The European esports market: Let’s Play! 2022
In recent years the esports sector experienced vast growth, mainly due to growing exposure to the digital natives. Market experts are keenly watching developments to see where the esports market is heading after COVID-19-related restrictions have been lifted. As of now, the growth in audience numbers experienced in previous years has hit a plateau. Still, the audience numbers have considerably grown in comparison to pre-pandemic figures. It is expected that the esports sector will continue to evolve and revenue figures will increase in the future.
The European esports market - overall development
The 7th edition of the Deloitte study 'Let's Play! - The European esports market' focuses on the development of the European esports sector. The study is based on extensive consumer research across 11 European countries and interviews with 53 market experts.
To download the full report, click here. For the individual country profiles, navigate via the map of Europe.
Overall, the esports market shows great potential despite declining user numbers in 2022. During 2020 and 2021, when the COVID-19 pandemic dictated world affairs, esports experienced a surge in user numbers. While overall viewer numbers have stagnated, regular engagement decreased as the pandemic-related restrictions were lifted. Still, the level of viewer numbers and engagement in total is higher compared to pre-pandemic levels. Hence, while awareness and overall reach have grown remarkably since 2020, converting a broad audience into regular viewers and gamers remains the major challenge to sustained economic growth.
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 European respondents report that they have at least heard the term ‘esports’, but even so, 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. 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 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 acknowledge that the way esports is organized differs depending on the respective title and genre.
Sub-ecosystems around core value orchestrators drive growth in the overall esports sector
The esports ecosystem includes many core-value-creating stakeholders such as league organizers, event hosts, esports teams and players. Furthermore, there are stakeholders involved from the publisher segment, traditional media and online platforms, as well as companies which sometimes can assume roles as strategic partners. Last but not least, the esports audience is an important stakeholder in the esports world, reflected in central KPI figures such as viewership numbers of esports competitions.
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. There are also other entities on the periphery with touchpoints into the esports industry with varying levels of influence. Such entities include governmental institutions, hardware suppliers and venue operators.
One essential factor in creating value and driving growth, is the setting up of incentives for stakeholders to enter and engage in the esports ecosystem sustainably. Committing to esports 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
In general, sponsorship income accounts for a large share of overall revenue. The breakdown of revenues will vary between market players, depending on the segment in which they operate. Ticket sales contribute a substantial share of the overall revenue for event hosts, while a large proportion of the revenue generated by professional esports teams comes from prize money.
During 2021 and 2022, the industry experienced a considerable revenue shift towards sponsorships, particularly as ticket revenues and merchandise sales dropped sharply or disappeared entirely due to the cancellation of live events. As the COVID-19 related restrictions were lifted, however, these revenue streams are beginning to bear fruit again. It remains to be seen what impact new sources of revenue will have in the future and how the revenue mix will settle in the long run.
International sector with national specifics
Although esports are an international, cross-border phenomenon, the development of esports development varies considerably from country to country.
In terms of country differences, the gap in reach and consumer penetration between more developed European esports markets and less mature markets is stark. Consumer uptake in Europe is highest in Poland, Spain, Italy, and the Nordics. In turn, growth in countries such as Germany, France, and the UK paves the way for the progression and success of European esports. In more developed esports markets, such as Poland and Spain, a more significant proportion of people who have watched esports at least once have also consumed esports content in the last six months. Countries such as Austria and Switzerland have a higher proportion of ‘one-off’ viewers. Not least, there are encouraging trends in smaller domestic esports markets. For example, a large share of consumers in Belgium, Hungary and the Netherlands reported watching esports for the first time since the outbreak of the global COVID-19 pandemic.
For a detailed look at the situation in 11 European markets as well as contacts to local industry experts, use the map above to the find out more about each country’s profile.