A couple of years ago, we were watching a live stream of the Dew Arena, one of the most coveted electronic sports or esports leagues in the country. The tournament was a sponsors’ galore, and the enthusiasm was comparable to IPL. With journalists reporting the live stream and many others who had found their calling in esports, it all had us wondering. How was a niche space like online gaming suddenly taking up so much space and soundbites in the sports community?
The last few years have seen esports rise in popularity like never before. Barely a few decades old, esports is essentially organized events or gaming tournaments where professional gamers compete individually or within a team, showcase their skills, and take home the coveted prize. These tournaments are conducted online or in a gaming arena with brands and sponsors. They also have the backing of large spectatorship from across the world and are live cast on various streaming platforms.
Esports, a global phenomenon and a media property beyond compare
Not only are more and more players joining the gaming community, but the industry has also shown tremendous potential to impact the global economy and become a media property beyond compare.
· Both revenue and viewership are scaling rapidly
According to Newzoo, the global number of gamers in 2020 stood at 2.8 billion, with a year-on-year growth of 6.4 %. This growth shows no sign of slowing down.
“The global esports audience will grow to 474 million in 2021, with revenues from competitive gaming set to be just shy of US$1.1 billion by the end of this year.”
In addition to an enormous number of gamers, esports has garnered a large audience too. It has grown at a CAGR of 13.6 percent over 2017–2021 and is expected to reach 577.2 million by the year 2024, with revenues reaching a potential of around $ 1.6 billion. All of this points to one significant development — brand interest in the gaming ecosystem.
· All audience is esports audience
Although 18- 25-year-olds form the biggest audience of esports, we see a rising interest among other age groups too. This indicates a universal acceptance for esports and its tremendous potential as a media property.
“Despite burgeoning growth, esports is still in its early stages around the world. Naturally, it is still grappling with some challenges.”
Key Highlights of the Esports Industry
· Standardization of rules — a long way to go
Despite the growing popularity of esports, the lack of rules is apparent. Player contracts, rights, wellbeing, disbursal of pay-outs, developer intellectual rights, as well as broadcasting rights still fall on the shoulders of event organizers. Given the global reach of esports, standardization on a lot of fronts is still a challenge. This will ensure fair play.
· Challenges in monetization
Unlike other regular sports, which get a big chunk of their revenue from broadcasting rights, the media rights for esports continues to be restrictive and not to mention expensive. Although esports is growing in its relevance as a media property, to gain further traction, the industry needs to streamline monetization opportunities.
· Use of technology — how much is too much?
The creators of the games implement various Artificial Intelligence technologies when it comes to gameplay. But should AI dictate the outcome of fair play? How or where do we draw the line in creating stickiness and upholding the spirit of sports — electronic or otherwise. There have been speculations and lawsuits filed addressing the fact that by using technology, publishers influence and dictate the outcomes of gameplay. These changes that developers make to enhance gameplay needs to be communicated to the gamers well in advance. But more importantly, the use of AI and other technologies needs to be regulated.
“It is interesting to see an entire ecosystem come together and grow rapidly, supporting further growth of the esports industry.”
Despite challenges, a thriving esports ecosystem is under way!
· The rising interest of brands and sponsorships
Although esports has been gaining traction for years now, the industry took a sharp hit in 2020 due to the pandemic. However, it bounced back in 2021, and numerous sponsorship deals were signed, surpassing the numbers in the first quarter of 2019. According to Newzoo, most of the sponsorship deals span multiple years.
· Brand reach and Sponsorships is immense
Across the globe, quite a few brands have been associated with various esports tournaments. But there is still a lot of untapped potentials. For game studios and publishers, having content and streams about the game with genuine game enthusiasts is ten times more effective than a journalist rating. 50% of the audiences are more likely to buy video games by watching the games played on streaming platforms. The key here for publishers is not just the acquisition but continued engagement. That is how more value and revenue can be created in the long run.
· The contribution of esports in job creation
India alone, the gaming industry employs nearly 50,000 people. In the US, the number of people employed in the industry increased 4.8% on average over the five years between 2016 and 2021. These numbers indicate that alternative careers in the esports ecosystem are on the rise. One of the most sought-after roles is that of a Caster, who is essentially a pre-game anchor and commentator during the tournament. Other roles like tournament admins, analysts, coaches, team managers, esports marketing, and journalism are also highly coveted.
· A growing value chain
Esports value chain is weaved on a cohesive ecosystem involving players, creators, spectators and sponsors among many others. Esports has a flourishing ecosystem of its own. It includes publishers and studios who create the games, esports companies that create a platform, brands; that sponsor and add to the prize pool, media companies and streaming platforms that provide avenues for viewership, and of course the professional gamers who take part in the tournament. All parts of the ecosystem have their dedicated functions and roles to play. As more publishers, brands, and gamers join the ecosystem, its growth as a flourishing industry is undeniable.
Esports in India, a rising phenomenon!
Pub G, Call of Duty, Counter-Strike, and Free Fire are household names in India. Teenagers to baby boomers are hooked on these games. The game was on for quite a few years; the pandemic took it to a fervent pitch. Outdoor games were off limit; entertainment options were limited. No wonder the clan of gamers rose, and with it grew the fortune of esports as an industry.
Indian esports industry currently ranks 16th globally, with total revenue of $1.17 billion according to Forbes and is on a rapid growth trajectory. The Indian viewership doubled to 17 million in 2020, while the prize money has grown by 25–30%. According to the Indian Federation of Sports Gaming, esports will see rapid growth in the country; and reach a cumulative revenue of up to ₹11,900 crores. The most popular genres in India include sports games, multiplayer online battle arena (MOBA), first-person shooter (FPS), fighting, card games, and real-time strategy (RTS).
The dollars — keep ’em coming
Investment in esports from India is on the rise. In 2010, there were just 25 gamer developers in the country. In 2020, this number grew to 250 — a mind-boggling strike rate, if you will! Naturally, VC’s have been more than interested in gaming, investing around $438 million in Indian gaming start-ups. The aggregate value of esport start-ups in India reached $68 million in the financial year 2020. The industry is expected to grow by a CAGR of 36% in the next 3 years.
The story is not limited to Indian investors. Global gaming firms such as Activision, Garena, and Supercell (which publishes Call of Duty, Free Fire, and Clash of Clans), are lining up to invest in India’s esports ecosystem especially post the ban on the likes of Pub G due to the takedown of Chinese apps in the country. Even telecom giants have thrown their hats in the ring with a keen eye on attracting and retaining subscribers. Airtel’s tie-up with Nodwin Gaming and Jio’s partnership with Nazara is sure to keep the scores ticking.
Indian esports industry needs a perception change
Despite growing investments, India is yet to catch up with its global counterparts. The numbers are rising, albeit slowly. To hasten the process, in addition to the global challenges that we discussed in the last blog, several local roadblocks need to be addressed.
· Perception towards gaming in the country is still archaic: It is not widely accepted despite the integration into mainstream sports. Gaming attracts an entertainment tax of 35% while sports is taxed at 20% — the government obviously still thinks of gaming as a fun activity. Hopefully, the rising passion for esports will change the perception soon.
· Betting is illegal in India and attracts a social stigma: Unfortunately, a lack of awareness has created a negative perception of esports as a close cousin of betting and online gambling games. This does not help the overall outlook and hinders the growth of the category to its potential.
- Esports events require enormous digital infrastructure: High-speed internet, real-time testing, and automated backend processes are a must for an immersive gaming experience. Latency is the biggest spoilsport. And, delays in the 5G rollout make it worse. Fast-paced gaming action demands superfast bandwidth; 5G can well be a shot in the arm for the industry.
“It is crucial to mitigate these roadblocks in the Indian Esports; the foolproof plan is the need of the hour.”
Esports in India — the road ahead!
These are early days for esports in India, and the road ahead can be paved for a zip drive with policymakers and industry working together. The sector is booming, and a few consorted steps in the right direction can make all the difference.
· Enabling and growing the player ecosystem
India’s median age is around 27.5 years, perfectly suited for the esports industry. There is an immense opportunity to nurture budding esports athletes. A structured player ecosystem complemented by focused training and coaching, fitness and wellbeing, and proper funding is a must for the industry to flourish. The Olympics committee and Asian Games acknowledge esports mainstream, giving the same level of support and encouragement to esport athletes around the world. Why should Indian athletes be left behind?
· Fast-tracking regularization
India has already made a move in regularizing esports with the formation of the International Esports Federation (IESF), Global Esports Federation (GEF), and Asian Esports Federation (AESF). These communities help standardize and regularize esports and provide much-needed international exposure for Indian esports athletes. The introduction of the National Ranking system for many popular games like Call of Duty Mobile (Battle Royale), FreeFire, and Valorant list out best performers and bring about legitimacy for Indian gamers. However, the actual standardization of rules and their implementation has a long way to go. It must be fast-tracked if Indian gamers are to play on par with their global counterparts.
· Accelerating policy changes
Any industry fast tracks its growth with the aid of the government. Esports is no exception. Faster allocation of the 5G spectrum and streamlining the esports industry with existing sports rules and regulations will accelerate the growth of this industry.
In conclusion
Esports has become a thriving community and a rapidly growing industry today. Interest in the sport and the paraphernalia surrounding it is rising like never before. It may have been inconceivable a few years ago, but today, esports as a media property is set to give traditional sports a run for their money.
The road ahead for the esports industry — in India as well as globally — is lucrative from all standpoints. But for the industry to truly thrive, all players across the value chain — from gamers community and sponsors to federations and governments — need to work cohesively. With technological advancements and standardization of gameplay, and policies relating to developing player skills, the growth opportunities seem immense. The road ahead may not be easy, but it is one worth exploring. Onwards and upwards!
