Olswang on eSports: the eSports revolution

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

You may not realise it yet, but the eSports revolution is well underway – and it might just be the biggest growth area in digital media over the next decade. With a multi-million pound industry already established, and forecasts being made for huge growth in the coming years, companies from gambling operators through to major international brands and media companies are waking up to the opportunities that the industry has to offer.

In this series of articles – Olswang on eSports - specialists from the Olswang team will explore some of the industry’s potentially lucrative revenue streams and most interesting opportunities - and we will look at the legal and commercial questions that are still to be answered.

We start by assessing the current landscape and the growth predictions for the industry.

What are eSports?

For the uninitiated, eSports is the term used for organised, competitive computer gaming. Much like traditional sports, players (often in teams), compete across various leagues and competitions for large cash prizes. Rather than pitting themselves against one another on the football pitch or the tennis court, however, gamers battle each other virtually via the likes of League of Legends, Call of Duty, Dota 2 and World of Warcraft. Instead of the FA or the ATP, Leagues are generally run by games publishers themselves (as is the case for Dota 2’s tournament, ‘The International’, which is organised by Valve Corporation) or an independent events organiser (such as the Electronic Sporting League).

Enter the eSports superfans

Much like its traditional counterpart, eSport spectators also play an important role in the ecosystem, with millions of fans attending live events each year and even more watching online. The 2014 finals of the League of Legends competition in Sangam Stadium, Seoul (which hosted the 2002 FIFA World Cup), for example, was attended by over 40,000 people and a further 27 million watched online. With such support it is perhaps no wonder that eSports teams garner mass support and champion gamers gain both fame and fortune worldwide. In August 2015, the prize pool for The International was $18.4 million with a first prize of $6.6 million, and tickets for the 17,000 seat stadium sold out within only 5 minutes.

Major international brands – not just gamers – also appear to be realising the rewards eSports has to offer. The likes of Samsung, Coca Cola and Red Bull are already involved in various sponsorship deals, and this is unsurprising considering the coverage that eSports receives online. Twitch, the live video streaming site purchased by Amazon in 2014 for approximately $970 million and undoubtedly the most popular source for viewing, claims to have over 100 million unique viewers per month (albeit this figure consists of both casual viewers as well as eSports enthusiasts). Traditional sports outlets have also caught onto the trend, with ESPN broadcasting both The International and Riot Games’ League of Legends Championship Series Final.

The potential for growth

In its 2015 review ‘The Global Growth of Esports’, market research company Newzoo estimated that revenues from eSports in 2014 (taking into account game publishing investment, sponsorships, online advertising, merchandise, licensing and ticket sales) were $194 million. Newzoo also estimated that in 2014 the global eSports audience consisted of 56 million regular viewers and 117 million occasional viewers. Whilst current figures may appear high, these are dwarfed by predictions for the industry. Newzoo’s predictions for 2017, for instance, see revenues hit $465 million and audience numbers swell to 145 million frequent viewers and 190 million occasional viewers.

Whilst Korea, China and the US still remain eSports strongholds, in Europe eSports are also becoming increasingly popular. London’s Wembley Arena, for instance, is playing host to the League of Legends Championship quarter finals this October, having held the event last summer. A significant boost to the market in the UK is also expected with plans for the country’s first dedicated eSports arena having been announced last year.

All in all it quickly becomes apparent that not only is eSports a true spectator sport, but a global one at that.

Having set the scene, in our next Olswang on eSports article we will move onto monetisation and, specifically, the potential for the gambling sector to monetise superfan engagement with eSports.