• Video Games and Esports

    Will Real Sports Lift Esports to the Next Level?

    Martijn Rozemuller, CEO – Europe

    With the world in lockdown, there’s a void to fill. Esports, including digitized real sport, is already plugging some of the gap. And it could be that the crisis proves the catalyst for digital sport – backed by TV and celebrity endorsement – taking esports as a whole to the next level.

    In the last few months, daily viewings of “multiplayer online battle arenas” (MOBAs) and “shooters” esports on the Twitch esports platform have soared, rising from 1.4 million daily in February 2020 to 2.5 million in April (see figure 1).

    But sports games, too, have surged in popularity. Motor racing has led the way, with the eNASCAR iracing in the US recording 1.4 million viewers in late March. And in the UK, nearly 5 million people tuned in to a digitally simulated Grand National, Europe’s most valuable jump race, at the beginning of April.

    Figure 1 – Esports viewing has surged during lockdown

    Esports viewing has surged during lockdown

    Source: Twitchtracker.com. Data as of 24 April 2020.

    Even before the pandemic, the world of physical sport was gradually spreading into digital. Many football clubs have launched esports teams, for example, and the Formula 1 Esports Series has been attracting tens of thousands of gamers each year since starting in 2017. But the crisis has given this trend a huge push, attracting people for whom video gaming is an alien concept to participate or watch for the first time.

    So, will the crisis make digital sport a new driver for growth in esports in general? We think so. Sports games currently only make up a relatively small part of an industry historically dominated by MOBAs or shooters, such as League of Legends or Call of Duty respectively. So there is huge room for growth (see figure 2).

    Figure 2 – Sports games viewings have room to grow

    Sports games viewings have room to grow

    Source: VanEck analysis, based on #YouTube subscribers. Note that YouTube is skewed towards European and North American viewers. In Asia the following platforms are more popular: Huya, Douyu and Bilibili. Sports games also includes racing (2% point). Data as of 23 April 2020.

    Below we explain why we think traditional sport is likely to prove a lasting driver of growth in the virtual world of esports:

    • There is enormous untapped potential. A very large proportion of the world’s population watch sport. That number is almost two thirds (61%) on TV and over a third (39%) online, according to Statista, (see figure 3). However, only a few percent watch esports. If just a third of the people who currently watch sport on TV started to watch esports, the esports market would increase ten-fold1.

    Figure 3 – Share of population watching sports and esports

    Share of population watching sports and esports

    Source: VanEck analysis based on NewZoo data, Statista. Sports data for 2017. Esports data for 2019.

    • The frontier between esports and traditional sports is increasingly blurring. Big name sports clubs are launching esports teams. For example, 13 out of the 18 German Bundesliga football clubs already have their official own esports team (see figure 4). Often these esports teams are fully embedded in the club’s infrastructure, with players having access to fitness facilities, coaching, marketing apparatus, etc. In the US, for instance, the San Francisco-based Golden State Warriors, one of the most successful teams in the National Basketball Association, has hired a traditional basketball coach to train its newly set up esports team.

    Figure 4 – Germany’s Bundesliga goes digital

    Team Own Esports Team?
    FC Augsburg Yes
    Hertha BSC Yes
    Union Berlin -
    Werder Bremen Yes
    Borussia Dortmund -
    Fortuna Düsseldorf -
    Eintracht Frankfurt Yes
    SC Freiburg -
    1899 Hoffenheim Yes
    1. FC Köln Yes
    RB Leipzig Yes
    Bayer Leverkusen Yes
    Mainz 05 Yes
    Borussia Mönchengladbach Yes
    Bayern Munich Yes
    SC Paderborn -
    Schalke 04 Yes
    VfL Wolfsburg Yes

    It is also interesting to note that esports is increasingly played by real sports professionals. In April 2020, the UK Premier League launched its ePremier League, starring real football players and for broadcast live on terrestrial TV (beyond YouTube and Twitch). As sports people typically retire young, between the ages of 30 and 40, esports could offer a second career (see figure 5).

    Figure 5 – ePremier League starring real footballers

    ePremier League starring real footballers

    Source: YouTube.

    • Real sports are easier to understand. You might find the rules of cricket or rugby hard to comprehend, but they’re more familiar to people than the complexities of shooters or MOBA games. The latter are only understandable for the fans, deeply immersed in their fantasy worlds. But real sports have simpler rules (for example, in a NASCAR stock car race whoever finishes the nearly circular laps first wins). By contrast, the rules of cricket are already known by a significant share of the global population, even if they were dreamt up English eccentrics hundreds of years ago.
    • Esports’ visuals are getting life like. For some sub-genres like motor racing, the difference from real footage is hard to detect (see figure 6).

    Figure 6 – Snapshot from Gran Turismo esports

    Snapshot from Gran Turismo esports

    Source: YouTube.

    • Financially, esports offers clubs another stream of income. Sports clubs can benefit from media and merchandising revenues, multi-million euro prizes and even packed stadiums for major events such as finals.

    So, one of the legacies of the pandemic may well prove to be a shift of real sports into the digital world of esports. All the factors for an acceleration of the trend are there. Who knows how big the shift might be. But imagine how big the world of esports could be if it even approached the popularity of traditional sports…

    To learn more about ESPO and the high growth potential of the global video gaming and esports industry, visit vaneck.com/ucits/esports/.

    The author would like to thank John Patrick Lee for his ideas and insights.

    1Currently VanEck does not possess data or research indicating that this will be the case.

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  • Authored by

    Martijn Rozemuller
    CEO – Europe

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