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Trends to Watch in 2019: Foreword 03 1 Trends to watch in 2019: Foreword 03 1. From online to offline 04 2. Esports and traditional sports will adopt 08 each other’s strategies 3. Influencers will become broadcasters 11 4. Changing competition into entertainment 13 5. The branding battle for fan engagement 16 and loyalty This report was published in February, 2019 Trends to watch in 2019 The esports market may be in its Meanwhile, esports broadcasting formats adolescence, but it is maturing faster than are rapidly changing and adapting tried- The global esports ever and the coming years are crucial. In and-true strategies from linear TV and market will generate this whitepaper, we will explore the five traditional sports. Yet, esports is also biggest trends shaping the industry’s bright teaching the traditional sports industry a future. Despite the digitalization of other thing or two. One thing is for sure: things industries in recent years, segments of the are heating up in the esports arena and in 2019, with a total audience of 453.8M esports industry are following a different trends we discuss in this report are at the path entirely. Thanks to the rise of local forefront. esports initiatives, plenty of viewership is moving away from the digital space toward bringing fans together at physical locations. Jurre Pannekeet Sr. Market Analyst © Newzoo 2019 3 1. FROM ONLINE TO OFFLINE: LOCAL ESPORTS LOCATIONS AND COMMUNITIES ON THE UP From physical to digital and back again Our previous whitepaper highlighted the importance of local esports initiatives, which will continue to become more prominent in the coming years. These cafes were once incredibly popular. However, as Internet speeds improved, they Esports Arena took a huge popularity hit. Instead, people moved toward online gaming. The meteoric rise of esports has resulted in a resurgence of PC cafes as a location for esports competitions, Locations in the USA as well as new locations like esports-dedicated bars. An increase in local esports initiatives will also improve bonds between Esports Enthusiasts and their favorite esports pros Meltdown Esports Bar and teams. This will directly strengthen esports organizations’ brands, meaning more revenues from investments. In the end, local initiatives will make esports more visible in the public Locations globally space, increasing the general population’s esports exposure. This will have a positive effect on esports engagement and participation alike, attracting new fans and solidifying brand loyalty toward teams, leagues, players, and events. Wangyu Cybernet Cafe China is leading in the development of local esports locations. The government is a major proponent of the move from online Locations globally to offline. And for operators, physical locations present plenty of opportunities for monetization that are simply not possible within the country’s highly regulated digital environment. © Newzoo 2019 5 Six cities want to become China’s key esports hub and are incentivizing esports organizations to set up shop Xi’an Xi‘an has doubled down on Sanya Sanya, one of China’s most famous Haikou Haikou is Hainan Island’s capital branding itself as a key esports tourist cities, is banking on city, located at the north edge of Population: 9.5M city, introducing favorable Population: 540K combining esports and tourism to Population: 2.2M the island. It is one of the top policies for esports organizations. boost its economy. destinations for domestic and overseas tourists. Xi‘an is the home of team WE Through its many colleges and and hosts several esports events, universities, Sanya already has Supported by local government, including the Demacia Cup, many student residents—a group the WESG Grand Final was held in Honor of Kings College Cup Final, very active in esports. Haikou by Alisport in 2018. There and LoL College Cup Final. are also many local esport events. In recent years, Sanya has Versus Programming Network successfully held a number of Hainan is also the first province to (VSPN), Team WE, and Banana international esport events, such as pilot China’s new game approval Culture each signed partnership the World University Cyber Games. mechanism. deals with the Xi’an government, focusing on tournaments, Largest Chinese education, and property. The city city by urban area will also host the 2019 World inhabitants Cyber Games. © Newzoo 2019 6 Six cities want to become China’s key esports hub and are incentivizing esports organizations to set up shop Hangzhou By 2022, Hangzhou aims to invest Chongqing To boost local esports activity, Shanghai Shanghai recently held a signing over $2 billion into developing the Chongqing singed a deal with session with multiple companies Population: 10M city’s esports activities. The city Population: 15M Alisports, resulting in Alisports Population: 25M active in esports to put the city on will host the 2022 Asian Games. relocating its business unit to the the path to becoming a world city. esports center. LGD Gaming built its own esports venue in the city, which will serve The sports affiliate of Alibaba As a result, Tencent Games’ Honor as the home venue for its LPL Group will also work with of Kings Winter Champion Cup took matches. Chongqing High-Tech Zone to place in Shanghai, and The build an international esports International 9 will happen there in Other projects include an esports street in Jiulongpo District. 2019. Also, esports athletes can academy, esports-themed hotel, register with the city to receive theme park, business center, and Alisports will also organize large- benefits, and NetEase and even a hospital designed for scale sports events and Shanghai’s government reached an esports players. networking sessions to boost agreement to move NetEase’s collaborations between foreign esports facilities to the city. Largest Chinese Largest Chinese and domestic companies in the Largest Chinese PandaTV and ShihouTV signed city by urban area city by urban area city’s sports industry. city by urban area similar agreements. inhabitants inhabitants inhabitants © Newzoo 2019 7 2. ESPORTS AND TRADITIONAL SPORTS ARE ADOPTING EACH OTHER’S STRATEGIES Striking a balance between direct consumer and indirect business monetization strategies The esports and games market combined will generate $149 billion in global revenues this year, more than the traditional sports market, which will be worth around $140 billion. The games and esports industry are focusing on increasing business-to-business revenues, such as media rights, sponsorship, and advertising. Meanwhile, the traditional sports scene will take cues from esports and gaming, looking to increase revenues from direct consumer monetization. SPORTS BUSINESS REVENUES For quite some time, viewers have been moving away from Media Rights traditional linear television, which is where the majority of Sponsorship ESPORTS sponsorship and media rights revenues come from in Advertising traditional sports. Many sports organizations are looking to offset the revenue decreases that come with shrinking TV viewership. And they are looking to the monetization models from games and esports to achieve this, including voluntary donations to content creators and premium content subscriptions. GAMING CONSUMER Both industries are going through a transitionary period, aiming REVENUES to strike a balance between directly monetizing consumers and Micro Payments indirect revenues through media rights, sponsorship, and Additional Content Subscriptions advertising. For traditional sports, we expect this balance to skew toward the direct monetization revenue streams that games and esports pioneered. © Newzoo 2019 9 New monetization models for the sports industry? MICRO-SPENDING SUBCRIPTIONS PLAYING Micro-spending on games occurs through Additional content subscriptions, such as purchases of in-game items such as battle passes, give players an enhanced cosmetics, boosts, characters, or items. experience of the game they play, offering new elements and features. VIEWING Video content creators in the games Premium content passes offer viewers an industry monetize their viewers through improved and personalized viewing voluntary donations from their fans, who experience through controllable camera appreciate and want to support their views, exclusive shoulder content, in-game favorite content creators. rewards, and more. © Newzoo 2019 10 3. INFLUENCERS WILL BECOME BROADCASTERS FOR ESPORTS AND TRADITIONAL SPORTS Influencers will be the next generation of broadcasters for many fans Both esports and traditional sports will NA FORTNITE SUMMER SKIRMISH WEEK 2 NINJA ADMIRALBULLDOG continue to distance themselves from media rights constraints, especially regarding who can broadcast and commentate on content. To that end, influencers will be allowed to commentate on content, attracting their respective fanbases to this content. Many of these fans are accustomed to spending money on content, opening plenty of direct- revenue opportunities for esports organizations. This format is already being used in some Fortnite streamer Dota 2 streamer on Twitch in 2018 on Twitch in 2018 esports. Fortnite and Dota 2 events often Viewing Hours include influencers as commentators or competitors. Notable examples include Average Concurrent Viewers Dota 2 streamer AdmiralBulldog and Fortnite streamer Ninja. Impressively, Ninja’s stream for the NA Fortnite Summer Live hours watched Live hours watched Skirmish Week 2 generated half the live on Twitch in 2018 on Twitch in 2018 Twitch viewership produced by the official event stream. We will see
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