Predictions: Riding the esports wave

The pandemic-enforced hiatus for traditional sports helped esports gain traction in 2020, but did it build on this in 2021?

As the early-stage M&A shows operators looking to grab a piece of the action, some of the sector’s leading names reflect on the past year, and look ahead to 2022’s developments.

Featuring:

Oskar Fröberg, founder and CEO, Abios
Martin Dachselt, CEO, Bayes Esports
Ian Smith, integrity commissioner, Esports Integrity Commission

Were deals such as Entain taking over Unikrn or Kambi buying Abios the first in a wave of esports M&A by gambling operators?

Oskar Fröberg (OF): We are still in the early days of esports, so naturally there is going to be a lot of M&A action to look forward to. We strongly believe, and hope for the sake of our industry peers, that these two deals have woken more gambling operators to start considering esports seriously and perhaps accelerate the decisions of some.

Whether or not this will set off a wave of esports M&A is difficult to say. In all honesty a lot of the companies in our industry still have a lot to prove before they are ripe for acquisition. On the other hand, looking at how frothy the markets in general have been over the past years we definitely think that could spill over into the esports industry.

Martin Dachselt (MD): Yes and no. Of course there are traditional and esports and gambling operators; they know esports is a growing market and they need a presence there to make offers to the audience. I think there will be more takeovers.

On the other side, the amount of esports companies who are available on the market is relatively small.

Ian Smith (IS): No doubt there will be more [acquisitions], and it will be pushed by sports opportunities in the US.

The difficulties for the really big brands, like Entain, is understanding that the esports betting market is a real challenge. I expect several more acquisitions of esports online operators, as well as data companies. You’ve got a few big players but also small people with big offerings.

Do you feel the gambling sector fully understands esports?

OF: Even though sportsbooks have offered markets on esports for years, the predicted popularity has not yet fully materialised. While esports experienced a tremendous upswing during the pandemic, primarily fueled by the rise of FIFA betting, we have fallen back to more normal levels of growth post-pandemic.

Firstly, esports is often the first touching-point between an esports fan and a sportsbook. As a result, the new users are not yet intimately familiar with the different markets and strategies.

Secondly, sportsbooks have a considerable user understanding and product knowledge within the traditional sports domain, making it simple and time efficient to copy-paste the existing success formula into the esports segment.

Thirdly, esports products are still in their infancy. Several popular features that engage sports fans are simply not available for esports betting in an efficient way. Live markets in sports are incredibly popular, but in esports the markets generally have low uptime, long bet delays and are plagued by high rates of suspended offers, making the experience less enticing.

MD: Partially. Some operators that engage with specialised providers, such as Entain and Bet365, they have an understanding of esports. But most operators already have a basic understanding of esports and how it differs from traditional sports. We need to educate, not just in terms of products but also to explain what can be expected in offering esports and what operators need to be aware of. To give an example, delays are being talked about now. Esports tournaments on online streaming service Twitch are delayed by 5 mins, which has led to issues.

IS: They don’t understand it. One of the problems is with the US, with legislators not understanding esports. Where people are seeking to create esports legislation, where there are no existing gambling regulations, the people making those laws don’t know what they’re talking about. They know it exists, but don’t know anything about it. Then you get to the regulators themselves, the gambling commissions, who need to implement the laws.

So you’ve got this triple layer- legislators making the laws, regulators implementing them, then betting operators and sportsbooks who don’t understand esports either. It’s hampered by bad legislation and regulation, but it will improve through education and experience. They key is for all people to rapidly understand what an esports bettor is, and what it looks like.

What do you feel could drive interest in esports as an entertainment option in 2022?

OF: The interest in esports is already growing year-over-year, as more people discover the world of esports and video games. As the market is nowhere near maturity, there is further potential for monetisation in all the verticals that we currently have and probably in the ones we have not thought of yet.

MD: Operators need to learn and have the opportunity to invest in the offer [of esports]. They can’t use the same services as traditional sports; esports is far more fast paced, and there’s much more data. Then of course there’s regulation.

In some areas esports is unclear on regulation, which of course needs to improve. It’s slowly improving. For esports tournaments, the scene is professionalizing, especially with LoL. It’s difficult for a lot of smaller tournament organisers to offer betting, so tournament organisers may need to learn more about the industry and all its aspects. Operators should also be aware that esports has a large young audience. People who are young are now playing. However, older people have the money to place bets on their favourite teams.

IS: I think a more joined up approach between tournament creators and gambling partners could help- working collaboratively to make a more holistic market.

Using data that is more relevant- being able to say, these are the markets we want, this is what the tournament organisers want. The biggest thing will be the expansion of esports itself.

We need to get sports bettors interested in esports. We also need to get esports off Twitch, and supplement that with more mainstream coverage. Get it in front of more relevant audiences. Why not have esports advertisements during the Premier League in Sky? For people watching NBA, why aren’t there advertisements for NBA 2K tournaments?

Where are the likely audiences, outside esports audiences? For people who don’t follow esports, and might be interested if they knew, the most obvious route there is sports simulator games. Something like Fifa has fans of the real life sport. A little more expansive thinking.