We live in an increasingly virtual society. This trend has most recently affected the world of sports. In recent years, the market has seen a sector that was previously virtually unknown burst onto the scene with great force: the esports. As Marcos Esguillor, member of the Vidiv platform, states, “the esports of five years ago are not the same as they are now, and I am sure that neither will they be in five years’ time”. However, there is a debate in society: Are esports really sports? The truth is that they are not only sports, but much more.
60 years ago, in 2022, the first video game (Spacewar) was born. Back then it was unthinkable that decades later a business would develop around video game competitions. However, the emergence of the Internet and online gaming in the 1990s accelerated the process. Between 1999 and 2002, the first professional esports teams and leagues were born. Another major milestone took place in 2009: the emergence of League of Legends (LOL). Soccer is the king of sports, but LOL occupies the throne in the digital arena. In fact, the 2017 international LOL final attracted 75 million viewers.
A Follower Centric model
The audience is the heart of eSports. Although all professional teams want to achieve the best results and win competitions, it is not their main goal. Most esports teams have a Follower Centric approach, which focuses on satisfying the needs of their audience, who are themselves the consumers. “The value of a team is determined by its ability to attract fans, to make people emotionally attached to them,” says Fernando Piquer, founder of the Movistar Riders club.
Multiple agents are needed to achieve this objective. Although gamers are obviously an essential figure for the development of video game competitions, they are not the only one. Also, the intervention of videogame developers, videogame support manufacturers, competition organizers, the teams that take part in them and sponsors are necessary.
It should not be forgotten that esports are an audience business. For example, from Good Game Group, they put the audience at the center of the value proposition of esports and, consequently, its monetization. “We have to know what the audience wants. We are working on translating these needs into data in order to be able to set out courses of action,” says Virginia Calvo, co-founder of the business group, on the sector’s business models.
The number of sponsors that support esports competitions, including companies such as Cabify or Aquarius , is a clear sign that, despite still being in the midst of growth, the sector has already built up a considerable market. In fact, experts say that approximately 80% of the revenues of esports clubs come from sponsorships, although new business models are already being considered.
However, its short history forces the sector to continually reformulate itself: “The brands that sponsor us are getting bigger and are looking for alternatives other than simply putting a logo on a T-shirt,” Calvo reports. The industry agrees on one thing: the future of the business lies in developing the way the club and the sponsor provide utility to the audience, the secret formula for revenue.
Similar to sports clubs, professional eSports teams have multiple sources of revenue in addition to competition prizes. Some of them are derived from sponsorships, events and streaming. The broadcasting of esports competitions has experienced exponential growth in the last decade thanks to the emergence of Twitch, the leading esports streaming platform. Despite not being able to hold face-to-face events because of the pandemic, the audience has grown significantly since last year. In fact, the Spanish Association of Video Games assures that Spain is among the top 10 countries in terms of audience.
Athletes bet on eSports
Although it might seem that the esports sector has arrived to compete with the sports sector, nothing could be further from the truth. In recent years we have seen active and retired athletes invest in eSports, demonstrating the synergy that exists between the two sectors. Some of them are Gerard Piqué, Antoine Griezmann or Michael Jordan.
This past year we witnessed the latest case of a retired athlete who invested in an eSports team: Pablo Aimar, a soccer player who was international with Argentina. Aimar led the round of funding for the professional club Wygers. From Fellow Funders we had the honor of accompanying Wygers and Pablo Aimar in this round of funding, they managed to raise €625,000, the maximum possible.
At Fellow Funders we are aware of the eSports boom. The emergence of new competitions, teams, broadcasting channels and prestigious sponsors is a clear sign that eSports are here to stay. Not only are we talking about digital sports, but also about business models that have more consumers and followers day by day. Esguillor, from Vidiv platform, says that “the sector will continue to evolve in the future, there will be new professions and more opportunities to monetize. It is a market that is constantly growing, already in double digits.