SportBusiness International speaks to a number of stakeholders from the esports industry and asks the following question: what will be the big trends in esports in 2017?
WHEN SPORTBUSINESS INTERNATIONAL interviewed some of the leading sports executives at the Leaders Sport Business Summit earlier this year, the consensus was that esports represented a massive business opportunity for the sports industry. They felt that the gaming sector would provide traditional properties with their best chance of reconnecting with a young, tech-savvy audience in the hard-to-reach 18-34 age range.
“When you look at esports and the way it has embraced the organic nature of fans, fan avidity and affinity, it’s something that we have a lot to learn about,” said Scott O’Neil, CEO of the NBA basketball league’s Philadelphia 76ers.
In a sign of things to come, O’Neil’s team threw its hat firmly into the esports ring when it acquired a controlling stake in Team Dignitas and Team Apex, two of esport’s leading franchises. The sense that a trend was emerging in the esports sector was reinforced by the fact that this move mirrored steps taken by Bundesliga side Schalke 04 and English Premier League side West Ham to acquire or partner with esports teams. To watch a video explaining these partnerships, click here.
According to research by Newzoo, the core audience for esports is 148 million, while SuperData Research pegs the core number at 214 million, set to go above 300 million by 2019. With numbers like these, it’s little surprise that traditional sports want to move into the sector.
In an attempt to make sense of the excitement, SportBusiness International decided to speak to a number of stakeholders from the industry and ask the following question: what will be the big trends in esports in 2017?
ENTREPRENEURS, SPONSORSHIP AND BURN-OUT
Michael O’Dell, president, Team Dignitas
“I think you will see major entrepreneurs and sports millionaires and billionaires begin to take an interest in esports, and investments will gather pace. Just in the last few weeks I was at BlizzCon in Anaheim, where Blizzard announced the launch of the Overwatch League and invited people to come and find out about it. You had people like Elon Musk, the owner of Tesla Motors, Stan and Josh Kroenke, and Robert Kraft, owner of the New England Patriots, showing a real interest.
“As far as my team is concerned, it’s a month now since we announced our deal with the Philly 76ers and I’m looking forward to growing and expanding what we’ve already built. We’re already working with them on the sponsorship side and it’s amazing to see how many people they’ve got working with top sponsors. In the past, I had to do everything myself, but now we have a complete sponsorship team in the sixers group working with us and advising us on the best way to deal with sponsors.
SURVIVAL OF THE FITTESTJames Watson, head of esports, Sportradar
“One development that seems a long time coming is the beginning of a process where the number of events [per esport] begins to decrease as self-filtering takes place. Currently, teams are overworked and play in several tournaments per week. That is unsustainable and as players and teams begin to prioritise, natural selection of events should follow.
“More specifically, Blizzard announced its Overwatch League at BlizzCon this year and this should be up and running in the second half of 2017. This will certainly be a development to watch.”
MORE THAN HYPE, BUT LESS THAN HYPER
Duncan Stewart, director of technology, media and telecommunications research, Deloitte Canada
“2017 will be another good year for esports, but not a great year. Revenues should be up 25 to 30 per cent, which is excellent, but likely still less than $1bn worldwide. But there doesn’t seem to be much evidence that revenue growth is accelerating and no good signs that esports is significantly breaking out beyond its base of 18-45 male gamers.
“I suspect we will see more traditional sports teams sign esports athletes for the PR value, but I also expect those deals to have no dollar signs attached, so it’s hard to assess how meaningful those signings are. Finally, I think the odds of more esports channels being launched by mainstream TV broadcasters are 50/50 at best. To sum up, esports in 2017 will be more than hype, but less than hyper. ”
PUBLISHERS ARE MAKING MONEY FROM ESPORTS!
Manny Anekal, founder and CEO, Versus Sports and The Next Level
“When publishers say they aren’t making money from esports directly, that’s correct. But only if by that you mean ‘making money’ from running the leagues, putting on events, organising the online games, hiring staff and a plethora of other issues it takes to make actual profit. However, the notion that publishers aren’t making ANY money from esports is ridiculous because esports are currently about marketing – and you use marketing to make money for your core products. When publishers like Riot, Activision or EA put on esports leagues or events, it’s a marketing vehicle to drive more sales of games and in-game content. So the better question is ‘Are publishers using esports to increase their overall revenue?’ And the answer to that is: ‘ABSOLUTELY!’”
ESPORTS GETS ACADEMIC
Carleigh Morgan, global research director, Institute for Esports Leader
“[I expect] the creation of intercollegiate esports networks and that universities will formalise their connection to esports by designing esports scholarships, integrating esports into student programming and marketing their campuses as hosting vibrant esports communities. I also anticipate traditional sports venues will explore the possibility of marketing to esports clubs, to expand audience base and diversify revenue streams.”
BROADCASTING TO ADOPT ESPORTS
James Dean, Turtle Entertainment, operator of the ESL franchise
“In the year ahead, we’re expecting the broadcast industry to truly adopt esports as an entertainment platform across the western world. This will generate a knock-on effect where non-endemic brands take the next step to help grow esports and engage with millennials. Alongside this, multiple reports show the sector will be worth around £300-350m in Europe in 2017. Esports continues to grow, and there’s never been a better time to get involved.”
PUBLISHERS WILL WANT TO TAKE BACK CONTROL
Robert Wigman, senior brand partnerships executive, Fuse Sport and Entertainment
“From conversations we are having with game developers, taking back ownership and having the ability to generate revenue from their own IP is a serious priority. We are seeing the growth and explosion of esports developers and creators such as Activision, who are taking back ownership and releasing games with the intention of them becoming a key esport in the future. Blizzard and Overwatch are good examples. The white-labelled events, such as ESL and the Intel Extreme Masters, will continue to thrive and grow. However, the less people involved for the developer, the easier and more efficient the process for the entire community.”
AND SPONSORSHIP VALUES ARE ABOUT TO RISE
“Right now the price point for entry brands is very small in comparison to traditional sports, but it is only a matter of time before this hard-to-reach audience and heavily-engaged target is monetized to the same level across the board.
“With large audiences come large brand deals, but a great number of brands are seeing this opportunity, have placed themselves in the space very early and will be aiming to consolidate their position in the fast-paced change to come. The rise in non-endemic brands getting involved with the space is also growing rapidly and this change will speed up the sponsorship values and deals in the coming year.”
PUBLISHER INFLUENCE OVER THE TOP LEVELS
Malph Minns, managing director, Strive Sponsorship
“Traditional sport shows that the top tier of competition is the most profitable. Publishers will take more ownership of this whilst curating existing competitions into a more formalised performance pyramid. Note the importance of getting the mass participation and the grassroots element right for publishers, though, as for the foreseeable future it is this community that will provide the vast majority of income through game and in-game purchases.”