines.
A recent report by the specialized consultancy Newzoo published before the pandemic broke out, set the sector’s revenue for 2020 at 1.1 billion dollars, almost 16% more than the previous year, of which three-quarters are derived from the sponsorships and broadcasting rights. Although they are clearly unlikely predictions in the new scenario, they serve to give an idea of the strength of the sector. On the other hand, an audience was estimated this year of almost 223 million fans, plus another 272 million occasional viewers.
The same work highlights the popularity that this phenomenon is gathering steam in emerging markets, and predicts compound annual growth rates between 2018 and 2023 of 24% for Southeast Asia, 20% in the case of Japan, and almost 18% for the Latin American subcontinent. Obviously, these are predictions that should be reconsidered after everything that is happening.
The leading competition eSport event in the world is League of Legends, and the last world final held in Paris had many viewers. The title EA Sports FIFA also stands out in popularity, with its international tournament FIFA eWorld Cup. In 2019, Madrid’s Palacio de Vistalegre became the venue for the quarter and semi-finals of the League of Legends World Cup, as well as another important competition, such as the Rocket League World Championship.
How did the sports world cope with the crisis?
One of the sectors hardest hit by the pandemic has been professional sports. On the one hand, confinement has suspended the athletes’ training and preparation activities in their tracks. But what is really worrying is the slowdown it has experienced as an economic activity, since all over the world leagues and competitions were canceled, and even the Olympic Games were postponed until 2021. According to the World Economic Forum, the three main sources of income from professional sports – ticket sales, sponsorships and advertising, and the sale of broadcasting rights – have been totally or partially diminished. Indeed, there are those who defend that sports in electronic format should fill the void left by traditional sport, replacing the offer intended for fans. Esports players can continue training and competitions can continue to take place online exclusively. Some have been able to adapt quickly, as is the case with Nascar, an international company that organizes car races. When the pandemic broke out, those responsible thought to continue with the activity since it takes place outdoors and there is no physical contact between the competitors. But this idea was soon wisely dismissed. Instead, Nascar has moved its racing cars to the internet, through its competition NASCAR iRacing Pro Invitational Series, assuming that the company already had experience in the field of racing car simulators. The first event held online was broadcast by the Fox network and gathered an audience of 900,000 viewers.
The video game sector, as a digital native activity, has seen its activity increase after the outbreak of the pandemic. According to Antevenio data based on a survey conducted in thirteen countries, 36% of people say they spend more of their time playing video games, and of these, half do so significantly more. There is a strong possibility that eSports will end up moving from a niche audience to a majority audience due to the crisis.
What is the importance of Twitch in the world of eSports?
One of the names that are ringing the most in relation to digital entertainment during lockdowns is that of the Twitch platform, the leader of streaming in the field of video games. Born in 2011 as a branch dedicated to digital gaming by Justin.tv, in 2014 it changed its name to Twitch Interactive to dedicate itself to the live broadcast of video game games and eSports tournaments. One of its most popular features is that it allows viewers to make monetary donations to those who generate and post content, becoming for many of these players a source of funding for their activity, both to subsist and to pay for trips to video game tournaments.
Which is the most watched game on Twitch?
During 2019, Twitch had faced competition from other platforms that seek to gain a foothold in the sports streaming market, such as Facebook Live or Mixer, which have managed to snatch influencers from it. However, Twitch continues to lead as the premier platform in the world of video games. Last year, League of Legends returned to the first position as the most watched video game on Twitch, ousting Fortnite, which is in second place.
How is Twitch reinventing sports streaming?
The pandemic has amplified the importance of Twitch even outside of the video game environment. As an example, Real Madrid has opened a channel on the platform to broadcast selected matches from its archives, such as Ronaldo’s debut or the best moments of the Copa del Rey and the Champions League. This website incorporated a new eSports directory which is intended to make it easier for users to search for live competitions and information about the players and the leagues in progress. Twitch has broken all traffic records during this crisis, reaching 3 billion hours of content viewed in the first quarter of the year. To get an idea of the magnitude, the equivalent figure for YouTube is 1,076 million and that of Facebook Live is 553 million. Likewise, Twitch has broadcast 121 million hours of streaming in the same period.
By the way, at the beginning of May 2020, we learned that Twitch has come up with another competitor that will have to be closely watched: the social video network Tik Tok, the latest trend among the youth. In collaboration with the Collegiate Starleague organization, it had organized its own eSports competition, dubbed the Tik Tok Cup. These were eight individual tournaments in categories such as League of Legends, Fortnite, CS: GO and Rocket League, which will distribute up to $ 60,000 in prizes. Collegiate Starleague will broadcast all tournaments through its official Twitch channel.
How much can eSports withstand?
The arrival of the pandemic has shown us that eSports have a capacity for survival in the face of extremely adverse situations that many other sectors envy, starting with its distant relative, the traditional competitive sport. A purely digital medium as it is and born directly from computer technology, it is one of the few that can endure when the only thing left standing is the internet.
Let us not forget, however, that we are facing a global recession that affects all sectors of activity to a greater or lesser extent, and that the business figures for eSports will not be unscathed in the midst of this general catastrophe. For now, companies in the sector have reacted to the crisis, first, cutting costs to mitigate the loss of income they anticipate, and secondly, suspending all face-to-face activity to operate exclusively online.
Confinement has driven the consumption of video games and access to specialized platforms; In fact, companies that create titles such as Activision Blizzard, Electronic Arts and Ubisoft Entertainment, have already officially announced that they expect an increase in their income thanks to COVID-19. And we have already commented on the magnificent figures of use of streaming websites above. But, there are other agents in the eSports value chain that face a much more uncertain future.
On the one hand, the companies that own the equipment are trying to cut costs in order to maintain liquidity. The Danish Astralis has agreed to reduce the salaries of managers and staff by 30% as a shock measure. Their biggest problem is that their business is concentrated in the management of eSports teams, unlike other companies, such as Enthusiast Gaming or Simplicity Esports and Gaming, whose investment portfolios are more diversified with other types of products.
Another example of businesses in danger is that of the organizers of tournaments and eSports events – and all that goes with it in the form of ancillary sectors – who have seen their revenue-generating model disappear overnight. In this way, two large American companies in this subsector, such as Allied Esports Entertainment, owner of the HyperX Esports Arena Las Vegas, and Torque Esports, which operates another in Miami, have closed their facilities without any medium-term expectation of resume activity. The pandemic has wiped out all revenue from ticket sales, concessions, broadcast rights, and sponsorship and advertising revenue.
One of the biggest blows that the e-sports sector is suffering from COVID-19 is the drastic drop in revenue from advertising and sponsorships, something that is also strangling the financing of other branches of economic activity, such as for example the media. Undoubtedly, the prolonged withdrawal of the sponsoring companies derived from the effects of the global crisis, could severely jeopardize eSports in the future.