Five Esports Industry Trends to Watch in 2021
Written By: Hauk Nelson
Like most other industries, 2020 did not go as planned for esports. In a year packed with in person events across the globe, the global pandemic shut down events in our hometown of Chicago and abroad alike. The esports industry quickly transitioned to an online model for the remainder of 2020, in many ways returning to the industry’s roots. Online competitions are the bread and butter of esports, and world class competitions were held completely online, and even in bubbles.
The pandemic thrust esports, and gaming as a whole, into the spotlight, as one of the few forms of entertainment that could continue in a quarantined world. The flexibility of esports, along with its new spot in the limelight, will shape the industry as we head into 2021.
Esports Organizations will Find More Ways to Diversify Revenue
The standard esports organization business model is simple – the more eyeballs an organization has, the more it can charge for brands to sponsor their teams, streamers, and content. Organizations such as TSM charge brands like Geico for promoting the insurance company in videos, Twitch streams, and more. This income is often supplemented by sales of merchandise.
However, 2020 saw sponsorship revenues slow due to the pandemic. Organizations in some cases were unable to fulfill their contracts due to restricted travel and in person appearances. For organizations part of the CDL or OWL, 2020 was supposed to be the year organizations could generate revenue from ticket sales, food, and beverage, as teams hosted competitions in their home markets.
One of the ways esports organizations have started to monetize differently is through a subscription package. Team Liquid, with Liquid+, and Cloud 9, with Stratus, offer membership subscriptions tailored to super fans. These subscriptions include exclusive merchandise, private seminars with organization leadership, and more. Esports organizations will look to find ways to monetize their brands and fandom beyond sponsorships and merchandise in 2021.
Rise of Casual Viewership
The second half of 2020 Twitch viewership was dominated by casual gaming. Games such as Fall Guys, Among Us, Animal Crossing and Minecraft all had explosive years on the platform. Just Chatting, a Twitch category featuring no gaming at all, simply a streamer interacting with their audience, was the most watched category on Twitch in 2020.
Unlike esports content, which is driven by high stakes competition and quality gameplay, games like Among Us drive viewership through the personality of the streamer. Gaming fans are just as willing to tune in to see a favorite streamer have fun with a game as to see the same streamer dominate in Fortnite. Games like Fall Guys and Among Us demonstrate the future of Twitch. Fast, fun game play that quickly changes pace and progression creates easy to narrate, digestible games. Read more about these games, and personality driven content, here.
Mass Investment in Collegiate Esports
In the wake of the pandemic, many college sporting events have been cut short or canceled. For some programs, such as Northwood University, their esports program is the only part of the athletic department currently operating. The ability for students to compete remotely in esports competitions, such as the Maui Esports Invitational, has shone a spotlight on the potential of collegiate esports.
Not only will more colleges invest in their own collegiate esports programs, more professional esports organizations will partner with universities. By building relationships with these schools, organizations can foster strong relationships with their target market and even identify potential interns and employees. Cloud 9 has partnered with multiple universities and their esports programs across the country, holding seminars on careers in esports and more. Collegiate esports can also serve as a talent pipeline – three collegiate League of Legends players were signed to LCS teams this year.
More Celebrities and Athletes will Participate in Esports
At the start of the pandemic, when all professional sports leagues were paused, many athletes started to participate in charity esports events. Celebrity Pro Am Call of Duty Warzone events became commonplace, organized by esports organizations such as FaZe Clan and 100 Thieves. Notable celebrity participants included Zach LaVine, Diplo, and Juju Smith-Schuster.
The majority of young people today have played video games to varying degrees. As more and more of these people that grew up with games come of age, these gaming celebrities will participate with esports. Rapper Post Malone recently invested in Team Envy, and Juju Smith-Schuster started his own esports organization. As gaming becomes increasingly mainstream, celebrities will participate in gaming events and invest in gaming companies.
Esports Organizations will Start to Consolidate
Exacerbated by the pandemic, many esports organizations have struggled to turn a profit. Running professional esports teams is incredibly expensive. Even in games such as Valorant, where the professional scene is new and underdeveloped, top talent can command six figure salaries. Many teams in the franchised CDL and OWL have called for decreased franchise payments as well, indicating how esports organizations are struggling to generate revenue from their massive investments.
As a result of these struggles, the successful esports organizations will start to consolidate the most valuable assets in the industry. Successful esports organizations that previously avoided investing in franchised slots will be able to acquire them for a discount as others bleed cash. Immortals Gaming Club, which owns slots in the LCS, CDL, and OWL, recently sold their CDL slot to 100 Thieves, and is allegedly looking to sell its OWL slot as well.