Esports Revenue Projections Adjusted Downwards Due to Coronavirus
NewZoo, one of the world’s leading research firms when it comes to esports data, has revised its 2020 esports revenue down from $973.9 million to $950.3 million globally.
The main cause of this? As usual for 2020, it’s the Coronavirus effect, with fewer events for folks to attend in person. Newzoo points out that there’s no reduction in the esports audience, nor is there fewer organizers overall, meaning that this is squarely due to the myriad cancellations that the industry has seen due to the pandemic.
With no events, this means that merchandise is also set to take a hit this year, as many fans spend their hard earned dollars on esports merchandise only if they are at live events. Esports ticket sales and merchandise therefore had their 2020 revenue forecast adjusted down from $76.2 million to $52.5 million.
Newzoo says that they based their revisions on past and near-future postponements, shifts to online, and canceled events. Lost revenues from some streams could be recouped as many esports companies have handled the shift to online very well.
The Coronavirus Continues to Impact Esports
Newzoo says that its vital that the Coronavirus gets under control for the long-term continuing growth of esports. This could mean further downturn in the industry, despite its digital nature.
“The negative impact on consumer-brand spending in the space could hurt the growth of both sponsorship and media-rights revenues in the future,” Newzoo said. “Should the COVID-19 outbreak continue—or look likely to continue—further into 2020 or next year, we will likely make further relevant revisions to our forecasts. Of course, we will continue to monitor the esports landscape in the context of this worldwide impact—as we always do.”
However, several events have already committed to returning to live events in late 2020, which could continue into 2021 as long as the pandemic continues to be under control in Europe and China. The United States’ outlook is a little grimmer, with case numbers continuing to rise, which means live events could have to wait until mid-2021.
Riot in Particular Is Carrying the Day
Newzoo points out in their data that Riot Games in particular is enjoying something of a heyday despite the pandemic. Both the LEC and LCS enjoyed viewership boosts this summer, despite normally having a decline from Spring, of 16.7% and 30%, respectively.
Add in the fact that they managed to host the Worlds 2020 competition in Shanghai thanks to the city’s recovery from the virus, as well as the fact that they’ll be the one show in town to still have a small live audience for their finals this year, and its clear that they managed to navigate what’s been a very challenging year successfully.
Why Does This Matter?
Newzoo is one of the most often cited research firms in the world when it comes to data about the esports industry. They work with several teams, tournament organizations, and other esports stakeholders to come up with their data.
With the expectations being lowered for the esports industry as a whole, it could have a small ripple effect of impacting investor confidence in the esports industry. However, as NewZoo rightly points out, it could have been a lot worse for esports as a whole, and the industry has proven to be pretty resistant to the Coronavirus recession that’s currently impacting several key industries.
While this headline isn’t necessarily a positive one for the industry at large, it’s encouraging in that it’s only a small reduction in overall revenues for the industry, and it’s divided among many companies and teams, meaning the impact to individual teams, leagues, and developers is likely negligible and offset by the swap to online events.