From steady to near-vertical; that’s the growth of the eSports or online gaming industry during COVID-19 lockdown and this growth is most likely to stay for some time.
The year 2020 has seen a lot of disruptions and near-total global lockdown as a result of the coronavirus pandemic. Major economic activities as well outdoor events including sports are among the worst hit so far. Every sporting event has either been postponed or canceled outrightly. The biggest event on the Earth, The Olympics has been put off till 2021 resulting in millions of dollar losses for Japan and many other countries. The NBA and NHL seasons are in a state of comatose. All tennis tournaments, European and Latin American football leagues, cricket series in India and England, motor-sports – everything at a standstill.
You can hardly find any new sporting events to watch on the television at this moment with nearly all sports channels airing old stuff with no apparent regard to the feelings of their viewers. This has led to the loss of revenues across the value chain in the world of sports. Moreover, suspensions and cancellations impacted negatively on the media-right deals of several leagues leading to further loss of hundreds of millions of dollars.
The UEFA is estimated to incur a loss of revenue for the postponement or cancellations of Euro 2020 owing to the coronavirus pandemic. As many leagues across the globe suspended activities, UEFA took a bold step to postpone the already scheduled 2020 European Football Championship to 2021. This move resulted in a loss of over 3-Million euros in the estimate. Further estimates suggest that outright cancellation would have cost them a loss of around 400 million euros.
The contracts of some of the European league players will run out at the end of the season; but, the process of transfers and contracts are yet to be ascertained. With no hopes for further matches being played this season, there may not be any contract extension till the end of June 2020. The consequences? Teams will lose large percentages out of players’ transfer fees.
The eSports industry overview
The Electronic sports industry, otherwise known as Esports, is one wherein gamers from all over the world hook up electronically via the internet to catch fun and sometimes, also make money. From a mere sporting perspective, the biggest advantage is the flexibility of choice and time to engage in a game of one’s interest from any location.
The “non-physical” sport has been on a steady growth from its early days as far back as 2005 or even earlier, much aided by growth in software and communication technology. Consequently, eSports created a lot of ancillary businesses along the line which has expanded considerably and evolved into a huge market.
With a massive turnout in recent times, the global market revenue of the eSports industry has been on a steady growth. In 2017 the worldwide revenue was estimated at US$655 million. This was described as “outstanding” by the New York Times. In 2018 the market was valued at nearly US$865 million. According to estimates from Statista.com, global Esports market revenue will reach US$1.8 billion in 2022. It is expected that the industry will continue on the path of rapid growth in the years ahead.
Add the COVID-19 factor with this and the industry will surge up by at least 65%!
Impact of COVID-19 on Esports
While the rest of the world suffers from the global lockdown with the now popular “social distancing” lexicon, online gaming has been gaining more patronage and seeing an upsurge in the number of viewers and players throughout the world. It is adequately filling the void for the majority of sports lovers. Chance Moncivaez, who plays Call of Duty: Modern Warfare on the Florida Mutineers, one of the Esports teams said, “I think Esports is perfect to fill that void because of the ability to play online competitions.”
Yes, the flexibility offered by online games is a strong allurement and the COVID-19 pandemic has increased its attraction to a great extent.
Unlike traditional sports, a virtual competition or esports tournament can take place without the need for physical contact. This makes it a perfect choice for those who seek alternative ways to get entertained and fight boredom also. Twitch, a major site for game streamers recorded a 31% rise in viewership in March according to estimates; the figure further went up in April. People have turned to playing more video games and also watching the best gamers in the world take on each other.
Impact on some of the giant players in the industry
The movers and shakers of the gaming industry – Microsoft, Nintendo, Activision, and Twitch are on a gold-rush mode these days. Their revenue is simply soaring up and up. Microsoft disclosed that the number of subscribers to its Game Pass service (consider this as Netflix-for-gaming) hit an all-time high of 10 million. It also reported over a 130% increase in multiplayer engagement in March and April among the subscribers.
Nintendo announced that sales of its Switch console went up by 24% year on year. Its new game “Animal Crossing: New Horizons” sold as much as 13.5 million copies from the date of release in late March.
Data provided by StreamElements and shown by Arsenal. gg indicates that Twitch, which is terms as the most popular video game streaming platform, recorded a figure of 1.49 billion gaming hours in April alone. That’s a whopping 50% increase from March. Like Amazon.com, AWS, and Amazon Prime, Twitch is another topper from the house of one gentleman named Jeff Bezos.
The popular gaming platform Steam recorded a very high concurrent user count at over 20 million in March alone. Epic Game’s Travis Scott Concert registered 12-million simultaneous views. In April alone players recorded a total of 3.2 billion in-game hours.
Newzoo’s report on the gaming industry and COVID-19
According to Newzoo, with the lockdown still largely in place, a global audience will go up by 495 million in 2020 with enthusiasts making up to 222.9 million and occasional viewers adding another 272.2 million. The average revenue per Esports enthusiast (those who watch more than once in a month) is expected to reach $4.94, a 2.8% rise from 2019. Media and sponsorship rights will provide much of the earnings, they are globally projected to generate over three-quarters of the total market revenues in 2020 to about US$822.4 million. Further analysis indicates at least one Billion US-Dollars in profits in 2021 and over-the-year growth of 15.7%. This is a 17.2% increase from 2019.
Also with the rise of interests and engagements, new strategies and policies on monetization are expected to be implemented and improved upon. We will definitely see a surge in the number of local events, leagues, and deals for media rights. Merchandise and consumer spending on tickets are projected to reach $121.7 million. Furthermore, investments from game publishers by way of supporting tournaments through partnerships and professional tournament organizers will amount to $238 million altogether.
Newzoo’s report emphasizes that its updates are not influenced by a lack of patronage or a decrease in business activities such as demand and supply. Revenue streams will remain steady and unchanged even after the COVID-19 situation is over.
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So, we conclude that…
The huge leap being witnessed in Esports participation and the resultant financial gains will not be going down anytime soon even with the gradual easing of lockdown across the globe. The number is projected to be on a steady increase in the months ahead.
This is great news to esports service providers as well as dealers in media and sponsorship rights. Even a number of TV channels are gradually shifting attention to this sector probably to spice up their content and in turn, attract or maintain viewership.
Other than the gallant essential service providers and health workers, almost all of us are staying home. And boy, that’s not easy! Esports like some of the other online tools and services, so far helped us to fight boredom and pretty soon, it will become a small part of lifestyle for a lot of individuals. The gaming industry is helping mankind in some way. And we should admit that.