The sports industry nowadays is one of the most stable and financially abundant spheres in the world, primarily due to an enormous audience consisting of sports fans and sportsmen themselves. Billions of people far and wide are following their favorite sports teams and players in football, basketball, tennis, golf, cycling, etc.
Nevertheless, the COVID-19 pandemic and its ruthless impact even on such a solid industry have been fierce. Every single sports game, match, and competition was prohibited and millions of fans were left alone without their favorite activity. Almost every single.
In 2020, 52 million more people got to know about a comparatively novel type of sports – eSports, which stands for electronic sports. The above-mentioned number denotes an 11.7% increase to the previous year’s figure reaching up to 495 million of viewers worldwide. Thousands of gamers and teams are streaming their live matches in Fortnite, Dota, FIFA, and others online using such platforms as Youtube and Twitch. Several TV channels are also broadcasting eSports games to fill the telecasting gaps. I would say that these are not bad numbers for 2020 taking into the fact that the Olympic games lost 3.5 billion viewers due to its postponement.
So, the main question is whether eSports will be able to replace the sports industry or not? And, is it a disruptive innovation by its concept?
Referring to the HBR Article by Professor Clay Christensen, disruptive innovations emerge in “a low-end or new-market footholds”. I definitely suppose that eSports gaming captures the new market represented primarily by the younger generation. Moreover, previously mentioned online streaming platforms such as Youtube and Twitch offer the broadcasting of games for free penetrating to the low-end footholds as well.
Nevertheless, one of the most important factors of disruptive innovation as a term is that it has to become mainstream over some period of time. And here, despite such fast-growing metrics, I cannot confidently declare that eSports is already a disruptive innovation. Personally, I believe that traditional sports will stand strong against eSports and will be prevailing for a larger portion of sports fans all over the world.
References
Statista.com. eSports audience size worldwide from 2018 to 2023. Available at: https://www.statista.com/statistics/1109956/global-esports-audience/
Statista.com. Number of Olympic Games TV viewers worldwide from 2002 to 2016. Available at: https://www.statista.com/statistics/287966/olympic-games-tv-viewership-worldwide/#:~:text=Olympic%20Games%3A%20TV%20viewership%20worldwide%202002%2D2016&text=The%20most%20recent%20summer%20games,the%20opening%20ceremony%20in%202016.
HBR.org. What is Disruptive Innovation? by Clayton M. Christensen , Michael E. Raynor and Rory McDonald. Available at: https://hbr.org/2015/12/what-is-disruptive-innovation
Hey Javid, thank you for sharing some interesting figures about the eSports industry with us. Do you also have data on the industry’s revenue increase in 2020? I can imagine that there has been a double digit % increase in sales this year. However, I don‘t think that this type of sport will ever „replace“ traditional sport, as the physical exercise is still one of the main reason people play sports. But it is safe to say that eSports have come to stay and they will most likely broadly complement traditional sport in the future.
Hi Svante! Thank you for your comment! The revenue increase of eSports in 2020 has grown up by 15.7% reaching almost 1.1 billion US$. You can find more information at Newzoo Global Esports Market Report 2020 (https://newzoo.com/insights/trend-reports/newzoo-global-esports-market-report-2020-light-version/).
As regards the replacement of traditional sports, I totally agree with you as mentioned in my blog. With respect to all other sports, such popular ones as, football, basketball, tennis, MMA, etc. will prevail in this industry.
2 years ago I followed the first time an eSport event live. I like to watch almost every kind of sport on TV, so I was interested to see if eSport can grab me like conventional sports do. So I streamed the League of Legends World Championship at home because I spent a few hours playing the game when I was a teenager. I was absolutely amazed at how tactical an online game can be, even though I’ve played it myself.
In Germany, too, American Football entered Free TV 2-3 years ago, which has since then created an absolute hype, especially among the younger generations. The commentators who explained the tactics and rules of the game made the game known to the general public and since its launch it has been experiencing a steady influx of new fans.
With this comparison, I want to say that I think that eSport will exist alongside conventional sport, but cannot disrupt it. In Germany, there was previously almost only soccer, handball or the Olympic Games on free TV. Through a format that introduced viewers to a new sport and explained the rules week after week, American Football was able to build a broad fan base.
I expect that this will come in the coming years, with the help of the youth and young generation, also for eSports, and that the streaming platforms will be accepted and recognized by the general population.
This may be the real disruption. It is not sport per se that is disrupted, but the way sport is consumed. No longer through Pay-TV or Free-TV channels, but through online streaming. DAZN can be taken as an example, which is a subscription sports channel, which now has rights for streaming the Champions League and the Bundesliga, as well as all European soccer leagues.
Sports broadcasting will shift more and more to the Internet, and thus inevitably eSports will take on a greater role alongside other sports.
Hey David, thank you for sharing your blogpost about how the sports industry can get disrupted by esports. I found the article very interesting due to the fact I have been playing games competitive myself and therefore would like to share my view with you. First of all, you mention that there is a large increase in the number of people that are becoming familiar with esports by stating this percentage has risen by 11.7% compared to the previous year. While some people will be amazed by this, I am not to be honest. Esports are really making a fast leap forward. I can remember one of the most popular games of the last few years: Fortnite had a prize pool for a whole year of over 100 million dollars. Even though this is still a low amount compared to the real sports industry there is definitely an enormous growth going on. Also, a lot of large companies such as Red bull are getting involved in the industry. My question to you David is: Do you think sponsor deals and prize pools will continue to increase progressively.
Also, considering your argument about whether it is disruptive I have a comment I would like to share. You think esports is targeting a new market. However, I am not so sure about it. For instance, the people that would go to play soccer e.g. outside 10 years ago dreaming to become the next Messi are now sitting behind their PC trying to become just as good as their esports idol. Isn’t it in this case the same market. Also, with the current generation that is already familiar with esports getting older don’t you think the audience will be the same? Please let me know your opinion!
Hi Martijn, thank you for your comment! I would still say that the increase in revenue and viewership indicators in 2020 considering the current situation all over the world is a great result for such a comparatively novel direction. Especially, if we compare it to the sports industry which had a huge loss in the above-mentioned indicators. And, of course, I suppose that the sponsorship will not diminish as long as the interest to eSports is increasing rapidly. The application of VR and AI in eSports is forthcoming. Therefore, viewership interest will only grow. However, I believe that this interest will not surpass the interest in traditional sports.
As regards the disruptive part, of course, people playing football are interested in playing FIFA. But, there is a different category of people who are playing Fortnite or Dota 2, which have no relation to any traditional sports but are still referred to as eSports. These people, in my opinion, are the representatives of the new market, which was not captured by any traditional sports discipline before the emergence of eSports.
Hi Javid, interesting topic! I, as well, have been following the evolving market of eSports. I have even invested in a company that has a lot to do with the gaming industry (Nvidia). Even though I think eSports have the potential to grow even further, with more and more (primarily younger) customers watching gaming videos and streams, I don’t think it will fully disrupt the traditional sports. It is a whole different market. People like watching sports, because they can identify with it when they play the same sports. I think eSports as a whole should be seen as a new kind of sport, being an addition to the sports industry.