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Pro League’s roaring audience growth is welcome damage limitation for ESL

Natus Vincere with the trophy after during Counter-Strike: Global Offensive Final game between G2 Esports and Natus Vincere during ESL Intel Extreme Masters 2020 at Spodek Arena on March 01, 2020 in Katowice, Poland. (Photo by Norbert Barczyk/PressFocus/MB Media/Getty Images)

  • ESL’s Pro League’s 11th season becomes most-watched in history in midst of Covid-19 pandemic
  • Despite viewing figures, ESL struggling to monetise behind-closed-doors events
  • Esports’ outlook not entirely rosy, with significant lost revenues due to suspension of live events

Even as Covid-19 took a terrible toll on ESL’s event business, it helped the 11th season of the Pro League become the most viewed in its history.

Chinese platforms excluded, ESL reported that the Pro League’s average audience across both the European and North American divisions was up 215 per cent.

The most impressive increase was for the North American division. Across Twitch, YouTube and Facebook, statistics website Esports Charts found its average audience was 142,519, up from just over 30,000 for the Americas division in Season 10.

Peak viewership was also increased on last season: 160 per cent for the European division, at 489,120, and 60 per cent for the North American division, at 251,349.

This enormous success was capped by the confirmation of a lucrative new deal with Twitch, which grants the platform continued non-exclusive rights to ESL events in 2020 and exclusive media rights outside Russia and China for two years, 2021 and 2022.

According to SportBusiness Media data, the deal is valued in the low eight figures (in US dollars) in each of 2021 and 2022 – a strong increase on the media rights revenue ESL currently generates from non-exclusive deals with Twitch, YouTube and Facebook.

Fnatic during Counter-Strike: Global Offensive game between Astralis and ENCE eSports during ESL Intel Extreme Masters 2020 (Photo by Norbert Barczyk/PressFocus/MB Media/Getty Images)

ESL chief executive Ralf Reichert would not comment on details of the deal but said the terms of the agreement had been in place before the Covid-19 pandemic and had not changed in any way as a result.

As more people spend more time housebound in response to the virus, Twitch has enjoyed a huge jump in the number of people watching content on its platform, but most of the platform’s esports-related revenue comes from advertising – an industry badly affected by Covid-19.

“We didn’t try to renegotiate because we had an increase in viewership,” Reichert says. “On the other hand, Twitch’s economic circumstances have changed a bit since we started negotiating, and Twitch didn’t use that renegotiate either. So you could argue, yes, the viewership had a positive impact.”

Picking up the pieces

It can be argued that sharp viewership increases for the Pro League were simply the one-off impact of the virus. The ESL Pro League – the premier Counter Strike: Global Offensive league – ran from March 16 to April 12, a period when large parts of the US and most European countries were in lockdown. As the Pro League plays the majority of its regular season matches during the daytime on weekdays, it was able to reach far more of its fanbase than usual.

But the fact the Pro League was able to go ahead at all is an achievement in and of itself.

Oleksandr s1mple Kostyliev during Counter-Strike: Global Offensive Final game between G2 Esports and Natus Vincere (Photo by Norbert Barczyk/PressFocus/MB Media/Getty Images)

As February turned to March, ESL’s flagship Extreme Masters event in Katowice, Poland was played behind closed doors. At the time, this was seen to be a precaution rather than a necessity – Poland had no confirmed cases of Covid-19 and the pandemic had yet to take hold across Europe.

The Pro League was scheduled to be played in Malta two weeks later as part of ESL’s partnership with Gaming Malta, a non-profit arm of the country’s government. As Pro League regular season games take place in a closed studio environment with no fans present, the company and the teams were anticipating that everything would go ahead as normal.

“We spent the week from March 4 to March 8 figuring out what the future was going to look like,” explains Reichert. “Malta had no cases of Covid-19 at that point and we were about to start exactly two weeks after the event in Katowice. We were working hard on logistics, increasing our efforts to ensure safety and were planning to create an enclosed environment.”

On March 9, ESL made a decision to go ahead with the Malta-based league. At around 3pm on March 11, ESL staff were about to board their flight to Valletta when news arrived that Malta had changed its stance on incoming passengers and intended to put them and any teams that travelled into quarantine for 14 days.

ESL gathered its staff for a crisis meeting and immediately began calling teams, making arrangements to keep the competition alive.

“It was completely crazy,” says Nicolas Maurer, chief executive of ESL Pro League team Vitality. “We immediately held discussions with ESL for an online format and they came up with a format within 24 hours. The teams proposed adjustments and the day after that, the format was set up and locked.”

Perfection not a priority

Reichert said that putting the event in Katowice behind closed doors at short notice had been a good warm-up: “We built a task force and set up a crisis office in Cologne, very similar to what we did in Katowice on the Wednesday, Thursday and Friday before the event. It was like we’d already had the fire drill!

Team Liquid Russel Twistzz Van Dulken during Counter-Strike: Global Offensive game between Astralis and ENCE eSports (Photo by Norbert Barczyk/PressFocus/MB Media/Getty Images)

“Then, we informed all stakeholders, including the fans, that we were going to go through and create it.”

With the league set to begin on March 16, all sides were willing to compromise in order to rescue the competition.

Instead of playing on a local network in a physical location, teams played at home. Teams were split into regions based on their proximity to European and North America servers on which the online game would be played.

This meant a Chinese team, Tyloo, ended up playing in the European division on European servers, putting them at a significant disadvantage. The further away a team is located from the game server, the more delay (or ‘ping’) they experience, weakening their ability to react quickly to game events.

Maurer says these were necessary sacrifices that teams were willing to make: “We were all in the same boat. We’d rather have an imperfect product in terms of production and even competitive integrity than to have no product at all. Maybe ‘Team X’ should have been in Group B instead of Group A, but we all agreed that we can live with it not being perfect. We had a product that could be broadcast. That was key.”

The league was pulled off with surprisingly few gameplay problems and, while it took time for ESL to iron out kinks in the remote production process, the final two weeks of the tournament were produced to a very high standard.

“That’s a testament to how well the team has dealt with this crisis,” Reichert says. “We hadn’t done remote productions for a long time and we had never done Triple-A production with players at home. We had to adapt to a different workflow but creatively and technically, I think we doubled the quality of production from start to finish.”

Limiting the damage

Vastly increased viewership for a product pulled out of the fire is a huge achievement, but it is still an exercise in damage limitation.

Modern Times Group, the parent company of ESL and esports festival circuit Dreamhack, expected a year-on-year fall in esports revenue of much as 45 per cent in 2020. This was based on events with fans returning in Q3 2020, which looks increasingly unlikely.

ESL has already lost millions of euros by turning fans away from its Katowice event, as well as the outright cancellation of an event scheduled in Los Angeles last month. Its Cologne event in July will also be held behind closed doors, and the estimated total loss across these three events is over €10m.

In the short-term, ESL has not benefitted financially from its increased viewership, but Reichert is fighting to remain positive about ESL’s prospects over the long term.

“The original MTG messaging was fairly pessimistic and the earnings report [published April 28] was already a little more optimistic. My job is to be a little but more optimistic than that,” he laughs.

“My job is to exceed expectations and even though revenue won’t grow compared to last year – that would be crazy – I think we can create enough value through our fantastic viewership to continue to build great partnerships like we’ve done in the past, and like we’ve done in the past few weeks.”

Convincing partners of that continued value has mostly been an easy ride for ESL: the company has pointed to its viewership figures and explained to them that they are now getting more eyeballs than even Reichert’s optimism could have bargained for.

In some cases, however, partners have been uneasy at the prospect of events without fans. Brands have worried that without direct access to fans at the arenas, their activation won’t cut through. They are also worried that empty arenas will reduce interest in the content – a fear that perhaps applies more to traditional sport than it does to esports.

Reichert notes: “Traditional sport is struggling with the concept that their sport will be as popular without fans in attendance than it was with them. Similarly, I heard a lot of people having problems imagining what esports will look like without fans… even though that’s where we originally come from. We were very confident this would have a limited impact.”

ESL’s net promoter score evaluation – which calculates the loyalty of a customer – has remained largely unchanged when events with fans are compared to recent events played without them. Like for like, the Season 10 Grand Final in Odense received a score of 50, exactly the same as the Season 11 Grand Final with players at home.

Ultimately, Reichert believes that even though ESL is particularly vulnerable to the effects of the crisis, the company is better placed than most in the esports industry to stay alive and prosper in the future:

“There’s been a lot of investment into esports over the past few years and not all of that investment went in to build sustained business models. There will be a market correction in all kinds of industries. There will be companies that don’t have the right backing, or a sustainable enough business model, and they will go away. That will be no different in esports. There will be a lot of bad news.

“The good news is that we’re part of a publicly listed company with $200m in the bank. We’re not in a struggle, but we need to mindful.”

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