How can Esports bring new values into the global economics or business industries in the future?

The global computer game market is forecast to be worth $159 billion in 2020, around fourfold box office revenues ($43 billion in 2019) and almost 3 times music industry revenues ($57 billion in 2019).

Gaming revenues are almost entirely driven by consumer spending, but the business model has evolved significantly in recent years. Consumers today buy fewer games than in previous decades, but spend longer with those games, shifting the business model from single-unit to recurring revenue generated from a base of active users.

As a result, the industry is laser-focused on increasing engagement per user. Apart from making video games as compelling as possible, the strategy for doing so has been the adoption of in-game monetization opportunities. This extra downloadable content (DLC) can include expansion packs, new features, tools and characters, and “loot boxes”, which are effectively a lottery of virtual items.

This business model has been available in tandem with improvements to gaming hardware, bandwidth, and mobile internet, which have made high-quality games more accessible across devices and platforms. Indeed, on the brink of half (48%) of the industry’s revenue now comes from mobile gaming.

A separate part of gaming is esports, which refers to organized, multiplayer computer game competitions. This sector is forecast to grow to only over $1 billion in 2020. Business models in esports closely follow professional sports – though competitions are much more fragmented – with the bulk of revenue coming from advertising and broadcasting. Although relatively small as compared with the general gaming market, esports has relevance here because it appears connected to the continued growth of gaming.

ESPORTS SCENE IN SAUDI ARABIA

Esports scene in Saudi Arabia

It may be a touch late to the party but the center East is on the brink of an esports explosion. Led by a Saudi prince with a penchant for gaming, there are some exciting developments ahead in 2019.

In the Arab world, the embryonic esports movement arguably began in 2015 when ESL– the world’s largest esports tournament organisers – hosted an exhibition event in Dubai. Since then, a variety of associations have been created including the Saudi Federation for Electronics and Intellectual Sports (SAFEIS) and therefore the Arab Esports Federation.

Prince Faisal bin Bandar bin Sultan is at the helm of both and has been driving the event of esports within the Gulf and wider Arab world. Working closely with Prince Faisal and Saudi company Vanguard, an official partner of SAFEIS, is Englishman Philip Wride, who brings 18 years of experience in the field local

“Prince Faisal may be a long-time gamer and he understands what esports is all about,” Wride explains to Sport Industry Insider. “To have somebody like that at the helm is absolutely fundamental because he can appreciate what the wider community will be looking for in terms of the products; he fights the battles on behalf of the esports community. Because of his position, as part of one of the largest economies in the region, he has the opportunity to really shape the esports structure.”

While Saudi Arabia has organised a few of massive tournaments within the past with large prize pots, this year will see a much bigger offering for gaming fans. The Saudi Professional League has found an esports arm for FIFA in partnership with SAFEIS and therefore the General Sports Authority. They’re following in the football footsteps of the English Premier League, French Ligue 1, German Bundesliga and other football leagues around the world.

A tournament calendar is now being put together for 2019, which is probably going to also include more structure around games like Tekken, Fortnite, Overwatch and League of Legends. The Kingdom already boasts one esports champion; Mossad Aldossary, better referred to as MSdossary, who won the FIFA eWorld Cup in 2018.

“In Saudi Arabia , there are esports specific venues beginning to be built,” Wride says. “There are already gaming cafes but they’re now starting to look at a slightly larger level like elsewhere in the world. Places with 150 PCs and 100 consoles which will host esports tournaments on a stage are going to be ready to showcase the regional talents.

“It’s about showing people that there is a pathway for them in esports. We already know that there’s a global scene and a global structure that, if you are good enough, you can be recruited into. MSdossary is currently playing for an American esports team, Team Rogue. They’ve expanded into the region by recruiting local players and they also have ties in Bahrain.

“We are trying to shine the spotlight both on what’s being created from the structural perspective but also the talents here. People got to know that there’s absolutely a chance to travel from here within the region to the worldwide scene. We’re saying, ‘There are people around the rest of world who are making a living out of this – if you take it seriously, there is a career opportunity here’.”

So how exactly does a nation gauge the esports appetite of its population?

“I think there are two main areas that you can look at,” Wride explains. “One is that the volume of players – their time spent playing and people associated metrics. The other is the level of viewing consumption. Whether that’s written content, video content, live streaming. If you know people are interested in what’s happening on the global scene, it makes sense to build a local scene by providing local viewing and playing opportunities.

“That’s what we’re now starting to see in the likes of Saudi Arabia. They’re looking at creating that structure and participation across tournaments. Beyond that, they also want to undertake to bring international teams and international players here to form the dominion an esports destination. Similar to what we are seeing in traditional sports, this complements Vision 2030.”

“Like anything, a mix of both grassroots participation and welcoming international talent is desirable. If big players come it’s a chance to showcase a number of the items that are happening in Saudi Arabia and potentially get a number of those global brands involved.”

In the UAE, too, there are ambitious plans afoot with new esports academies and venues in and around the country’s malls in the pipeline.

“Introducing venues at malls may be a smart idea,” Wride says. “It gives more opportunity to get footfall but also utilises some existing facilities. The plan currently, based on the conversations we’ve had, is that some venues will be opening in the next six months. – though there are still details to iron out such as which games they are going to use.”

There is certainly a billboard incentive for the region to embrace esports because it has emerged as an incredibly lucrative segment of the game industry. While some brands could be a touch nervous about entering a market about which they need little knowledge, Wride insists those that take the plunge find the advantages are numerous.

“Educating brands is one of the biggest challenges for sure,” he admits. “But the question to brands is simple: do you want to engage your audience or do you not? If you do, you need to be in this space. It’s not going to disappear, it’s only going to get bigger; you either bite the bullet and get in, or you miss out.

“Once you show the numbers globally and talk about the opportunity for growth here, brands tend to be much more receptive. They want to get involved but they need to understand how they can do that. Brands involved in esports need to be authentic, they need to be relevant, and they need to contribute to the overall experience of the audience.

“One advantage we are increasingly finding is that as people who have grown up with gaming are moving into decision-making positions at brands so there is more awareness about esports. We are starting to see that transition now in terms of those who have the responsibility for putting marketing plans together and activating budgets.”

Those companies who joined the esports movement early have enjoyed massive exposure and positively recognise the worth of the association. The scope of partnerships can vary massively but Intel, for instance , created an eponymous series and recently agreed to a three-year affect tournament organisers worth $100 million.

“In the esports space we have endemic and non-endemic partners. Endemic would be technology companies like Intel. They have been phenomenal, creating the Intel Extreme Masters which carries their brand all round the world. They’ve built that relationship with the audience through their activations over the years and they know that the level of involvement has directly impacted their bottom line.

“Fashion brands are also finding a way to connect with a different audience, one which may not want to go and walk into a store. This resonates and I think there is certainly a really interesting market for female gamers in the region that has so far been untapped.”

Broadcast rights is another area during which esports is rapidly advancing, though a battle between organisers and game publishers could yet prove prohibitive.

“The challenge in certain areas of esports is that unlike traditional sports you have a publisher who creates and manages the game. There have been certain instances when a third party may be operating a tournament, but the publishers feel they have the rights rather than the organiser.

“Those debates are happening in esports at the minute but we are still seeing broadcast deals done. Recently online streaming platform Twitch, who are owned by Amazon,bought the rights for the Overwatch League for around $90 million – for two years of coverage.”

Whether it’s grassroots gaming, international tournaments or sponsorship deals, the center East is now looking to say a share of the ever-expanding esports empire. And Wride feels there is enormous potential in the region.

“The growth has been slow but steady so far but I think now it’s going to speed up significantly. The next couple of years are going to be very interesting indeed.”