Esports and business: 12% growth and great prospects in Italy
The phenomenon of esports as business is analyzed In the Digital Panel of GiocoNews.it and Esportsmag.it, also looking at developments in betting.
“We have been experienced a remarkable development of esports in the last year and a half. To understand the sector, we can “give some numbers” and set two main indicators. Audience is the first important indicator. It is made up of those who see the sector and there are 495 million fans worldwide and 1.2 million in Italy. However, there are 17 million people who make gaming and there are development possibilities. Year over year, it grows by 12% and is an excellent index for the hopes for the future. The other indicator is turnover and here estimation techniques need to be refined. We are talking of about 1 billion in global revenue but if in Italy video games invoice 1.7 billion, you will understand there is still much to do”. Laura D’Angeli, founder of esportsforbusiness, business advisory, revealed these numbers during the Digital Panel of Gioconews.it, organized together with Esportsmag.it, entitled: “eSports: not just gaming – The emerging business models in the eSports sector and development prospects“.
How is the sector growing? “From 2015 until today, there is a great growth. In 2018, 4.5 billion were invested in projects and M&A of companies operating in esports. We talk about developers, publishers and tournament organizers and teams and also media companies. In the latter period, Espn and Fox have acted as amplifiers to this phenomenon by bringing the streamers on TV from Twitch and YouTube. The investments went in North America, Europe and Asia and were distributed among the various actors. The teams exponentially grew from 2016 to 2018, from an investment to 18 for a total value of $18 million. This money helps these organizations in structuring and equipping with important tools”.
And legally? “The path of legal recognition will play a key role in market development. Gaming is a closed world that caters to the customer base of gamblers, but in eSports 70% of the revenue comes from advertising and sponsorships. And companies come from other sectors. Wealth is not only given by the product but by the content that is generated. It is a highly articulated sector and wealth is generated in its organization”.
Angelo Cito, president of the Italian Taekwondo Federation of CONI, speaks about the prospects in terms of regulation and the possible arrival at the Olympics. “I am sure that many aspects of eSports can be similar to sport. At the center, there is always the athlete. In recent months, very important steps have been taken, in Lausanne in the congress organized by the IOC, we talked about competitive video games and Gaisf was instructed to arrive to a proposal for the sports recognition of the sector and it seems to me a great step forward”.
From the words of Cito, the lack of a single international interlocutor that centralizes everything is clear: “I can assure you that there is distrust and at some point the IOC put Gaisf in charge to formulate a proposal about this world. There are no definite times but things are going fast. I repeat, for me it is a very important step”.
The lockdown saw the need to continue playing sports through eSports: “They were very important – Cito explains – as a federation we organized a Tekken tournament. Traditional sport was in a position to have to survive the lockdown and practically via electronic mode, because we could not practice it in the gym and on the playgrounds”.
When will admission and entry to the Olympics take place? “I don’t think Paris, but something could happen at the event. Also because the more the years go by, the more the new generations grow and the eSports will also become heritage of those who will occupy the political and managerial offices”.
The lawyer Luca Pardo, Founder of Ontier Italia, analyzes the legal aspects: “We are facing a global market which should be mainly observed outside national borders. The phenomenon of esports is equal to the technological revolution and artificial intelligence and we are thinking at a European level if not global one, and we hope to do that. For now, it is a sport left to negotiating autonomy and subject to public regulation, but something must be done in this regard.”
His overview of the European market is interesting: “France has regulated the authorization model for organizing an esports and gaming event and even adresses to the Ministry of the Interior. Status of players and prizes has also been regulated. This regulation is missing in Italy and the observatory is trying to frame the issue. IOC has so far excluded esports from sports, while the US has regulated what they wanted by trying only to attract professional players to their top events”.
We speak of business linked to the framing of the various aspects of the sector: “There is no single model but one for each stakeholder. We are moving towards the treatment of TV image and contractual rights. We have seen, however, that there is absolute lack of homogeneity between regulations, such as the Porsche esports Carrera cup which was framed as a competition or the eSerieA, which doesn’t provide for the application of advertising regulations but only the regulation of the sport end in itself. Other events are regulated in not exactly appropriate ways, such as sponsorship agreements with the organizer who recognizes sponsorship of the participating team. However, there are also tax problems. The association could be used for the only organization of a tournament or event. For teams, the employment relationship is totally free, so today forms of self-employed and non-dependent work are used, but it must be regulated here too.
For the CEO of Qlash, Luca Pagano, a true pioneer of the eSports sector in Italy and internationally there are many problems to be addressed in this phase: “The main characteristic is that the sector is very fragmented and it is difficult to tell it and to identify which are the fundamental points of the sector. Esports are not a phenomenon, they are not a trend but they are and will be part of the culture of young people. Yes, it is a business opportunity, but also a social interpretation and I hope for a regulation because esports are here to stay. I would prefer sports regulation and I think it is necessary to have a central body that forces the actors to sit at the table. The path of the Coni has got this aim. Foresight is needed to seat those who understand esports at the table. It is a product that resembles traditional sport but speaks a different language. It goes at the speed of light, communication and new games change every six months, the rules of engagement change very quickly.”
An example? “The mobile product is already esports, but many organizations don’t take it into account and this changes everything and will change the storytelling and engagement methods. A few precise but central rules are needed when important capitals will arrive (and are coming) from companies not directly connected to esports, then we will have arrived at year one”.
Great attention also to the link with betting and matchfixing risk: “As Sportradar, we are putting in place the same tools that we use in sports and football to fight Match Fixing” Ferdinando Ferrero, Sales Director Sportradar, among the speakers of the panel, explains. There is a bit of chaos right now, because many don’t want to miss the train to understand how best to take advantage of the business opportunity. “Esports today are called to boost integrity and is produced through prevention and education. As Sportradar, we control the data of sports events to ensure integrity and we give greater importance to this by explaining to athletes the correct use of bets by preventing distortion. Growing in this, esports have a great opportunity if they can provide integrity.”
As regards betting, the data grew during the lockdown: “There was no sport but the volumes are modest, a few million turnover out of 1.1 billion of the total volume in Italy and there is a long way to go. At this stage, operators want to stay on the market and enhance the offer. Leagues will be crucial for this. But we have to start talking to an increasingly large audience because the audience is still very low in terms of age”.
The issue of integrity is fundamental: “And that’s what we try to do by adopting the same parameters that we use for sports. We only validate esports events that respond to our protocols and with our systems we check the betting flows so as to see if there are anomalies. Being esports electronic games, it is true, it is easier to control and possibly identify any match fixing problems”, Ferrero ends.