European esports market worth €240 million, with 86 million fans across Europe

• In 2018, the European esports market generated total revenues of €240 million.
• With an expected annual growth rate of 23%, total revenues are expected to reach €670 million by 2023.
• The European esports audience is estimated to reach 105 million people by 2020, up from 86 million in 2018.

The European esports market is worth approximately €240million, with the potential to reach an estimated €670m by 2023, according to a new report from Deloitte, in cooperation with game, the association of the German games industry.

According to the report, Let’s Play! – The European Esports Market, with an estimated global fan base of 380 million people (86 million in Europe), esports has become an interesting opportunity for both endemic and non-endemic brands. The market is forecast to have an annual average growth rate of about 23% over the next five years, with the European esports audience predicted to increase at a steady rate, reaching an estimated 105 million people by 2020.

Kristin Banse Manager Marketing & Esports at game, commented: “What started as a niche entertainment product has become more and more popular over the years, reaching a significant audience. The majority of esports fans are millennials aged between 21 and 35, a target group many companies try to reach and connect with. Esports offers the opportunity to engage with them to every company open enough to try it.”

Media rights revenues are expected to increase
Increasing revenues will remain over the following years, with advertising and sponsorship estimated to account for 60% of the industry’s overall revenue by 2020, primarily as a result of the growing interest of both endemic and non-endemic brands reacting on the increasing interest esports generates on younger generations.

Furthermore, the potential increase of the esports audience will have additional effects. First, the increasing number and variety of live events will positively boost the merchandise and ticketing revenues. In addition, media rights are expected to increase by almost 500% from 2016 until 2020 in the European esports market.

Interesting opportunities for traditional media
Revenue and audience growth in the European esports market will not come alone, and as more and more brands will seek a chance to be engaged with the industry, innovation and change are expected to affect the market, especially on traditional media. Live streaming and Video-on-Demand offerings, driven by the desire of the public to decide when and what they want to watch, are the preferred ways to watch esports (40% of the audience), next to 27% watching on traditional TV.

Dan Ison, lead partner for telecoms, media and entertainment at Deloitte, commented: "For media companies looking at esports, the games are just beginning. Audience numbers and revenues are continuing to grow, with high-profile tournaments in 2019 piquing the public's interest in esports as entertainment. The content is especially well suited to act as a testbed for new interactive and digital formats, for instance through integrating social media interactions into programme formats. It's for this reason, as well as the rising audience numbers, that esports should be a must-watch market for media brands."

Even though audiences are still too small to be granted some prime time, there are good options to monetise esports interest, either by advertising or by the creation of exclusive content that targets the more loyal, more dedicated fan base.

Future challenges
One of the key metrics to measure the success of any business is the interest it awakens on investors, and the European esports market is increasingly performing well in that area. Last year set a record on that regard, with an investment volume of about €3.9 billion and 68 M&A transactions recorded worldwide.

Sam Boor, senior manager in Deloitte's Sports Business Group, concluded: “Esports have attracted interest and investment from some of Europe's most recognisable football clubs, and for good reason. The audience is predominantly comprised of young, tech-savvy consumers who spend more time online and using mobile devices – a demographic that stakeholders in sport are keen to engage with. This has resulted in traditional sports rights holders and clubs increasing activity in the market, most commonly through the development of formal competition structures around video games associated with their sport and the acquisition of esports talent. This development is also attractive for multi-national brands already active in traditional sports advertising who are keen to connect and engage with that same consumer demographic who are perceived as harder to reach by traditional means.

“The esports industry mirrors traditional sport in many ways. It is fragmented across different games appealing to different audiences and it faces many challenges that are observed in traditional sports such as governance, integrity and talent identification, recruitment, development, diversity and care. The key to growth and ultimately maturity will be to ensure that sponsors, media companies, online platforms, game publishers and esports teams work together to create a financially sustainable model across the industry.”

End

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