Businesses Hesitant to Ink New Deals in Esports, But That Doesn’t Stop the Industry From Evolving

Total revenues deriving from esports are expected to rise by 14.5%, bringing the total market value to $1.054 billion. The pattern of the growth has shifted compared to previous years due to the Covid-19 pandemic. Sports simulation titles exploded in 2020 when real-life major sports leagues were cancelled. The trend and popularity of titles such as FIFA and NBA2K remained throughout 2020 and are expected to continue growing faster in 2021. While the total market for esports has grown and is expected to grow more, the number of esports sponsorship deals is declining. The number of sponsorship deals dropped by 21% last year at a pro team level, from 454 deals in 2019 down to 358 in 2020. As the pandemic continues, uncertainty remains, and fewer companies are likely to ink new sponsorship deals. There is also an indefinite suspension of offline stadium events and no organized studio productions. Everything is online, and the studio analysts, interviewers, commentators and announcers are all confined to their respective homes. This leads to an increased focus on just the matches and gameplay with limited availability for commercial opportunities. In the absence of commercial competition, some areas of business can scoop up deals on the lower-side. Many of the premier online casinos and bookmaker sites are main sponsors of top-tier teams across Counter-Strike: Global Offensive, Dota 2 and League of Legends. It is not surprising, considering that these types of companies are often the main sponsors of top teams in traditional sports like soccer.

Esports overlapping with traditional sports

Speaking about traditional sports, traditional sports teams are buying and starting their organizations. Some examples are Paris Saint-Germain, FC Schalke 04, Bayern Munich, FC Copenhagen, Ajax Amsterdam and Besiktas Istanbul. It is predicted that all major football clubs will have their respective esports division competing in hugely popular electronic sports titles like FIFA. Like PSG and Schalke, some early adopters have League of Legends teams and other divisions competing in other esports. Looking at hugely popular US sports-type esports, like NHL and NBA2K, there are already official virtual leagues where each NHL and NBA organization have an esports division competing. The setup for these two leagues is interesting, as the National Hockey League (NHL) and National Basketball Association (NBA) are part-owners of the leagues along with the game developers. All players are under contract with the organization they play for, get paid monthly salaries and get cash bonuses from prize pools. As traditional sports are suffering due to the pandemic, many traditional sports fans are eyeing the esports counterparts of their favorite sports, further bolstering the industry’s growth.

Greater room for non-gaming content in streaming platforms

Another trend we see in the wake of the pandemic is that non-esports and non-gaming content is becoming more prevalent on streaming platforms like Twitch. Sporting events are not the only area of stadium entertainment that is suffering due to the pandemic. Most music concerts were cancelled or severely limited due to social distancing rules. For many musicians of different genres and popularity, Twitch became a lifeline during 2020. Twitch has been siloed for most of its existence to be mainly about gaming content. The pandemic has opened up its doors to other industries, such as the music industry. Where streaming musicians are cementing their positions on the platform and thriving, most likely, this is a trend that will stay even post-Covid-19. The music industry has even overlapped with gaming. The hugely popular gaming title, Fortnite, has launched a couple of in-game concerts featuring the likes of Travis Scott and Marshmello. A concept that has proved to be hugely popular, often with unique in-game drops for concert attendees. Something that other games besides Fortnite may explore as the pandemic drags on.

The trends of overlaps from traditional sports and music and the commercial exploitation from online betting sites are most likely not temporary but rather the future of the industry.

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