The Covid-19 outbreak has had a significant impact on esports, one of the fastest-growing areas of the gaming sector. Dozens of esports tournaments have been cancelled, with many more postponed indefinitely. Events scheduled to be held in stadiums are moving online to mitigate the spread of the disease.
ESL’s Counter-Strike: Global Offensive (CS:GO) Pro League, Riot Games’ League of Legends championships, Activision Blizzard’s Call of Duty League, and Take-Two Interactive’s NBA 2K League are all being launched in online formats. EA is also adopting the same approach for Apex Legend, FIFA, and Madden events. Although shifting online is a temporary measure, it has the potential to become a standard format for some events. Epic Games and Activision Blizzard are already working on latency optimization for Fortnite and Overwatch events. These are played by teams and franchises from different regions.
COVID-19 is boosting esports viewership
With many countries now under lockdown, the online population has risen sharply, bringing more viewers to esports competitions. Gen.G claims to have seen an 18% increase in the audience for its PlayerUnknown’s Battlegrounds (PUBG) and League of Legends teams on Chinese streaming platforms DouYu and Huya between January and March 2020. Due to COVID-19, revenue from sales of tickets and merchandise will drop, while in-app purchases on streaming platforms will rise.
The competition between YouTube and Twitch will intensify
Streaming platforms Twitch (with a 73% share of total viewing hours in 2019) and YouTube (with 21%) are seeing viewing numbers increase due to the global lockdown. Having acquired the exclusive streaming rights to the Call of Duty League, YouTube’s market share is expected grow in 2020.
Twitch could take this opportunity to add more mobile esports content. This will allow it to attract mobile esports leagues the majority of which are currently available on YouTube.
Online advertisement revenues to grow, while out-of-home will decline
Out-of-home advertisements are a significant revenue stream for esports organizers. With the industry’s shift to online formats, out-of-home ad spend will decrease in 2020. This could have major implications for the industry over the next few years. Brands are expected to allocate spending on both online and out-of-home ads, with the former being the primary channel because of its greater security in times of uncertainty. Streaming platforms stand to benefit from this trend, while organizers will see their ad revenues fall significantly. As a result, the value of media rights that streaming platforms buy from organizers could potentially surge in the coming years, pushing streaming platforms to look for long-term, exclusive deals.