Esports in Europe

Looking for the latest tech stats and trends on Esports in Europe? We’ve got you covered. We’ve collected the latest European technology statistics, trends, and data to help in your quest.

❓ Understanding esports in Europe

“Esports did OK but not great.”
  • Gaming and esports are two completely different things: esports is defined as “the playing of computer and video games on a competitive level with teams or individuals facing each other within leagues or in tournaments.”
  • Esports is a drop in the bucket when it comes to gaming. Gaming generated $165 billion in global revenue in 2020, Esports isprojected to do $1.1 billion.
    • Sponsorship: $584.1M (+7.5% YoY)
    • Media Rights: $163.3M (+3.3% YoY)
    • Publisher Fees: $108.9M (-11.6% YoY)
    • Merchandise & Tickets: $52.5M (-50.3% YoY)
    • Digital: $21.5M (+60.9% YoY)
    • Streaming: $19.9M (+44.9% YoY)

  • Thanks to COVID, viewership grew to 495 million viewers (11% YoY, while Streaming and Digital Revenue grew by 61% and 45% respectively but Merchandise & Tickets (which is bigger than the previous combined) went down 50%.
  • The esports industry raised €1.7 billion worldwide in 2019, a considerable decrease from €3.9 billion in 2018 (Tencent Holdingsis €1.6 billion of this.)
  • The European esports market is a fraction of the global market: in 2019 it generated€300 millionin revenue and raised €630 million in capital (according to Crunchbase.) Revenue is projected to grow to €670 million by 2023 (23% CAGR.)
  • It is becoming more structured: Associations and league systems were been implemented (pre-pandemic), new competition structures are evolving and nonendemic participants are entering esports, especially as sponsors or commercial partners.
  • Some of the biggest teams are European: Team Vitality (France), Fnatic (UK), Astralis (Denmark) and G2 Esports (Germany.)
  • Germany is the largest market in Europe: 9.2 million viewers and €70 million in revenue last year. By 2023, it could go to €180 million.

❓ Understanding leagues and IP

“Esports has global structural problems and incentives to maintain them.”
  • In traditional sports, there are basically two core league models:
    • a “decentralized league” with a number of independently operated events that use a common rules system that is administered by a “regulatory” body.
      • Example: the PGA Tour.
    • a “centralized league” where all matches and tournaments in a league are managed by a core body that defines everything from rules to schedules and compensation, and both collects the majority of revenues and sets/enforces guidelines on the rest.
      • Example: FIFA.
    • Even under this “controlled” model, the administered body doesn’t control the sport. You can play football, organize competitive tournaments and even broadcast games without paying royalties to FIFA.
  • Esports is different: there are both centralized and decentralized leagues but all competitive play is ultimately dependent on the game’s publisher. You can’t operate or broadcast Fortnite without Epic Games’ permission.
  • This is OK-ish (so far) because game publishers want their games to become successful esports and drive more revenue and viewers. Problem stems fromconflicts of interests because Epic’s priority is Fortnite, not the Fortnite World Cup. Examples:
    • Football is optimized for watching, Fortnite is optimized for playing.
    • Publishers won’t create in-game IP for teams (think a Fnatic jersey) because the audience is not big enough. Unbranded items are more profitable.
    • Publishers won’t pay for a Fnatic license. They rather pay for Marvel IP with a broader appeal.
    • Publishers won’t pay for a Fnatic license. They rather pay for Marvel IP with a broader appeal.
    • Publishers with multiple games like Activision Blizzard’s Overwatch League and Call of Duty leagues don’t allow esports team to play under one name in different games (essentially forcing esports team to be multiple esports teams at once)
  • For FIFA, club owners are customers. For gaming publishers, you are the customer and esports is marketing for their game. This stifles innovation.
  • In Europe: for the esports market to maintain this growth, newly implemented leagues, such as the League of Legends European Championships (EU LEC) franchise, must prove successful.

📈 Why Esports is an opportunity

“There are reasons to be optimistic.”
  • Esports will be a $17.2 billion market by 2020, with a total audience of 646 million by 2021. Audience-wise, this approaches the Premier League levels. In Europe, revenue is projected to grow to €670 million by 2023 (23% CAGR.)
  • Increasing popularity and growing audience globally. 105 million people are expected to be watching esports in Europe by 2020, with more than one in three Europeans having already watched esports at least once in the past.
    • Austria: 6%
    • UK: 10%
    • Italy: 23%
    • Spain: 23%
    • France: 14%
    • Germany: 11%
    • Sweden: 11%
    • Poland: 15%
  • Implementation of franchise leagues with no relegation. In 2018 the Riot Games announced the European Championship (known as LEC) for “League of Legends.” This allows for more stability for investors, fans, media deals, platform deals.
  • Traditional sports clubs are becoming increasingly involved in the esports market. FC Shalke 04, Manchester City, PSG, AS Roma and several Bundesliga clubs have competitive esport teams for a variety of games (FIFA, LoL, Rocket League, and Dota 2.) This can transfer audiences from traditional sports to esports.
  • The European esports market is experiencing an influx of non-endemic brands engaging as sponsors and partners: Mastercard, Mercedes-Benz, Volvic and TAG Heuer are just some examples.
  • There were over 120 collabs (paywall) between esports brands and non-endemic sponsors, many of them in Europe.
  • The European esports market has seen strong average annual growth of about 24% since 2016, projecting €600 by 2023.
  • Generation Z (18-25-year olds) now watch more video games than traditional live sports.
  • Generation Z now want to become content creators. And the easiest way to create content right now is in gaming.
  • Of the $1.1 billion in direct revenue, 75% will come from media rights and sponsorship. And that’s without in-person revenue. The sector is expected to generate $1.6 billion by 2023.
  • The total esports audience is not smaller and the number of organisers is not fewer, so there is no decrease in demand and supply.
  • League of Legends (LoL) in Europe and North America enjoyed a successful summer – a 30% increase in viewership instead of the traditional 20% decline.
  • A bunch of industries – music, movies, clothing – are being funneled through gaming and using gaming as the main (new) avenue to reach customers.
  • Even though not as hard as gaming, the industry still rides COVID tailwinds. The world is moving online – from board games like Catan to Kun Aguero streaming on Twitch.

🚀 Opportunities in Esports

  • Just like traditional sports, competitive yet amateur gaming is a huge market. The equivalent of pickup games is 1v1s for cash.
  • Help more people become competitive gamers or just get better and beat your friends for bragging rights.
  • People aren’t willing to spend money on things other people can’t see they spent money on because signalingis a powerful force. What’s the equivalent of metal cards for neo-banks?
  • Become a Grower by shifting risk aways from users with Income Share Agreements for would-be professional players.
  • Still, Twitch streamers can make more money than pro players. The rise of creators usually leaves out streamers but it shouldn’t.
  • Become the ultimate source of truth for esports data and open it up with an API.
  • Gambling is mainstream but regulation and payment processors stifle innovation and prevent new players entering the market. There’s a tremendous opportunity for a Stripe but for gaming and other non-reputable industries.
  • Help teams, players and streamers with taxes and cross-border regulation. With the world going remote, it’s not clear what’s taxable and what’s not and scrutiny is increasing. Start a consultancy or a database.
  • Add a layer of context, commentary and data on top of streaming. Esports can’t go mainstream until it is easy enough to understand the ever-changing nuances of games.
  • Monetize your team or brand with drops.
  • Marketers can reach new, younger audiences. Collaborations are still underrated. The trophy case for the LoL World Championship is Louis Vuitton.
  • Broadcasting rights (specially in Europe) are still inexpensive because viewership can’t compete with prime time slots, allowing for profitable streaming businesses.
  • Go mobile. Mobile gaming is tremendously popular but the West isn’t used to watching people compete in mobile.

👎 Problems with Esports

“Be careful with gold.”
  • We may be living in an unsustainable bubble. Most teams are struggling, “trapped in a vicious cycle of underperforming revenues, too-high valuations, and losses that make it impossible to invest in growth.”
  • Esports is over-hyped and constantly underperforming: in 2017, it was estimated that the Overwatch League would generate $720 million. But in 2018, the global esports industry generated $775 million across all titles. For comparison, wrestling generated $900 million.
  • M&A activity is strong in the gaming side (think Peak Games and Rollic) but there’s not enough liquidity for esport startups. Many startups built around the supposed esports ecosystem have floundered or shut down.
  • Publishers have firm control over leagues – playing, broadcasting, sponsorships and more
  • A2019 report by Kotaku found numerous esports executives that defined the industry as varyingly “unsustainable”, “overhyped”, and often “fraudulent”.
  • Influencer marketing agency are starting to get between players and teams, increasing the price for sponsorships.
  • Because of the hype and international cash flows, the esports market is increasingly scrutinised by financial regulators. For example, German tax authorities established a task force at the end of 2018 to examine the esports sector.

🔮 Predictions

  • As COVID subsides, esports fervor will recede. But COVID will have permanently increased esports’ overall economic and cultural trajectory.
  • The division between reality and in-game is starting to blur. From sports Twitch live-streams to live concerts in open worlds like Roadblock and Fortnite.
  • Esports works, but gaming is where the true growth is. And it is through gaming that people get to know esports.
  • Mobile is still an untapped opportunity and will continue to grow.
  • Salaries, player costs, and everything will go up. Free-agency is disappearing.
  • World is going remote: The international market of players will open up. Argentineans will play in the US, Americans will play in Europe. Etc. Etc. The same with teams—teams in Europe are opening up franchises in other countries, teams in the US are opening up franchises in Latam, Europe, etc.
  • Partly due to COVID, brands are gonna need other (online) ways to reach their customers so 2021 will be THE YEAR for gaming and culture collabs. Balenciaga’s in-game runway is an example.
  • Most industry experts expect an increase in esports investment and deal activity but are bearish on the inability to hold large in-person sports.

🌐 Players

Teams

  1. Fnatic($38M)
  2. G2 Esports ($27.3M)
  3. Team Vitality (€36.5M)
  4. Natus Vincere
  5. Team Secret
  6. Ninjas In Pyjamas
  7. OG
  8. Mousesports
  9. Vodafone Giants
  10. Virtus.pro
  11. SK Gaming
  12. Team LDLC
  13. PENTA Sports
  14. Gambit Esports
  15. Epsilon Esports
  16. Alliance
  17. Heroic
  18. Unicorns of Love
  19. Timechasers
  20. Mad Lions
  21. Astralis
  22. Excel

Companies

  1. ESForce Holding($100M)
  2. G-Loot (98M)
  3. Esportal Group($8M)
  4. ESL($30M)
  5. DOJO Madness($19M)
  6. Challengermode($18M)
  7. Pandascore ($9M)
  8. Gfinity ($9.3M)
  9. Strafe ($5M)
  10. esports.com ($5.8M)
  11. Znipe($4.8M)
  12. GameScorekeeper($700K)
  13. L2P LIMITED($4.6M)
  14. Gameye($4M)
  15. EGoGames($3.3M)
  16. MateCrate GmbH ($2.5M)
  17. GamerzClass($1.7M)
  18. PatronGG($1M)
  19. EsportsLAB($1M)

Funds

Angels

  • Christian Edler (invested in DOJO Madness)
  • Martin Dahlin (invested in G-LOOT)
  • Dan Gilbert (invested in G2 Esports)
  • Selin Kiper (invested in Scoutium)
  • Niccolo Maisto (invested in Gameye)
  • Joseph Tsai (invested in G2 Esports)
  • Ben Holmes (invested in GamerzClass)
  • João Graça (invested in Replai)
  • Cédric Delorme (invested in Bet4Fun)
  • Al Tylis (Invested in G2 Esports)
  • Myke Naef (invested in G2 Esports)
  • Tej Kohli (invested in Team Vitality)
  • Julien Lemoine (invested in Pandascore)
  • John Maloney (invested in Pandascore)

Accelerators

Communities

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