DC Discusses: Monetising esports: Lessons learned from experts

Monetising esports: Lessons learned from experts

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Market landscape and growth drivers

• The pandemic has been an accelerant to the esports market; during its height it was the only sport broadcasting, attracting huge audiences across the globe
• One of the biggest strengths of esports is its virtual nature and the digitally native fan base that they garner and whilst traditional sports was brought to a standstill, esports was able to thrive
• The key players in the market centre around the publishers, those who are creating the games, though more recently there has been a move towards a partnership approach between publisher, teams, sponsors
• Despite the high viewer numbers, audience monetisation remains low vs. mainstream sports, and coupled with esports being a relatively small proportion of the total video gaming market, means significant opportunity for growth going forward
• Betting and gaming companies are beginning to express interest in the space, which will be welcome, albeit the industry will want to ensure that "integrity" and safety of its younger players are not compromised

Areas of investment & monetisation

• Capital has traditionally been invested in teams initially, however recently ‘picks and shovels’ or infrastructure companies around gaming and esports are key areas for consideration
• Expanding the view of esports opens up a world of opportunities in tech start-ups and ancillary products e.g. data, streaming tools, events companies
• The risk associated with esports and investment, comparative to other emerging markets, is no higher and with the added benefit of a technology focused sector, it has long term value potential
• Streaming platforms in particular, will be an area of not only, consolidation but growth. There is also potential for more advanced technology companies from Asia capitalising on their more mature market to dominate the space

Outlook

• The sector is poised to continue to develop and grow, there is opportunity now to invest time and capital for what the industry could become in 10 years
• Investment into the esport ecosystem is a key part of its continued growth, not just investing into the games themselves, but all aspects of the world and supporting ancillaries
• Building the infrastructure around the sector will be key to its longevity
• What will aid industry revenue growth is audiences focusing on fewer games drawing more lucrative sponsorship deals and prize money
• Most of the M&A activity for now will be driven by the games publishers, as profiled by the recent takeover activity circling Codemasters