The European esports market: Let’s Play! 2021
In recent years, esports stakeholders have joined together to form a globally connected ecosystem (here also referred to as ‘the esports sector’) that is fuelling a growing fascination among audiences. Sector observers are keenly watching developments to see where the esports market is heading, although the predominant view is that audience and revenue figures will continue the growth seen in recent years.
The European esports market - Global view
The 6th edition of the Deloitte study 'Let's Play! - The European esports market' focuses on the economically sustainable development of the European esports sector. The study was based on extensive consumer research and numerous expert opinions. In addition, there are 13 country profiles that outline the current state of the esports sector in different European markets.
To download the full report, click here. For the individual country profiles, navigate via the map of Europe.
Let's Play! 2021
Read the full Deloitte Insights report
The increasing relevance of the sector as a platform with growth potential elevates esports into the B2B mainstream. More and more stakeholders are seeking to contribute to this trend with their capital, know-how and services, encountering various challenges at different stages of their esports ventures – from building market knowledge to complex strategic and operational matters.
Understanding the concept is the first step
During the COVID-19 lockdowns, we saw the popularity of esports continue to grow strongly. Today, the majority of Europeans report they have at least heard the term ‘esports’, but even if the term itself is well-known, not everyone understands exactly what it means. Therefore, it is very important to establish an agreed definition:
Esports are a subcategory of the gaming industry as a whole, which includes active, free-time video gaming. In addition to the competitions themselves, we define esports primarily as a spectator product that attracts audiences on the Internet, on TV and on-site at live events. There are competitions in a wide variety of different games – which can in turn be categorized into different genres – and it is important, particularly for newcomers without a deep understanding of the market, to appreciate that no two esports are alike.
Sub-ecosystems around core value orchestrators drive growth in the overall esports sector
The esports ecosystem includes key value drivers and orchestrators of esports competitions, products, services and content. Core value-creating stakeholders comprise league organizers, event hosts as well as esports teams and players, while there are also stakeholders involved from the publisher segment, traditional media and online platforms as well as strategic partners. Naturally, the esports audience is another key stakeholder in the esports ecosystem.
The overall ecosystem contains numerous sub-ecosystems that may revolve around individual league organizers and event hosts, publishers, game titles or content creators, depending on which stakeholder ultimately delivers value to the customer. While the borders between individual sub-ecosystems may be blurred, the sum of the esports sub-ecosystems make up the esports sector as a whole.
Other entities that have touchpoints with the esports industry in varying degrees of frequency operate on the periphery of the ecosystem. They include governmental institutions, hardware suppliers and venue operators.
For the esports ecosystem to create value beyond the sum of its parts, it must provide incentives for stakeholders to enter the system, to engage with it, to create value within it, and, ideally, to remain part of it for the long run. Committing to an esports (sub-)ecosystem must therefore have recognizable benefits – both inherently and relative to competing business opportunities. This will depend, among other things, on the commercial prospects.
Stakeholders contribute to esports revenue streams in six main areas:
- Revenues related to leagues and tournaments, as well as the performance of professional players in the competitions (i.e., prize money and entry fees)
- Sponsorship deals between esports teams, leagues or event organizers on the one hand and strategic partners (investors/sponsors) on the other
- Advertisement, placed either on-site at live events or during competition broadcasts
- Revenue from the sale of media rights for esports content (both free-to-air and pay-per-view)
- Ticket sales at live events and merchandising revenue
- Publisher fees paid by publishers to independent esports organisers for hosting events and to esports teams for marketing rights
Other esports-related revenue streams may arise from esports-related investments or agency work, among others. Stakeholders engaging in esports activities often also record non-esports-related revenues generated in their other business activities outside the esports space.
Main revenue sources are B2B channels, making B2C monetization a strategic challenge
The breakdown of revenues will vary between market players, depending on the segment in which they operate. Ticket sales generate a substantial share of the revenue for event hosts, for example, while professional teams collect prize money. In general, sponsorship income accounts for a large share in the overall revenue mix across the ecosystem.
During the pandemic, we saw an even greater revenue shift towards sponsorships, particularly as ticket revenues and merchandising sales dropped sharply or disappeared entirely due to the cancellation of live events. As we move closer to a 'new normal', however, we expect these revenue streams to return – even as ecosystem stakeholders started to unlock new sources of revenue during lockdown. It remains to be seen what impact these factors will have in the future and how the revenue mix will settle in the long run.
International sector with national specificities
Although esports are a cross-border phenomenon, their maturity varies considerably from country to country. Consumer penetration in Europe is highest in Poland, Spain, Italy and the Nordics, for instance, while Germany, France and the UK with their highly developed organisational structures also represent formative markets for the structural and economic development of the European esports sector. We are seeing encouraging trends in smaller domestic esports markets as well. For example, a large share of consumers in Belgium, Hungary and the Netherlands reported watching esports for the first time since the COVID-19 pandemic began.
For a detailed look at the situation in 13 European markets as well as contacts to local industry experts, use the map above to the find out more about each country’s profile.