Let’s Play! 2020 – The European esports market

• In 2019, the esports audience grew by 12% and reached around 443 million people.
• For the same year, 77% of esports organisations reported an increase in revenues.
• During the governmental restrictions related to COVID-19, esports experienced a strong increase in viewership, which, however, does not directly translate to revenue growth.

Germany, 20^th of August 2020: Increasing popularity and rising revenues: The European esports ecosystem continues to evolve steadily, claiming its position as an entertainment option for the broader public. After consecutive years of growth, the industry was expected to exceed one billion dollars in global revenues for the first time in 2020.

However, the reality is quite uncertain. While the vast majority of market participants reported growth for 2019, the situation in 2020 under the impact of the COVID-19 pandemic is highly diverse, as shown in Deloitte’s report Let’s Play! 2020 – The European esports market published in cooperation with the Interactive Software Federation of Europe (ISFE) and game, the association of the German games industry.

“At first sight, the expectation that esports could emerge as a frontrunner from the crisis does not seem far-fetched, as many competitions continued in purely virtual formats when the governmental restrictions were introduced,” says Stefan Ludwig, head of the Sports Business Group at Deloitte Germany. “At the same time, however, the significant increase in digital viewership is partly contrasted by high losses in the ticketing and sponsoring area, as all physical events had to be canceled. It will therefore be interesting to observe whether the esports market will continue to grow despite or perhaps even because of the COVID-19 pandemic.”

To gain first-hand insights on the developments in the European esports ecosystem, Deloitte conducted an extensive consumer survey among 12,000 people in June 2020, with 1,500 participants each from eight European countries: Belgium, Germany, Hungary, Italy, Spain, Switzerland, the Czech Republic and the Netherlands. Simultaneously, 53 company representatives from organisations within the European esports ecosystem participated in a second survey, representing all areas of the esports ecosystem where companies conduct business: events, leagues, teams, media and online platforms, publishers, as well as strategic partners.

Increasing popularity fosters engagements of non-endemic companies

A closer look at the numbers from the latest edition of “Let’s Play!” shows: more than 75% of esports-related companies in Europe recorded increased revenues in 2019, with almost half of them (45%) experiencing a growth of more than 20% compared to the previous year. At the same time, the worldwide audience grew by 12%, reaching around 443 million people across all channels and pushing esports further ahead on its way to becoming mainstream. Europe is one of the global esports hotspots after Asia and North America. About 38% of the survey participants have watched esports content before, with Spanish (55%), Italian (53%) and German (38%) consumers representing the top of this list. The same applies to the number of regular users, as the southern European countries and Germany account for the highest share of esports enthusiasts in the countries under consideration.

These fans are predominantly young and well educated, which makes them an attractive target group. Accordingly, the interest of companies to appear as a sponsor or investor in the esports ecosystem has steadily increased in recent years - especially among non-endemic companies.

“For non-endemic companies, esports is a real opportunity to get in touch with the highly sought-after customer group from Generation Z,” explains Sergi Mesonero, Head of Esports at the Interactive Software Federation of Europe (ISFE). “These companies are starting to recognise what impact esports has on these young people. Conversely, esports organisations that find ways to successfully bridge non-endemics into the market can hope for financially potent partners with a strong appeal.” Therefore, it is no surprise that the market experts consider increasing activities of such non-endemic brands as the second main driver for future growth in the sector besides rising viewership numbers.

COVID-19 leads to increased viewership numbers

After the developments of the past year that allowed ecosystem stakeholders a positive outlook for 2020, the COVID-19 pandemic has disrupted business plans throughout the industry. As a result of the implemented restrictions to contain the pandemic, people have spent a lot of time at home in recent months, which has been the basis for a strong increase in viewership numbers of esports broadcasts on the internet and on TV. The strongest increase could be noted in Spain and Italy, where the regulations implemented by the government were particularly strict. Here, 44% of the respondents stated that they consumed more esports than before the pandemic. Despite the strong attention on esports during this time, only 43% of the interviewed organisations could sustain their revenue level or expand their business while 38% suffered revenue losses.

“An increase in consumption of esports cannot be directly translated into corresponding revenue growth,” concludes Kim Lachmann, Senior Manager at the Sports Business Group at Deloitte Germany. “The economic consequences of the pandemic vary considerably for the different segments within the esports ecosystem: some organisations were able to adjust their business model to the new circumstances while others were forced to temporarily shut down their operations.”

Particularly in comparison with other segments of the sports and entertainment industry, however, esports so far has come through the crisis quite well, whereby its dynamic and innovative character is especially beneficial. There has always been a lot of experimentation in esports and the market participants are learning quickly. As a result, esports manages to create benefits for fans and participants in the ecosystem during the COVID-19 pandemic. It therefore remains exciting to see exactly how the industry will develop and what medium and long-term effects will result from the current situation. After all, the esports industry continues to look positively into the future.