Esports is the fastest growing theme in the gaming sector. These organised multiplayer video game competitions have enjoyed spectacular growth over the last decade, with thousands of fans filling stadiums to watch live events and millions following them on streaming platforms. Although esports currently caters to a niche audience – almost 10% of the global online population of around 4.5 billion – its reach is expanding rapidly.
Listed below are the key technology trends impacting the esports industry, as identified by GlobalData.
The vast majority of esports are played on PCs, due to the superior game control offered by a keyboard and mouse combination, and the ability to customise components. With the popularity of esports increasing and new PC-based games arriving, gaming PCs are likely to be the preferred choice of esports players over the next three years. Dell’s subsidiary Alienware, for example, has built a large training facility in California for Team Liquid to promote its Aurora gaming machines, while Asus provides high-refresh gaming monitors and esports-specific compact desktops to Ninjas in Pyjamas.
Mobile esports will take off dramatically over the next three years. Free-to-play games such as Player Unknown’s Battlegrounds (PUBG), Clash Royale, Vainglory, Arena of Valor, Free Fire, and Mobile Legends are pioneering the mobile revolution. Mobile esports is growing particularly quickly in Southeast Asia and Latin America. Tencent, a major player in both mobile gaming and esports, is looking to address this geographic variance. Its subsidiary, Riot Games, will release a mobile version of the PC-based League of Legends in 2020.
Console-based esports is expected to remain limited to titles such as Call of Duty (CoD), FIFA, Super Smash Bros, and Halo over the next three years. These games will face significant competition from PC and smartphone-based games.
As mobile esports becomes more prominent, Nintendo is well-positioned with the Switch (which sits at the confluence between console and mobile gaming). With over 100 million PS4 users, Sony could attempt to bring consoles to the forefront of the market, but it lacks exclusive titles. Microsoft is also on shaky ground as none of its exclusive titles are likely to replace dominant games such as CoD in the coming years.
Virtual reality (VR)
With the arrival of untethered VR headsets and new games, a fresh market for VR esports is emerging. HTC, with its Vive Focus Plus headset, and Facebook’s Oculus, with the Quest, are major players in this area. Valve’s Index and Sony’s PlayStation VR (PSVR) are unlikely to gain traction due to their high price and tethered connectivity to PS4, respectively. HP, which makes the Reverb headset, has partnered with Virtuix to organise a $100,000 esports tournament in 2020.
Games such as Echo Arena, Onward, Space Junkies, and Smashbox Arena are popular in events like VR League and VR Master League. Beat Saber, Population One, and Pistol Whip have the potential to further popularise VR in the esports industry in 2020.
Esports is moving from local area network (LAN)-based wired connectivity to 5G-powered wireless connections. Over the next two years, organisers will explore the potential for crossplatform competitions using 5G’s low latency and high bandwidth capabilities.
5G could have a significant impact on esports, and telcos are already racing to gain market share. SK Telecom, AT&T, and Vodafone have partnered with leading organisers to offer 5G services for mobile esports in South Korea, North America, and Europe, respectively.
Artificial intelligence (AI)
AI will become integral to esports over the next three years. SenpAI (for League of Legends and Dota 2), and Omnicoach (for Overwatch) are prominent machine learning-based training platforms for skills and strategy development. Organisers like FaceIT are using Minerva, a community management tool that uses machine learning, as an anti-cheating measure in events.
Startups like Edisn.ai are also using facial recognition of players to increase fan engagement and help broadcasters and teams produce personalised and interactive content. Tools that use natural language processing (NLP) will gain greater prominence over the next two years.
Insights derived from data analytics are being used by organisations across the esports value chain. Teams such as Cloud9, Team Liquid, and Astralis have partnered with Microsoft, SAP, and Newzoo, respectively, to use data to develop gaming strategies, attract investment, and reach larger audience. Organisers like DreamHack and ESL have teamed up with Nielsen for sponsorship valuation and media measurement. Game-specific platforms are also emerging.
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More than two-thirds of esports executives believe match-fixing is a threat to the industry’s legitimacy and growth, according to a 2019 survey by law firm Foley & Lardner and the Esports Observer. Match-fixing incidents in games such as CS: GO, League of Legends, StarCraft II, and Overwatch have damaged the industry and lead to popular players like Life being banned from competition. Over the coming years, organisers will tackle matchfixing by investing in fraud identification and addressing tech vulnerabilities.
Live streaming channels for gamers generally follow a subscription model, where in-app purchases, called microtransactions, ensure a steady stream of revenue. Twitch, for instance, relies on subscription packs (Prime and Turbo) for the majority of its revenue and offers an in-game currency called Bits. Amazon pays a 30% cut of the total amount donated to the gamers and retains the remaining 70%.
As esports gains traction, the industry is aiming to develop reliable revenue streams. However, many of the most popular games are getting older, which will eventually cause declines in demand and revenue. League of Legends, for example, has been around for over a decade, and Call of Duty is even older.
The money-making capabilities of these games, along with relatively newer ones like Dota 2, Fortnite, PUBG, and Overwatch, are stopping developers from focusing on new titles. The adoption of the franchise model will extend the lives of these games for around three to five years.
This is an edited extract from the Esports – Thematic Research report produced by GlobalData Thematic Research.
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