Media and entertainment companies should train sights on eSports franchises to access new demographics, says Deloitte report

Published: 2 April 2019

The explosion in popularity of eSports is creating new avenues for the media and entertainment industry to reach a wide range of demographics and generate unprecedented, lucrative opportunities. The franchise model, which facilitates profit sharing within the eSports ecosystem and incentivizes new investment, will propel its development into a fully-fledged industry, according to the latest report ESports graduates to the big leagues from Deloitte's Center for Technology, Media & Telecommunications.

Citing an earlier Deloitte Digital Media Trends Survey, the report says that half of Gen X respondents play video games at least once a week, almost as often as millennials and Gen Z respondents. Gen Xers lead all generations in the amount of time they spend playing games on mobile. Although older generations might dismiss video games, their children have grown up with them and continue to play on consoles, smartphones and PCs.

"The growing popularity of eSports has spawned new opportunities for companies along the value chain of the media and entertainment industry, whether these are related to game development, marketing or computing hardware. The industry is poised for explosive growth driven by rapid advances in digital technology," says Taylor Lam, Deloitte China Telecommunications, Media and Entertainment Sector Leader, citing Deloitte findings that the global eSports market is expected to generate USD1.5 billion in annual revenues, primarily from the exposure of sponsorship and advertising to an estimated global audience of 600 million fans.

The report highlights the franchise model's emergence as a catalyst for concerted efforts to transform eSports into a fully-fledged industry. Typically, franchises help establish revenue sharing among games, events, merchandising and players, as well as ensure minimum requirements for pay, benefits and training facilities. They also play a pivotal role in advancing industry governance, ensuring integrity and combating fraud, especially given the rising importance of cybersecurity to secure data and analytics and prevent vulnerabilities and intrusions.

According to the report, eSports offers a new channel for businesses to engage and evolve with their audiences and transform to meet the changes brought about by digital disruption. It is a new, modern way of storytelling that helps bring target audiences into a more interactive and immersive narrative experience through borderless online networks.

"However, businesses need to understand the industry's nuances before moving into the eSports arena and should work to understand their audiences and exhibit an authentic interest in their dedicated games by partnering with teams, players and leagues, as well as leading streamers and streaming networks," explains Nikki Wang, Head of Sports Business China, Deloitte China.

The eSports landscape is evolving rapidly, becoming more inclusive, interactive and immersive than ever. The report underscores the importance for media and entertainment companies of building relationships with players, leagues and spectators, exploring new merchandise opportunities with downloadable digital content, and enhancing the viewing experience for eSports audiences. Advertisers, meanwhile, should see how to better connect with audiences by moving away from linear, broadcast channels to social media, streaming and eSports arenas.