Pivotal year for esports properties
With concern growing that esports businesses aren’t monetizing their fans effectively enough, 2019 will bring a new phase of experimentation, shifts in investor strategy and even downsizing.
“I am excited about 2019 in many ways: A lot of investment that has been going into esports in recent times will emerge through new products, services and adding value to the ecosystem,” said Jens Hilgers, co-founder of ESL and the esports venture fund Bitkraft Esports Ventures. “Inevitably, though, we will also see the first big wave of failing business models and approaches. This is a time of great learning, progress and opportunity for esports.”
Hilgers notes that these cycles are not new to competitive gaming, but the new money that’s flowed into the space in the last three years has raised the stakes.
The highest-profile experiment will be the Overwatch League’s steps toward local market games for their teams. In preparation for full home-and-away schedules in 2020, three teams — the Dallas Fuel, Atlanta Reign and L.A. Valiant — will each host a slate of games in their own venues on separate weekends.
These steps are crucial to the future growth prospects of OWL teams, which are eager to develop more of their own revenue streams. But the home games are a big unknown. Esports fans have proved that they’ll show up for major tentpole events, but it’s an open question if there’s much of a market for live attendance at routine contests.
ESG Law founder Bryce Blum, lawyer to many of the top North American teams, said 2019 will shed new light on the wisdom of each game publisher’s different approach to esports. “Fortnite” publisher Epic Games has focused on content creation and promoting the game itself, looking for traction among noncompetitive streamers and celebrities instead of building a pro-league-style elite circuit. OWL is going down the localization path, and Riot Games now has franchised models in both North America and Europe, with more regional balance than ever in its global ecosystem.
“There could be multiple winners here, but whichever models prove they can create long-term value will go into the playbook that will impact decisions being made in the space for decades to come,” Blum said.
Another theme for 2019: More attention on casual gamer culture, which is a far bigger market than hard-core esports.
“The line between competitive esports and entertainment is becoming thinner, particularly when it comes to attracting the attention of major consumer sponsors and partners,” said Nicola Piggott, a partner in the esports public relations firm The Story Mob. “The smartest teams, publishers and orgs are looking at ways to create additional value through smart influencer strategy and content that widens their lens beyond hard-core competitive play.”
Carlos Rodriguez, founder of the European team G2 Esports, predicted publishers will start looking into new genres in pursuit of broader audiences than the current big hits of “Counter-Strike,” “League of Legends,” “DOTA 2” and “Overwatch” do.
“In 2019, I expect the esports community to start demanding a new type of competitive video game, beyond battle royale, that will evoke significant changes for 2020 and beyond,” Rodriguez said. “I also predict that esports will look into developing and promoting more family-friendly games [e.g. Rocket League] to widen the audience and find new places to attract and engage with fans.”