One of the world’s largest eSports entertainment brands FNATIC recently published a report analysing the COVID-19 impact of the industry. This insightful report revealed many interesting implications for organisations in this space. As experts in helping our clients take advantage of new opportunities, here are 5 key takeaways.
1. Flexibility and Safety in Online Events
Between January 2020 – May 2020:
• 31.6% of Offline events managed to shift to an Online format;
• 44.9% were postponed; and
• whilst only 23.5% were cancelled.
These numbers emphasise eSport’s unique advantage of flexibility for tournament organisers compared to traditional sports. eSports events offer significantly more scope to restructure an event which de-risks the business model for tournament organisers.
2. Revenue Does Not Have to be Physical
Naturally, tournament and eSport organisers reliant on physical events for the associated revenue from merchandising and ticket sales have suffered most heavily from the pandemic. However, all other revenue streams are still experiencing significant year on year growth amidst the pandemic. For example, global sponsorship revenue forecast for 2020 stands at $614.9 million which would represent a 13.1% year on year growth. Additionally, streaming and digital revenue streams are expected to have a staggering 60.9% and 44.9% year on year growth respectively. Clearly there is money to be made in eSports in a truly modern way, utilising technology to create revenue streams without the overheads associated with traditional sports.
3. The Gaming Industry Defies the Market
The gaming industry has been undergoing significant growth over recent years but the COVID-19 pandemic has revealed how strong and resilient this sector can be. Leading game publishers have been posting very strong numbers for Q1 2020:
• Zynga (+27% stock price, +52% rev growth)
• Activision (+23% stock price, -2% rev decline)
• Electronic Arts (+8.5% stock price, +%12 rev growth)
These numbers compare favourably to the S&P 500 overall of -9.3%. Major gaming publishers are outperforming the market at unprecedented levels. All businesses target customer gains as a means of growth and the market data underlines the growth potential in this industry.
4. Celebrity Star Power
David Beckham is one of the most high-profile stars to invest in eSports. In June 2020, Beckham’s co-owned eSports organization ‘Guild Esports’ launched with an aim to raise £25 million in the next funding round. Beckham’s global star power will go a long way to reaching this target which, if achieved, will value the organization at over £100 million.
Converting traditional offline sports fans into consumers of online eSports content has been a big success for the likes of the English Premier League and Formula 1. A big part of this success is down to sports stars streaming online which has created new opportunities for brands and talent agencies. This is new territory for many businesses and with this comes uncertainty. Hamlins’ reputation within the marketing and brand protection area is well established and we are ideally placed to advise individuals and businesses to enable our clients to maximise the opportunities associated with this trend.
5. Legitimisation of eSports
Mainstream media coverage of eSports has been at an all-time high during the pandemic. The BBC has covered the League of Legends UK Championship starting in June and this has been advertised consistently on their website’s home page. The perception of eSports has also been one of the biggest barriers to growth for the sector over the last decade. With this barrier slowly disappearing, a shift in perception of eSports will open up the potential for new audiences and opportunities.
Hamlins is a truly modern law firm who are able to apply their extensive experience of advising on numerous sporting disciplines to eSports and help you flourish in this growing sector. For more information on the added value Hamlins can bring to your business, or if you require specific legal advice relating to eSports, please contact Matthew Pryke.