by Aman Ahmed and Shraddha Ray Menon
On a wider perspective e-sports has been running strong on audience numbers especially considering the growth of live streaming platforms including Twitch. In terms of revenue generation per fiscal year, there is a steady decline due to lockdowns across the globe due to COVID-19.
The sinking forecasts of revenues is not due to lack of demand for e-sports. The audience is ever growing and reaching new viewership records every month. It is predicted that global revenue will hit 973.9 million dollars in 2020 down from 1.059 billion dollars, a previous forecast.
So what is causing this?
WHY THE DECLINE
- Due to COVID – 19 restrictions organisers of e-sports events can no longer stage big physical events. They are now forced to make a switch to remote live streams through online streaming platforms.
- The revenue generated in a physical e-sports event through ticket sales and merchandises of games, is now missing due to no physical tournaments. It has been forecasted that the 2020 revenues would be about 8% lower that the revenues generated in 2019.
- The delays and cancellations of international e-sports activities and the transition from physical to virtual events is coming at a price.
- Without any opposition, digital revenue is a big part of e-sports revenues. What lacks is excitement and energy of the fans.
- Without the energy of cheering fans, it becomes a very hard task for organisers to convince sponsors to invest in e-sports events.
- Fans are now more inclined towards spending money towards individual streamers rather than on online esports events.
HOW EVENTS WILL BE DIFFERENT
The Format is changing and there is a migration from Online events to offline ones.
- organisers are switching to regional events rather than international events.
- The biggest reason for the change in formats is – competitive integrity of in-person events.
- This uncertainty in market forces is placing a certain pressure on companies, resulting in retracting marketing budgets to preserve capital with a resultant downward impact on revenues of 2021.
- Reduced marketing budgets, shrink forecast of merchandise and tickets sales. These have reduced to 76.2 million dollars from 121.7million dollars.
- Media rights are also likely to fall from 176.2 million dollars to 163.3 million dollars.
- The sponsorship revenues are likely to plumate significantly from a forecasted 614.9 million dollars to 584.1 million.
The down trend on revenues will continue with increase in the COVID19 numbers and stricter impositions of restrictive measures.
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Disclaimer: This Note is for general information only and not intended for solicitation. Please do not treat this as a legal advice of any sort. Views contained in this, are personal with interpretive value of the author and teams assisting the author. Readers are encouraged not to rely solely on these contents before making any decision.