E-sports fail­ing to spawn prof­its

The Phnom Penh Post - - MARKBEUTSSINESS - Er­wan Lucas and Thomas Cabral

IT IS a para­dox pit­ting pop­u­lar­ity against rel­a­tive pit­tances – e-sports have ex­ploded into the global con­scious­ness but the big money has not yet ap­peared pitch­side, or screen­side. Par­tic­i­pa­tion has soared as vir­tual games gain trac­tion, with a world­wide fan au­di­ence now es­ti­mated at 280 mil­lion, ap­proach­ing that for the NFL.

Such a leap in growth has helped fuel talk that com­pet­i­tive elec­tronic sports, or pro­fes­sional gam­ing, could even soon be­come an Olympic “dis­ci­pline”.

But even if the League of Le­gends fi­nal drew a huge au­di­ence to the “Bird’s Nest” Na­tional Sta­dium in Bei­jing ear­lier this month the sec­tor has yet to ma­ture eco­nom­i­cally and needs to se­cure more fund­ing in or­der to se­cure a longer term foothold in the sport­ing world, an­a­lysts say.

And the ques­tion of how to open the rev­enue stream sluice gate is com­plex.

“This year, e-sport should earn a lit­tle over € 850 mil­lion [$990 mil­lion] and stud­ies show that come 2021 we’ll reach turnover of some € 3 bil­lion,” says Lau­rent Michaud, di­rec­tor of stud­ies at Idate, a lead­ing Euro­pean think tank on the dig­i­tal econ­omy.

“But that’s set against a global video games mar­ket worth more than € 65 bil­lion.”

How to ramp up low mon­eti­sa­tion is ex­er­cis­ing minds given that an e-sport fan brings only €3 to the ta­ble an­nu­ally on av­er­age, ac­cord­ing to a re­cent study by Nielsen Sports.

Soc­cer gen­er­ates typ­i­cally some 10 times more.

One rea­son for the dis­par­ity be­tween the vir­tual and the non-vir­tual sport­ing uni­verses is the dif­fi­culty of en­gag­ing with e-fans via tra­di­tional broad­cast­ing out­lets.

“Our foot­ball sta­di­ums are still sold out – but clubs shouldn’t feel too safe be­cause the crowds are not so young. Tra­di­tional sports don’t have to be afraid of e-sports, TVs should,” says Tim Re­ichert, chief gam­ing of­fi­cer at Ger­man topflight foot­ball club Schalke 04.

“We’re still at the point we have to ed­u­cate broad­cast­ers and out­side spon­sors on how to in­ter­act with this com­pli­cated au­di­ence, be­cause they don’t watch TV and they all have ad block­ers,” Re­ichert said at the Web Sum­mit in Lis­bon, a kind of “Davos for geeks” where vir­tual gam­ing fea­tured high on the agenda.

Many e-sport fans are used to re­ceiv­ing their vis­ual fare for free via plat­forms such as YouTube, rather than switch­ing on the TV set.

Tra­di­tional me­dia are still tak­ing baby e-steps af­ter com­ing late to the genre.

“We’ve had a part­ner­ship with BBC 3 which is a re­ally good space to ex­plore it, and with some suc­cess,” says Bar­bara Slater, who heads the BBC’s sports cov­er­age.

“We’ve cov­ered an e-gam­ing event live. I just think we’ll step for­ward cau­tiously but there is no ques­tion the in­ter­est and the amount time and en­gage­ment that e-sports is achiev­ing with our au­di­ence.”

An ad­di­tional ob­sta­cle is du­bi­ous im­age a sub­stan­tial swathe of so­ci­ety has of video gam­ing and e-sport in par­tic­u­lar.

“Peo­ple are afraid of what they don’t un­der­stand. There is still a gen­er­a­tion that doesn’t know any­thing about video games. Twenty years ago that was a ma­jor­ity, now it’s 50-50 and in the fu­ture there will be less peo­ple that don’t un­der­stand it,” says Ralf Re­ichert, founder of Elec­tronic Sports League (ESL), the old­est and largest-scale or­gan­iser of es­port com­pe­ti­tions.

“The sim­ple chang­ing of gen­er­a­tion will re­move the fear” of mak­ing the eleap, says Re­ichert.

Web won­der

The gen­er­a­tional shift is mov­ing in es­port’s favour, says Andy Dinh, a for­mer star gamer now head­ing his own team.

In his view, “to­day’s fans take their chil­dren to watch an e-sport com­pe­ti­tion e-sport as some take theirs to watch the base­ball. These are the up­com­ing gen­er­a­tions of fans.”

That will in­creas­ingly bend the ear of spon­sors and broad­cast­ers when it comes to show­ing and in­vest­ing in com­pe­ti­tions which are set in­creas­ingly to be­come un­miss­able at­trac­tions on the e-cir­cuit.

“Our spon­sor­ing costs are ris­ing and will con­tinue to do so, but so will our earn­ings,” in­sists Bracken Dar­rell, pres­i­dent and chief ex­ec­u­tive of­fi­cer of IT de­vice de­vel­oper Log­itech.

IDate’s Michaud weighs in that “the fu­ture of e-sport is not on tele­vi­sion, every­thing is on the web”.

He added: “Broad­cast­ing rights will con­cern plat­forms, there will be [rights] for the or­gan­i­sa­tion of events, every­thing con­nected to sports bet­ting could com­prise im­por­tant rev­enue.”

Face­book or YouTube, cited as po­ten­tial broad­cast rights buy­ers for sports events, could be tempted by e-sport in­stead of more tra­di­tional sports that they might judge a less prof­itable re­turn in in­vest­ment terms.

“Foot­ball is much big­ger and it’s go­ing to be there for a long time but it’s to­tally fine,” in­sists RESL’s Ralf Re­ichert.

“If e-sport be­comes the sec­ond largest sport in the fu­ture, ev­ery­one in the in­dus­try will be very happy with that!”


Peo­ple watch the World Cham­pi­onships Fi­nal of League of Le­gends at the Na­tional Sta­dium ‘Bird’s Nest’ in Bei­jing on Novem­ber 4.

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