Game On! With Traditional Live Sports on Hiatus, Will Esports Fill the Void?

For devoted fans of traditional spectator sports, news that the NCAA had cancelled March Madness, the NBA had suspended its season, and Major League Baseball was postponing Opening Day provided a particularly jarring signal that incipient shelter-at-home guidelines necessitated by the COVID-19 pandemic were turning their world upside down. Even as sports commentators hastened to caution fans that sports didn’t matter in the grand scheme of things—with not just live entertainment, but thousands or possibly millions of lives hanging in the balance—fans wondered what would fill the void, as businesses closed, jobs evaporated, social circles shrank, and the distant but diverting dramas of playoffs and pennant races and roaring stadium crowds disappeared for the foreseeable future.

After the United States formalized its shutdown by declaring a national emergency on March 13, some sports networks began making desperate attempts to plug holes in their broadcast schedules with replays of “classic” games. But just as Zoom meetings, streamed worship services, and distance learning initiatives rapidly proliferated to serve the communications needs of a world largely sheltering at home, vast numbers of the sports-starved multitudes turned to live-streamed esports. Most visible in the simulated sports world are high-profile NBA 2K tournaments pitting NBA stars against each other in live-streamed faceoffs that have put up massive numbers (live and on-demand), and a surge in sim racing with celebrity racers taking pole position timeslots on NBC, FOX, and ESPN2.

The Surge by the Numbers

The current spike in organized, competitive online gaming lands on top of a widely reported 2019 esports boom, and already-high expectations for 2020 growth. Research firm Arizton Advisory, in an April 2020 market report titled Esports Market—Global Outlook & Forecast 2025, projected that the global audience of “esports enthusiasts” would grow from just over 150 million at the end of 2018 to more than 250 million by the end of 2021, with “occasional viewers” increasing from just over 200 to 300 million in the same time frame. Revised estimates, based on the explosion of esports exposure since March, place the total number of viewers by 2022 at 679 million, comprising 363 million occasional and 316 million enthusiast. “The impact of COVID-19 is clearly being seen on esports, which is definitely increasing its viewership as well as its market share at the expense of traditional sports,” says Arizton marketing specialist Sayantoni Das.

Gaming usage saw a 75% peak-hours spike after the pandemic shutdown took hold, as noted by Verizon. Gaming market leader Twitch, home to a host of celebrity streamers, reported all-time highs in hours watched, hours streamed, and average concurrent viewership, including a 30% increase in average viewership in March alone. Between the first and second half of March, Twitter saw a 71% increase in volume of esports conversation in the platform, according to EsportsObserver.com. On March 20, PC gaming marketplace Steam reported a largest-ever tally of 20 million concurrent users on the platform.

Responding to the unprecedented proliferation of esports action, in early May, Twitch unveiled a new esports directory to help fans track all the online competitive gaming action they want to follow.

Meanwhile, esports leagues announced a flurry of in-person event cancellations and plans to shift their communities to all-online, while studios specializing in large-scale esports delivery rushed to pivot to remote production and at the same time meet rapidly accelerating demand, much of it from outside their existing communities.

The Inside Track

Some of the most dramatic growth has occurred in the sim racing space, which has long supplied a second career of sorts for real-world racing celebrities like NASCAR’s Jeff Gordon and Alex Bowman and Formula 1 stars like Charles Leclerc and Alex Albon. Formula 1 began replacing cancelled races with virtual alternatives in March. Formula 1’s first “Virtual Grand Prix” drew 1.2 million TV viewers and 3.2 million viewers online. NASCAR joined in with the eNascar iRacing Pro Invitational Series, with the first installment playing to more than 900,000 viewers on FOX Sports.

Just as popular (and equally ascendant in the current climate) are competitions like Torque Esports’ The Race All-Star Series, which pits star sim racers against professional drivers in a sim racing showdown, broadcast live on ESPN2, thanks to a new (as of April 2020) partnership between Torque and the sports broadcasting giant (Figures 1 and 2, below).

Figure 1. Torque Esports’ The Race All-Star Series

Figure 2. The Race gameplay

“We weren’t expecting to see a million new people watching sim racing on television” this year, says Torque Esports COO Darcy Lorincz, “Now we’re at an awareness level we never thought possible” (Figure 3, below).

Figure 3. Nielsen Media Research data showing average viewership for iRacing events at more than 1.1 million

Spiking engagement with sim racing is not limited to passive TV viewing audiences, of course. In mid-April, Torque Esports reported a 416-percent increase in downloads of their Gear.Club sim racing game in the last two months. In a presentation last November at Streaming Media West, Lorincz projected an 18-month ramp-up period for the various projects and growth that companies under the Torque Esports umbrella, such as UMG Gaming, had planned. That meant ensuring that Torque had the infrastructure in place to meet exploding demand for live-action gaming with resilient streaming and minimal latency. (“Lag is the biggest killer in sim racing,” Lorincz explains.) But when the world hunkered down and started gaming like never before in March, he says, Torque Esports experienced a new kind of March Madness, “compressing 18 months of growth into 90 days.”

Most of this growth is attributable to what Lorincz calls the “crossover crowd … others who have probably never even done this before—at least not at this scale. They may have dabbled and looked at things. We can see where they come from, and we know exactly if they were already registered users, for instance. That speaks for itself as an appropriate data point. We track those KPIs very closely.”

On WTF1, a “pure digital” gaming site for Formula 1 fans that Torque Esports recently acquired, Lorincz says that roughly 80% of visitors are new. “They would be people might have who read stories and watched videos of real races in the past but weren’t in [the sim racing] world.” When “shelter at home” kicked in back in March, first-time downloads (not updates) of their Gear.Club mobile game grew 74% in a week. For views of racing highlights uploaded to Twitch in the same time frame, Lorincz adds, the company saw a staggering 3600% growth.

While conceding that he never expected to see it happen this fast, Lorincz believes the latent potential for this kind of growth was always inherent to esports’ widely distributed participation model—and perhaps it just needed such a dramatic cultural shift to unleash it. “I don't believe that scale [in esports] comes from getting people together in a theater or an arena or a stadium,” Lorincz contends. “Those events are awesome, but how many can you do? ESL [Electronic Sports League] does 12 or 14 major events. On UMG, we do 800 automated events a day. That’s the kind of scale that I like. That’s what drives our numbers.”

Brands and the Boom

Felix LaHaye, Founding Partner of United Esports (Figure 4, below), says, “There are many forces at play in the cyclical nature of the viewership. We have people coming in as a replacement for traditional sports, and young people who might be giving it a first shot.”

Figure 4. United Esports

LaHaye contends that on a broader level across the esports universe—beyond gaming that simulates traditional sports—much of the growth can be attributed to existing gamers with more time on their hands expanding their horizons. He likens it to “when you were a kid and you were sick at home watching TV. If you’re going to be watching 12 hours of content a day, you might try new things, have a more diversified approach. You might not just watch the same streamers for five more hours. People are become more innovative and a little more risk-taking in what they’re going to watch. I think it’s going to bring new viewership to different channels.”

As an esports marketing firm, United Esports’ focus is developing campaigns and content initiatives to bring value to brands making investments in the esports space. LaHaye says these brands’ response to the sudden growth in esports consumption has been mixed. “Some brands are reluctant because they perceive it as an uncertain time,” he says, “and then you have the complete opposite, with brands that are more in tune with certain elements of the media, which are flocking to esports or doubling down on some of them. You’re seeing some brands back away, but others having a level of increased returns. None of us are happy about the current situation, but in esports there are a lot of companies that are trying to capitalize on the fact that people are at home. There’s a strong understanding that, with the digital nature of esports, there should be as much or more activity right now than in previous times.”

The story current numbers tell, according to Arizton, is not altogether rosy—in some ways, more congruent with the general state of the economy than the booming participation levels esports is enjoying. “As sponsorships are the largest revenue contributor to the esports market,” Arizton’s Das comments, “the cancellation of onsite tournaments and large-scale in-person events played in big stadiums has led to a decline in esports revenue from our previous estimates. COVID-19 has also impacted other revenue sources such as media rights, publisher fees, and tickets. Merchandising has also been impacted. For 2020, the market revenue is set to decline by almost $90 million from our previous estimates.”

But Das hastens to add that a boost to the revenue picture more or less commensurate with increased esports awareness is likely to follow as the economy begins to rebound: “Further projections for 2021-2025 show a strong revenue forecast based on increased popularity of esports during COVID-19. We believe occasional watchers will turn into esports enthusiasts in greater numbers pushing the market revenue further beyond our projections.” Arizton’s revised estimates (reflecting the current unanticipated surge) project the size of the global esports market exceeding $2.8 billion by 2025, while experiencing a compound annual growth rate (CAGR) of more than 17% over that five-year period.