Esports: from niche market to sport of the future

February 14, 2020

Esports: from niche market to sport of the future

Esports continue to grow at an exponential rate with a push from large companies investing in what they consider to be the sport of the future

Perhaps the last to accept the evidence should be the International Olympic Committee (IOC) for esports to be definitely considered the sport of the future. What was a resounding ‘no’ a few years ago, is now a ‘yes’ with exceptions, and it seems only a matter of time until we see athletes in future editions of the Olympic Games Olympic sharing a venue and stage with esports prodigies competing for medals.

Without going any further, at the 8th Olympic Congress held in 2019 (an initiative that is part of the debate over the future of the Olympic movement), the president of the IOC, Thomas Bach, declared the following: “Many electronic sports are increasingly physical thanks to virtual reality and augmented reality that replicate traditional sports. We encourage international federations to consider how to manage video games of their sport and to explore opportunities with publishers.” About the possibility of esports becoming an Olympic discipline, Bach considers that “for the moment it is still a premature debate.”

Esports: from niche market to sport of the future

While the Olympic movement is still thinking about granting them a place on their stage, esports are gaining market share at a frantic pace with a boost from large companies that are betting on the new entertainment industry. According to the 2019 esports market report published by Newzoo, the sector earned $1.1 billion last year (26.7% more than the previous year) and it is predicted to reach $1.8 billion in 2021. Sponsorship, with $465 million, is the largest source of revenue, followed by media rights, advertising, ticket sales and merchandising, and publisher fees.

Esports: from niche market to sport of the future

Gonzalo Jiménez Illana

“Esports are not a trend, the game of the moment or the latest YouTube viral madness that everyone joins. They are intense competitions that are defining the future of entertainment and whose boom has caught those who do not belong to the millennial generation off guard,” says Gonzalo Jiménez Illana, esports professor and communications director at Above Sport, with whom we recently organized an exclusive webinar for our master’s and postgraduate students and former students.

Since the emergence of arcade machines in the 1970s, the evolution of video games has been unstoppable. “The internet and online games have allowed tournaments to be generated, face-to-face or online both nationally and internationally, and have favored the arrival of sponsors and, with these, increasingly succulent prizes and the proliferation of professional players. Sport in the 21st century is much more than a hobby; it is passion, discipline, a habit that exercises our abilities and reflexes, it is competition. Electronic sports are all that, adapted to a new type of player and a very different audience from the disciplines we can call traditional.”

“In the long term, millennials will end up leading all industries, and I think esports will be one of the first in which we will see a mix of company directors and CEOs from a previous generation and digital natives who have been raised with this new form of entertainment.”

Deloitte and Nielsen, two of the largest international consultants, both identify the main esports consumers as men belonging to the millennial generation. “There are more and more companies deciding to bet on this sector because it attracts a specific and very attractive demographic. Some 75% of esports consumers are millennials (people between 18 and 34 years old), 63% are men and in 52% of cases they have university studies.”

What factors have contributed to this clear expansion of esports in the last decade?

Technologically, the emergence of free streaming services. And structurally, the commitment of the publishers, the regionalization of competitions, and the consolidation of players and competitions that are taking the industry to levels of popularity and social and economic progression never reached before.

Will it be today’s millennials who will lead the management of the esports industry in the future?

By definition, in the long term, millennials will end up leading all industries, and I think esports will be one of the first in which we will see a mix of company directors and CEOs from a previous generation and digital natives who have been raised with this new form of entertainment. It is already the case with the main Silicon Valley companies, where those who not long ago were at university have created the social network ecosystem that is currently so present in our society.

From your experience, what kind of professionals does the esports sector need in order to consolidate?

The sector needs more and more professionals as the environment and the number of players grow and, therefore, their needs also grow. Esports teams require players, coaches, but also physical trainers and psychologists. Equally, to maintain this growth, the sector needs experts in communication and marketing with knowledge and experience in the industry that will boost its visibility and expansion in the most efficient way possible. These communicators are also a great attraction as presenters or commentators of esports or ‘caster’ competitions, as they are called in this sector. And, of course, as the market and the demand for new video games grow, technical programming professionals and artists that will be responsible for the design, music and even the dubbing of these video games.

“To maintain this growth, the sector needs experts in communication and marketing with knowledge and experience in the industry that will boost its visibility and expansion in the most enable viewing and dissemination in the most efficient way possible.”

What is the big legal challenge that the esports industry will have to face in the future?

Currently, the esports sector operates under a legal system that does not fit its needs. It is essential to define from the labor point of view the relationship between the players and their teams, since it is presently a tricky area. On the other hand, the management of intellectual property rights, which is in the hands of the publishers (video game owners) and championship promoters, could be a conflictive issue in the medium to long term if it is not very well defined.

How do you think football clubs should use the popularity of esports to their advantage?

Currently, many football clubs have created a small esports division, but they must trust more in this sector and embrace its peculiarities without being suspicious of its nature, and not bet exclusively on the video games associated with football, but understand that it is a separate division with its own fans. If traditional clubs create these divisions only as a way to attract the youngest ones to their main activity it will be difficult for them to achieve success in the esports sector.

“The growth of the sector will be related to the creation of new video games and VR and AR platforms”

What are the future trends? Where will the sector grow?

In my opinion, the sector is growing quite sustainably and quite cautiously, despite the figures and predictions of those who think that it is just a bubble. The most important thing is that the publishers see esports as an interesting area to boost the development of their business and want to take advantage of it, since without them and their drive it will remain stagnant. As for the growth paths of the sector, I believe that its evolution will be related to the creation of new video games and virtual reality (VR) and augmented reality (AR) platforms.

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