a market that attracts but does not bring in enough?


According to a survey of New York Timespublished at the end of November 2022, even if the boiling around eSport increasesprofits are not taking off – or not fast enough in the eyes of investors. This sector is experiencing strong growth and attracts a young audience, but game publishers are struggling to make this area profitable. Fact, what applies to traditional sports doesn’t seem to stick to competitive esports. Is it necessary, to generate profit, to look for other sources of income?

Competition is fierce in the face of traditional sports

Most investors still haven’t made a profit or seen a return on their investments in video game competitions. game publisherslike Riot or Activision Blizzard, control the major competitive leagues in North America, that are not yet profitable – or are just starting to break even. Devices that make money in traditional sports, do not seem to apply to the field of eSports. On the other side of the Atlantic, in France, according to the Interministerial Center for Foresight and Anticipation of Economic Changes (PIPAME), the investment figures are rather encouraging : 29 million euros in 2019 against 5 million euros in 2017.

Most esports events actually involve thousands of peopleas recently with the world championship League of Legends at the Chase Center in San Francisco, which attracted more than 18,000 people. A fine performance indeed, but the tickets remain cheaper and therefore less profitable than a place for a traditional sport. In addition, far fewer Americans watch eSports. In the United States, sports such as basketball or American football are so popular – 12.4 million viewers watched the NBA Finals in 2022 and 17 million watched NFL regular season games in 2021 – that it is still difficult for competitive video games to stand the comparison.

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Thomas Pesquet photographed in his astronaut uniform.
Focus on the biggest tech influencers in France and Europe

On a European scale, during the European gaming championship League of Legendswhich took place in May 2022, more than 296,000 people in France watched the event live on Twitch. Certainly, this is an encouraging result for eSports, but it remains far behind traditional sports. If we take the example, very recently, of the 2022 Football World Cup, for a single match, the meeting, however unattractive, between France and Tunisia federated 8.8 million viewers.

According to Activision spokesperson Joe Christinat, despite the recalibration caused by the pandemic, we had full arenas and a record number of viewers « . Indeed, professional eSport competitions have broken all-time records. He added that there is  » overwhelming enthusiasm for new Overwatch and Call of Duty games and that  » our followers want these leagues and we remain committed to them « .

Disappointment among North American investors

The profitability of eSports, also goes through broadcasting agreements with television channels : they are almost absent in the electronic sports sector in the United States as in France. Leagues like the NBA or the NFL earn billions each year thanks to this market. In France TV rights, according to the media Pointfor league 1, amount to more than 1.1 billion annually for the period from 2020 to 2024. While competitive video games are usually streamed for free on platforms such as YouTube or Twitch. In 2020, while the live video streaming service broke an audience record with more than 1.1 billion hours watched in March, the slowdown in the digital advertising market has slowed considerably in eSports.

Certainly, investors don’t expect fledgling esports to overtake traditional esports quickly, but they’ve still been disappointed with early feedback. Ben Spoon, CEO of an esports organization called Misfits Gaming declared to New York Times  » they sure told us that these leagues would grow by leaps and bounds, and we all drank the Kool-Aid [une boisson populaire américaine. ndlr.][…] What has happened is that growth has not materialized as quickly as we hoped « .

Another challenge concerns the place where the competitions are organized. In practice, most tests of League of Legends in North America take place in the Riot arena in Los Angeles which turns out be a brake on the profitability of the sector. Do not organize the events across the country does not federate a « fan base » and deprives teams of earning money by organizing matches. Like traditional sports, whose competitions take place throughout the territory, the eSports sector has started to carry out similar encounters, but the Covid-19 pandemic has put a stop to this development. French originality, interest for esports teams and gamers has gained momentum thanks to platforms like Twitch or YouTube. Popular streamers have their own team, such as Karmine Corp around Kameto, Vitality around Gotaga or more recently Mandatory from ZeratoR, the creator of the Z event, or Aegis around Mister MV, Shaunz and DFG. This makes it possible to federate pre-existing communities around sports teams.

« Rome was not built in a day »

Game publishers are asking investors for patience in any case. They consider that “Rome was not built in a day”. The example of Asia tends to demonstrate this, electronic sports are very popular there, recently a huge dedicated arena was built in Shanghai. South Korea is considered « a sacred land of eSports », according to a mini-documentary available on Arte, everything is organized around electronic sports and its market is estimated in 2022 at 1.41 billion euros. However, they are still nascent in North America and cannot federate as Asian countries do. Game executives believe that this industry should be viewed as a high-growth start-up, not a fully mature business.

This year, according to the data company Stream HatchetUS viewers watched approximately 217 million hours of esports content versus 147 million in 2018. Naz Aletaha, Global Head of Esports League of Legends at Riot indicated that “ we often say we’re still in the days of the NFL leather helmet « . Figures that are quite promising. Same observation on the side of the hexagon, according to data published by Médiamétrie, in collaboration with France eSport 2022the eSports sector has approximately 11 million fans. This result includes three categories : 6 million French people who watch electronic sports competitions without playing them, 3.5 million who watch and play then 1.3 million who only play competitive video games. In addition, French sports clubs are increasingly interested in this sector: handball, football or even rugby, all have created their own video game teams. For instance, in 2017, Olympique Lyonnais partnered with LDLC, an IT company that has had its eSports team since 2010. For John Needham, president of eSports at Riot, some investors are  » very frustrated » not to have profitability quickly but that a party recognizes that competitive video games will eventually become a dominant and profitable industry.

According to newzoothis domain will reach a revenue record by the end of 2022. Even though a third of the revenue generated by eSports comes from China, North America is not left out. The largest share of revenue seems to come from sponsorshipswith an amount of 837 million dollars. Companies are looking for other sources of cash flowthis is the case of Riot, which relies on microtransactions.

Focus on other sources of income

According to the sources of New York Timesduring the organization of the 2022 championship event for Valorant, another game suitable for electronic sports, Riot made around $40 million from microtransactions alone. Faced with these good results, John Needham indicated that  » that’s where we’re going to disrupt the broadcast revenue formula, because that’s evolving « .

Currently, the costly effort of fielding competitive teams is seen as a  » catalyst for actions that generate real revenue through the esports organization. Felix LaHaye, managing director of United Esports, a games marketing agency, compared esports to a car manufacturer, drawing the parallel between competitive play for one and Formula One racing team for the other. That is to say, to be an expensive business that attracts eyes and prestige”. He indicated that “it creates value elsewhere in their ecosystem […] It’s worth having a leader at a loss in terms of the product that builds the brand and then you end up selling normal products to people « .

The example of Team Liquid, a Dutch electronic sports organization, is indicative of this phenomenon. This team made a huge amount of money and now has nine different sources of income, including owning an eSports encyclopedia website according to Mark Vela, managing director of Axiomatic Gaming (AG), the group that owns Team Liquid. For the director of AG “ it’s a natural evolution […] everyone needs to take a step back and see what really works for us here « . Admittedly, the Dutch organization generated more than $38 million in revenue last year, but it is not yet profitable..

On the French side, the Vitality teamone of the most important clubs in France, has a budget of 12 million euros according to an article published by The world. His record is impressive : the biggest French eSports club, one of the three most powerful in Europe and it regularly approaches the world top 10. It counts among its sponsors renowned companies such as Adidas, Orange or Renault. The various fundraisers that have taken place in recent years, enabled the founders to receive a salary. Vitality is thinking big for its future since, after opening a store in Paris, the goal is to open several fan shops in Europe. As the example of Team Liquid demonstrated, it is necessary to find other sources of income in order to become profitable.

Thus, for game publishers, you have to see things in the long term and not in the short term as some investors may think. It is also necessary to widen its field of action and look for other sources of income to one day hope to become profitable.

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