The abandonment of franchise leagues, the popularity of Valorant and the reduction of salaries – what quarantine will bring eSports

April 24th betting company Parimatch held online event PM GO 5.0 BRIEFING. Participants discussed how the coronavirus epidemic affected eSports. Why, by the end of quarantine, the industry may lose five clubs and part of the tournament operators and how regional leagues will win – in Cybersport.ru.

Although e-sports has suffered less from the COVID-19 epidemic than a big sport, the ability to exist online has not saved the industry from a number of problems. This is primarily due to the financial instability of many organizations and the lack of long-term partnership agreements. CEO Virtus.pro Sergei Glamazda predicted that some clubs would be forced to abandon part of the lineups or cut wages to players. A co-founder Natus vincere Alexander Zerogravity Kokhanovsky said that, most likely, five out of 30 large eSports organizations will close due to the crisis.

According to Kokhanovsky, clubs that are represented in franchised leagues will experience difficulties. For example, slots in the second Overwatch League season cost from $ 35 million to $ 60 million, and for a place in the European division of League of Legends in 2019, you had to pay from $ 10 million to $ 13 million. The money invested in these championships will not pay off now, as sponsorship opportunities and interest will be reduced. So, we should expect that the clubs will abandon the slots in the franchise leagues and try to resell them.

Kokhanovsky and Glamazda noted that their clubs do not experience serious problems. In Virtus.pro, players are not going to reduce salaries. Although how became known on the same day, the organization has already resorted to similar anti-crisis methods Winstrike team. According to Kokhanovsky, to provide greater financial stability and the ability to predict the future, partnerships for a period of two to three years are needed.

However, even those clubs that have reliable sponsors are experiencing difficulties due to the lack of LAN tournaments, since players do not appear in the frame in online leagues, which means that brand logos on their T-shirts are not visible. In addition, merchandise sales are declining.

Top clubs that are able to fight for trophies will also miss a large share of the money for tournaments, as the prize money in online championships is often several times less than in official LAN events. Otherwise, e-sports organizations feel much more comfortable than sports clubs. The established training process works as before, with the only amendment that there is no way to get together at the bootcamp. The lack of personal interaction between the players, of course, affects how quickly one or another intra-team issues can be resolved, but this is not critical. The media activity of the clubs was practically not affected. Glamazda noted that the organization cannot now bring players to the studio for filming, but making content for fans remotely is also possible.

All speakers noted that the general interest in e-sports has grown and will continue to increase in the coming months. This is affected by the limited choice of entertainment available to the audience during self-isolation, as many other events are not able to go online. Due to this, e-sports is becoming mainstream, which is actively mentioned both in online publications and on federal channels. Increasing the audience and general interest in the industry will help both in the current situation and will give a longer effect that will continue after the end of quarantine.

Problems with sponsors

The economic crisis against the backdrop of the epidemic of coronavirus and quarantine has affected many companies. Some of them have now begun to behave more carefully, cutting marketing budgets in order to maintain financial stability. Consequently, sponsorship money in e-sports will be less, but, according to Kokhanovsky, brands that come from sports can fill this imbalance.

Problems with sponsors and advertising partnerships can be experienced by the entire industry, from tournament operators to specialized media, despite the fact that the audience is projected to grow. Such difficulties will affect all areas of business, and e-sports here will not be an exception. In addition, as noted by Sergey Glamazda, clubs have lost LAN-tournaments, where partner brands can be shown “face”.

For betting companies, on the contrary, e-sports is now one of the priority areas due to the closure of sports tournaments. More serious integration of e-sports betting shops can play into the hands of many clubs, but for this it is necessary that game publishers make concessions and remove some of the existing restrictions on betting advertising.

Technology Distribution Director at Yandex Grigory Bakunov notedthat in a crisis, e-sports is one of the few attractive areas for investment, but here you must be extremely careful and careful in choosing partners.

Some companies previously interested in e-sports have now lost interest in advertising due to reduced consumer demand. As noted by Kokhanovsky, some of the brands found themselves in a situation where what they advertise is simply impossible to implement now, and therefore the promotion of certain goods may not affect their sales. At the same time, Kokhanovsky noted that competent marketers will continue to promote goods in the future in order to create a loyal attitude to their brand. However, the income of the e-sports industry from partnership agreements and advertising will still noticeably decrease.

Tournament Operators at Risk

Tournament operators will suffer most from quarantine. According to Kokhanovsky, about five TOs can leave the market. According to forecasts, the company’s revenue will be only 10-20% of the expected. None of the briefing speakers believes that LAN tournaments will appear earlier than at the end of 2023 or at the beginning of 2023. Even if quarantine is removed much earlier, this does not mean that mass events at stadiums and large venues will be allowed. Possible future social distancing may also play a role here, when for some time people will be wary of any mass events.

Representatives of WePlay! noted that in a crisis, only those companies that diversified their business and are independent of a particular region will feel comfortable. Oleg Krot and Yuri Lazebnikov from WePlay! stated that they had already intensified their work in Asian markets and in Oceania. Kokhanovsky also mentioned the high interest in tournament content in China, where the peak of the epidemic has already been overcome.

Tournament operators can lose up to 100% of the income from their main sources – partnership agreements, ticket sales and merchandising. Self-isolation also equalized the capabilities of large TOs and local broadcast studios, since in order to create a high-quality and attractive championship for an audience under quarantine conditions, only eminent participants are needed.

Kokhanovsky believes that game publishers can help the tournament operator, giving them “more workload” to hold more championships. But relying on the help of developers who get superprofits under quarantine conditions is not worth it, as they are extremely cautious in approaching the e-sports market. The main interest of publishers is connected with ordinary gamers, and not with professional competitions.

Regional leagues and mobile e-sports – new trends

All speakers noted that the current crisis, like any other in history, brings new opportunities in addition to the negative consequences. Coronavirus will undoubtedly affect the development of the industry: some trends may be short-term in nature, while others will entail serious changes.

Due to quarantine, interest in streaming platforms has increased. Already in March, the number of hours watching Twitch increased in different countries from 30 to 70%. The number of streamers is growing, although slightly less actively.

Esports tournaments also set records. For example, the peak performance of ESL One Los Angeles 2023 – Online Championship Dota 2 viewers was higher than that of LAN majors. According to the creator of the analytical resource Esports Charts, Ivan Danishevsky, online tournaments show results that are comparable, and sometimes exceeding LAN-championships. Since now most competitions are held within the same region due to problems with ping, this can increase interest in local leagues. Danishevsky noted that in Asian countries the popularity of such tournaments has increased significantly. In his opinion, the current situation may give impetus to the development of amateur and regional leagues.

Due to quarantine, the audience of video games has grown significantly, however, it is often problematic to transform it into e-sports spectators – for example, due to the high threshold for entering the same Dota 2 or League of Legends. Understanding mobile games is often much easier. Although they are not yet able to compete with the top e-sports disciplines, Danishevsky predicts an increase in their popularity. For example, over a million people watched the Mobile Legends Championship at its peak, and almost all of this audience was from Indonesia alone. Danishevsky emphasized that mobile e-sports is still at the first stages of development, however its availability and simplicity can provide good prospects.

Danishevsky also predicted the growing popularity of Valorant. The release of the shooter Riot Games took place at the right time – it coincided with the period of quarantine and increased interest of the audience in video games. Small tournaments and show matches by Valorant already show good performance in terms of views, and the game itself leads on Twitch in terms of the number of viewers.

The future of all industry players, as noted by Oleg Krot and Yuri Lazebnikov, will depend on the ability to adapt. The current situation with coronavirus for business is similar to any other major crises, which are characterized by a decrease in purchasing power, the closure of certain projects and the freezing of transactions. Most eSports organizations will be able to deal with this problem and turn it to their advantage.