Transformation•Nov 19, 2020
Media & Sports Innovation: How the Esports Industry Adapted to COVID-19
Sports leagues across the world have shifted to competing without having fans in person at their arenas. As a result, their viewership has taken a direct hit, even with the increased accessibility of TV and streaming services for fans everywhere. The NBA Finals and Stanley Cup Finals—two of the biggest stages in sports—saw 51% and 61% decreases respectively in viewership from the past season.
However, in place of traditional sports, the esports industry—a booming business for competitive video games as spectator sports—has found a way to thrive amid the pandemic. A recent study by estimates that more than half of people 35 and under have been watching gaming or esports related content during the lockdown.
We take a look at three ways the esports industry has innovated and managed to rise above the circumstances of COVID-19.
1. Transitioning Online
All esports matches are being played on specially designed servers created by the game publisher to reduce latency issues for the players and manage any other possible technical issues. This has made it simple for esports leagues to transition into competing online once the social distancing orders were active and all of the competitors were separated. Most teams began using their own practice facilities or asked players to complete from their individual homes, using a voice chat software like Discord to maintain communication. While the lack of in-person audiences feels different, the ease with which leagues have been able to set up tournaments has allowed operations to continue smoothly.
2. Advertising and Promotional Opportunities
NewZoo, an esports analytics firm, has announced that projected industry revenue for 2020 has fallen from $973 million to $950 million, largely due to the fact that merchandise and ticket sales are no longer an option. While the situation seems grim at first, the industry has found a way to capture new revenue via streaming services like Twitch, YouTube, and Facebook.
Analytics firm Stream Hatchet has reported that watch hours on these sites grew from 4.8 billion in the first quarter of 2020 to 7.6 billion in the second quarter, an unprecedented increase. As Gen Z and millennial audiences transition away from traditional TV and towards different kinds of content, brands have found a reason to capitalize on the demographic by using streaming services as a promotional space for their products. In addition, advertisements on these sites are displayed based on the location of the users, which enables opportunities for all kinds of groups globally—government, retailers, restaurants—to take advantage of these sites. With more brands normalizing promotion in the esports scene, audiences have continued to grow and, in turn, the industry has expanded.
3. Collaborations with Traditional Sports
Traditional sports leagues have historically struggled to engage with millennial and Gen Z audiences. It makes sense, that they would move their content online during COVID-19 to a platform that boasts an audience matching their target demographic. ESPN, NFL and other leagues have begun streaming matches via Twitch, taking advantage of its unique chat feature that built the communities that the site is known for creating.
Formula 1 staged a F1 Virtual Grand Prix for celebrities and drivers everywhere to race on a simulated virtual reality (VR) track. The NFL, NBA, and Champions League each hosted tournaments for games in their respective sports, streaming the events to audiences everywhere (thanks to the global reach and ease of access of online platforms). As more and more athletes grow up playing games and watching esports content, we can expect to see more cross-collaboration between esports and the sports we know, even beyond this pandemic season.
The Future of Sports and Esports Innovation
There are other factors that have contributed to the esports and gaming industries flourishing during COVID-19 (new console releases, PC part releases and building) but the fact remains that the success has been ongoing. In fact, Newzoo has optimistically projected an audience growth of 11.7% and a revenue growth of 15.7% into 2020.
By seamlessly transitioning to online play, seeking promotional opportunities, and partnering with traditional sports, the esports industry has accelerated its entry into the mainstream media. As business booms, we can expect there to be a lot of exciting work to be done to help manage the technology and business processes within the wide world of esports.
At Credera, we are investigating how innovation is happening in different industries during and beyond the COVID-19 pandemic. If you’re interested in investigating how to innovate at your organization, feel free to reach out at email@example.com.