The impact of Covid-19 on the E-Sports

The global esports market is now estimated to generate revenues of US$1.05 billion in 2020, according to Newzoo, down from the market researcher’s previous estimate of US$1.1 billion.

The Global Esports Market Report has also adjusted its 2023 forecast upwards slightly, with the competitive gaming industry now set to generate revenues of US$1.59 billion, compared to US$1.55 billion.

The biggest contributing factor to Newzoo’s revision is the coronavirus pandemic, which has caused many esports events to be postponed, cancelled, or moved to online formats. The new report stresses that its update is not to do with decreased demand or decreased supply.

As a result, the temporary cease in esports activity and a transition to digital-only events saw 2020’s projections affected. After this year, the immediately impacted revenue streams will remain unchanged from Newzoo’s previous forecast.

• What is the future for esports after Covid-19?

Breaking down the impact of Covid-19 on esports in 2020, income from merchandise and ticket sales is projected to fall from US$121.7 million to US$106.5 million. Newzoo has also downwardly revised media rights and sponsorship forecasts for this year, going from US$185.4 million to US$176.2 million and US$636.9 million to US$614.9 million, respectively.

Despite those shortfalls, as well as the cancelled and postponed events, Newzoo expects streaming revenues to grow faster than expected. The global quarantine has led to higher viewership across various over-the-top (OTT) platforms, meaning team streaming revenues are set to increase from US$18.2 million to US$19.9 million in 2020, and US$31.6 million to US$34.4 million in 2023.

Global partnership fees for 2020 are also expected to rise to US$120.2 million this year. This is based off a steady flow of new competitions, titles, and publishers leading to more demand, thus driving up publisher fees, even in more mature markets such as North America, China, Europe and South Korea.

Newzoo adds that it remains confident that esports will continue to be an attractive business or marketing opportunity for publishers, and that this growth will be sustainable for the coming years in both developed and developing markets.

In addition, Newzoo expects to make further downward revisions to its forecasts if the coronavirus outbreak impacts the second half of 2020.

The report does not factor in the impact of a potential global recession resulting from the decreased economic activity caused by Covid-19. It does, however, warn that the negative impact on consumer-brand spending in esports could hurt the growth of both sponsorship and media rights revenues.