ESports: League of the Future?

by Ricard Jensen and Ryan Dastrup

The future of sports, according to many experts, may not be in the traditional sports of football, basketball, baseball and hockey, but in an entirely new world where the stars young fans are most passionate about are elite level eSports competitors.

In the few years, we’ve seen remarkable growth in the business side of professional eSports. Earlier this month, consultants at NewZoo reported that global revenues from eSports totaled $1.9 billion and were growing at a rate of 9.6 percent annually.

Just what are some of the ways that E-Sports is growing and what’s fueling its newfound passionate fandom. Here are a few highlights.

·        2019 marked the first year we saw eSports on primetime TV. ESPN and ABC broadcast The Overwatch League and The League of Legends, while Turner Sports is teaming up with EA Sports to broadcast the FIFA E-League. The TV ratings are impressive if you consider all the ways people watched, on live TV plus streaming.

·        Traditional NBA venues began hosting major eSports competitions and the fans are coming in droves. In 2018, The Overwatch Finals sold out the Barclays Center, more than rivaling the crowds who come to watch the NBA Nets. The prospects for synergy between pro basketball and the NBA are so great that 21 NBA teams now have franchises in the 2K League.

·        Look at the high-profile athletes and sports business leaders who have recently invested in eSports. These people know what they’re doing and the fact that they’re involved provides credibility for this competition of videogame superstars. In 2018, some of the stars of sports and pop culture who bought into eSports include Drake, Michael Jordan, Steve Young, Sean “Diddy” Combs and countless others.

·        Special venues are being created just for eSports events; they’ll no longer just be tenants in NBA and NHL arenas. This trend actually started in Asia where the government of South Korea has built three. The Ministry of Culture, Sports and Tourism announced the project to build up to three new eSports facilities with dedicated tournament areas broadcasting and production facilities, and the capacity to hold 1,000 screaming fans. In the USA, Philadelphia is building the first video gaming arena in the country that will seat 4,000 spectators. In Las Vegas, the state-of-the-art MSG Sphere is now under construction; this venue will seat 17,500 fans who will be totally immersed in the action by watching an LED screen the size of three football fields and a modern theater sound system.

·        As eSports grows, more and more sponsors want in on the action. In 2019, we began to see major mainstream corporations wanting to play a prominent role in sponsoring eSports. Earlier this month, cereal maker Kellogg’s announced they would switch a large part of their sponsorship dollars from traditional sports like baseball to the League of Legends. The impressive list of sponsors includes some obvious partners (Intel, Red Bull, and Twitch) to some who might surprise you (Mercedes-Benz, Visa and Gillette). The sponsorship extends to the uniforms the teams wear; It’s not unusual to see elite eSports teams wearing jersey patches sponsored by Geico, Red Bull, Telefonica, Chevrolet, and a host of other leading brands.

·        We’ve reached the point where there are bidding wars for the best eSports athletes, who in turn are making huge salaries. For example, top Fortnite player Tyler Blevins can earn as much as $500,000 each month in competitive tournaments. As eSports become more popular, he may be one of the game’s many superstars.

All this leads to a basic question. Just why have eSports become so popular? In essence, isn’t the product simply watching a bunch of talented videogame players excel at their craft? It’s not especially athletic, like watching LeBron dunk or seeing Aaron Judge hit a towering home run. So, where is the appeal? Pieter van de Heuvel, the head of eSports at NewZoo, explained the appeal of eSports to young people this way in a 2019 report by the agency. “The huge interest in eSports from sports celebrities, clubs, media companies, and brands alike illustrate how games are leading the media and entertainment business towards a new future that has more in common with games than not,” said Pieter van de Heuvel, head of eSports at Newzoo, in a statement. “Games bring innovation in tech and consumer business models, and have a unique ability to engage with and actively involve the younger generations. Traditional and digital media and sports companies bring experience in providing advertisers with an effective communication platform. There clearly is a natural, strategic and commercial fit.”

A 2019 Nielsen report described the appeal of eSports to the younger generation this way. Games are no longer child’s play. Millennials, the first generation to grow up with widespread access to video games, are now adults between the ages of 22 and 38. The oldest Millennials were four years old when the Nintendo Entertainment System launched in North America in 1985. Those who spent their childhood playing games didn’t suddenly abandon the hobby when they reached adulthood. With myriad platforms, devices and technologies available today, games are more accessible than ever. The arrival of smartphones brought gaming to consumers who didn’t own a video game system growing up. Coupled with a paradigm shift where most mobile games are free to play, big hits like Pokémon GO can easily attract monthly player counts in the tens of millions.

A look at Millennial gamers according to Nielsen:

·        54% with full-time employment

·        43% with a Bachelor’s degree or higher

·        45% with children

·        76% pay for a movie/TV streaming service

·        38% pay for a music streaming service

·        $58,000 average household income

Without question, eSports are growing in importance and will only continue to become more popular. The challenge for sports business professionals is to try to find ways to discover the ways in which a sports team or venue can develop an eSports strategy, even if that means totally rethinking how you have always felt about traditional sports.

Note: To learn more, contact Dastrup at rwdast@gmail.com or Jensen at Ricard.Jensen@utsa.edu