COVID’s Effect on the eSports Industry
In the couple of years of the COVID era, the world has seen businesses fail and industries reshape themselves. Big names such as J.C. Penny, Gold’s Gym, J. Crew, and Hertz filed for bankruptcy in the wake of the pandemic and the question of normalcy has been up for debate for months. However, even during that chaos, one industry has managed to not only survive, but to thrive: the eSports industry.
What allowed the industry to accomplish this?
A Brief Overview of the eSports Industry
The eSports industry is the overarching world of competitive video gaming. Competitors from different teams and countries compete in leagues and tournaments for popular game titles such as League of Legends, Counter-Strike, Overwatch, and more.
The industry derives its revenue from professional competitions and streaming services like Twitch, which in the past decade, has experienced explosive growth. In this business model lies the secret that allowed the industry to grow so much: remoteness and engagement.
Commissioner of one of the larger eSports events, the League Championship Series (LCS), Chris Greeley in SP Global highlighted in 2020 that “We had a peak viewership of somewhere over 550,000 [people], which were our biggest numbers in four to five years.”
This is at the same time when Harmelin Media reported that the NFL experienced 10% lower viewership, the NBA Finals had 50% fewer viewers than 2019 with the lowest finals ratings on records, and the MLB World Series ended with an overall 36% decline in ratings.
So, what caused the difference in regular sports and eSports?
The simple answer? Remote access. While stadiums of basketball and football games went empty during the pandemic, eSports fans shifted from stadiums and rallied to the largest streaming platform—Twitch—and set record growth for the platform. In the initial months after the lockdown, The Verge found that Twitch reported a 50% increase in hours watched with a 120% increase in viewership year-over-year, and by May, Twitch reported up to 1.645 billion hours watched per month.
What underpinned this strong growth was a seamless transition from in-person to online events by eSports organizers along with the sponsorship opportunities that grew from halted regular sports seasons. For example, companies like Gucci, IBM, and Honda entered new sponsorship agreements with eSports organizations, allowing for greater exposure and growth of the eSports scene. In fact, eSports’ engaging and efficient streaming model was so effective that it encouraged multiple sports organizations like the NBA to start their own Twitch channels.
However, very few come through a pandemic as a full winner, and the eSports industry was no exception. While there was greater viewership and exposure for the industry, it came at the cost of revenue decreasing as a whole. According to NewZoo, the total eSports revenue in 2020 was $950.3 million, a 0.8% decrease from 2019. It was a far miss from the $1.1 billion that was projected with the pandemic unaccounted for. Furthermore, the limitations of online play between different regions created fractured international competitions that limited tournaments to regional tournaments rather than the full international-scale tournaments that were possible in-person.
It is undeniable that COVID had a profound and perhaps industry-changing effect on the eSports scene and the broader sports industry. In fact, the pandemic has allowed eSports to accelerate many of its developments including gaining further recognition as a viable industry and attracting more investors and consumers. But as the world returns to normalcy, one question remains: will eSports fade as a ‘pandemic fad,’ or will it continue its bright future? No one knows, and while the trajectory for the eSports scene is somewhat unclear, there is plenty of reason to hope and conclude that eSports are here to stay for good.
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