SBC analysis: Deloitte’s eSports 2016 predictions

Deloitte has released its technology media telecommunications (TMT) forecast for 2016, and it makes for some interesting reading in regard to eSports. esports deloitte

It is estimated that as an industry it will grow by 25% and create global revenues of $500m (£346.8m) in 2016. This is up $100m (£69.4m) from last year. Deloitte’s predictions fall some way short of some of last year’s Superdata’s report that the industry is worth $748m (£521.1m) and will jump to $1.9bn (£1.3bn) in 2018. Another report by Newzoo speculated that eSports globally is worth $278m (£193.7m) and this will leap to $765m (£532.9m) in 2018.

Making accurate assessments and precise predictions is difficult in the world of eSports as it does not yet enjoy the type of in-depth statistical analysis that other major sports do. Duncan Stewart, Director of Technology, Media and Telecommunications Research for Deloitte Canada said: “Media measurement in traditional sports is extremely precise and extremely accurate. The measurement on eSports is all over the place.”

Regardless, many assessments of eSports continue to look at it in direct comparison with other major sports, and as Deloitte points out this makes it look relatively small fry. By way of a comparison the Mayweather v Pacquiao fight generated $500m (£346.8m), the same amount the entire eSports industry is expected to make in 2016. The same Deloitte report estimated that the European football market would generate $30bn (£20.8bn) in 2016/17.

Duncan Stewart, Deloitte
Duncan Stewart, Deloitte

As an industry still in its infancy, and one which relies on technology and streaming capabilities to a far greater extent than most, it’s unsurprising that eSports lags behind the likes of the NFL, the NHL, the NBA, the Premier League and the rest in terms of monetizing its fanbase.

Take a look at viewing audiences though and this gulf is notably narrower. The Deloitte figures estimate it will have 150 million viewers this year, it reaches tens of millions regularly and the number of major tournaments is set to continue to grow. It depends on how a sport is judged; whether that’s on its ability to make monetize its customers or the amount of them watching. Regardless, with the latter now firmly in place for eSports, the former becomes far more attainable. It’s just a matter of time and strategy.

The number of investments in eSports in the last two years is evidence for this viewpoint.

Amazon bought streaming service Twitch for close to $1 billion (£693.6m) in 2014, Activision Blizzard paid around $46m (£31.9m) for eSports events and entertainment company Major League Gaming earlier this month, whilst Swedish media giant MTG acquired a significant chunk of the largest eSports company ESL for a fee of around £55.5m in 2015. That eSports fans are more likely to make in-game purchases and buy more merchandise than other gamers surely played a part in these decisions, and the more mainstream attention it receives the more fans will be drawn in. 2016 will be the first year eSports sees serious television time with a new CS:GO league to be televised by Turner Broadcasting.

Gfinity will continue to host events at its eSports Gfinity Arena which opened in March 2015 in London, whilst cinema chain Cineplex recently agreed a deal to launch a new league with events set to take place across its venues in Canada.

That the latest available figures show that 82% of eSports revenue comes from men, and 75% comes from the millennials aged between 18 and 34 is significant and highly usable data from a business perspective.

ESPN.esports
ESPN The Magazine eSports issue

Throw into the mix that the likes of ESPN and Electronic Arts have shown that they’re serious about eSports coverage too and 2016 looks set to be an exciting year for competitive gaming and its fans.

ESPN’s Editor in Chief Chad Millman spoke to the LA Times in an interview posted since Deloitte’s report went out. He said of eSports: “The storyline was so compelling that we decided there was no reason we shouldn’t be doing this on a daily basis with the same rigor we cover the National League Football or other sports.”

In terms of platforms on which eSports is enjoyed, PC gaming and console gaming are already popular with far fewer opportunities on mobile. This is set to change though with companies such as Cashplay, a platform which offers real money eSports tournaments on iOS and Android, and Super Evil MegaCorp, which produced Vainglory, expanding their output and reach. Superdata summarised that publishers would increase their focus on mobile eSports with it accounting for 19% of the US eSports audience.

Deloitte’s verdict that eSports is bigger and smaller than you think is misleading. In terms of viewing figures it’s already far larger than most would imagine, whilst it’s premature and somewhat inane to judge its worth on the revenue it generates and will generate as this is notoriously, and admittedly, hard to call with the information available.

The fact that is clear as day is that major corporations are investing serious money, whilst individual investors such as Russell Okung (Matcherino) and Ashton Kutcher (Unikrn) are investing in platforms throughout the wider industry. Moreover, an increasing number of bookmakers are adding eSports markets, with William Hill, Bet365, Sky Bet, Pinnacle Sports, and Betway all currently offering odds on matches.

As a relatively new market with serious opportunities for growth that are yet to be fully explored, and with a tech savvy, engaged audience that have shown they’re willing to spend, it’s no surprise that sponsors and investors are flocking to eSports.

Deloitte validly opines that there is not a direct correlation between online video gaming success and eSports, but it cannot be denied that there is a huge crossover of fanbases and the more mainstream eSports goes, the more there’ll be avenues and companies looking to exploit this.

In short, that eSports is bigger and smaller than you think is a contentious point. Moreover, by 2020 most indicators point to it being bigger than 99% would have ever guessed just a few short years ago.

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