The steady expansion of fifth-generation (5G) mobile networks around the world gives telcos and mobile network operators (MNOs) the platform to establish a strong presence in the electronic sports (eSports) arena.
Market research firm Omdia estimates that global eSports revenue expanded almost 17% between 2019 and 2020 to be worth US$1.4bn. Though that is a fraction of the US$160bn generated by mobile, console and PC games in total, there are now significant opportunities to scale rapidly. In particular, the eSports market is expected to accelerate in tandem with the parallel growth of mobile games, so much so that Omdia now predicts it will almost double to US$2.6bn by 2025.
That’s not to say there aren’t challenges ahead. The eSports market was hit hard by the coronavirus pandemic in 2020 as live stadium events were postponed or cancelled. Newzoo estimates that revenue from merchandising and tickets declined 50% year on year in 2020 to be worth just US$52m, for example, with publisher fees dropping almost 12% to US$109m.
That dip in performance meant the value of the overall eSports market stagnated at US$950m last year, despite solid growth in its largest segment, sponsorship, which increased 7.5% year on year to US$584m. The fact that audience numbers were up almost 12% to 495m in 2020 offers cause for optimism, however, as more enthusiasts and occasional viewers tuned in to online events. Newzoo predicts that those figures will increase further to reach 646m by 2023, with eSports revenue growing in tandem at a CAGR of almost 16% to hit US$1.6bn by the same year.
Telco eSports partnerships proliferate
Telcos and mobile network operators have a pivotal role to play in the development of the eSports market. They are already “infrastructure enablers” – the providers of core fixed and mobile telecommunications networks which allow eSports competitors and audiences to connect into burgeoning online events. And they are also active in building eSports gaming communities through sponsorship.
DOCOMO Digital VP of Europe & Latin America Luisa Muneratti and VP of Partnerships Greg Siegel documented several collaborations between telcos and eSports companies in Latin America and Thailand last year.
Other telcos have since followed a similar path. Verizon signed a three-year partnership with LCS, Riot Games professional League of Legends eSports league in North America last summer. The collaboration involves both sponsorship of LCS’ summer season and the provision of its 5G lab as a training facility and the broadcast of tournaments and additional content over Verizon’s 5G network.
In the Philippines, Globe Telecom and Esports AcadArena work with Riot Games Southeast Asia to sponsor eSports scholarships at local colleges.[i] The country also saw telco Smart Communications partner eSports talent agency Tier One Entertainment to expand the Filipino eSports community through branded campaigns and celebrity gamer promotions.[ii]
Elsewhere Finnish operator Telia extended its media partnership with ESL Gaming until 2023, while 3 Group (including 3 Austria and WIND TRE) signed a three year deal with MotoGP eSport Championship provider Dorna Sports in May 2020.[iii] Even the UK, which has long lagged other countries in terms of its eSports development, saw British Telecom (BT) sign a multi-year partnership with Excel Esports. The collaboration involves the telco sponsoring the team’s jerseys in Riot Games’ LEC and UKLC, but more significantly showcasing its network infrastructure’s speed and performance by linking the team’s training facility HQ in London’s Twickenham Stadium.
How telcos can monetise eSports and increase gamer ARPU
The growing availability, increased speed, and lower latency offered by 5G networks is likely to impact eSports expansion profoundly. So too, the anticipated transition to a more cloud orientated game streaming model that eliminates the need for powerful client-side hardware such as PCs and games consoles and improves the performance of gameplay on mobile devices, particularly smartphones.
Being at the heart of eSports network connectivity is assured. The more complex part for operators is working out how to embed themselves more profoundly in the eSports community through different channels, including ticketing for access to online events, bundling subscriptions to gaming platforms, and setting up merchandising and advertising channels.
There are also strong indications that targeting gamers with time and money to spend on their favourite sports activity can help telcos drive up average revenue per user (ARPU). Research commissioned by Ribbon Communications found that 60% of gamers would pay 50% more a month for a better gaming experience, specifically lower latencies and higher data speeds that boost online gameplay[i].
Based on its survey of over 5,000 gamers worldwide, Ribbon found that 58% already pay a premium to their network provider to enjoy the best gaming experience possible. A further 79% would consider replacing their home broadband and mobile connectivity with 5G for a better gaming experience, with 95% willing to pay more than they do already for that additional performance.
Large numbers of eSports gamers and audience members are also young and often live in regions of the world where they don’t necessarily have ready access to bank accounts or credit/debit cards. The relationship between them and their 5G connectivity provider can be made much stickier if gamers can pay for access to online eSports events and competitions through direct carrier billing (DCB), which adds the fees to their monthly smartphone subscriptions.
Business models are still being worked out and new services devised. But suppose they can stay flexible enough to accommodate widespread differences in how competitors and spectators want to access and pay for their eSports participation. In that case, telcos are in a solid position to entice a new generation of customers.
[i] Globe, AcadArena partner with Riot Games for collegiate esports in the Philippines, eSports Insider, 25th September 2020
[ii] Tier One Entertainment partners with Smart Communications, eSports Insider, 22nd December 2020
[iii] MotoGP eSport Championship Partners With Telecom Company, RW, 26th May 2020
[iv] Ribbon Research on Cloud Gaming Reveals Revenue-Generating Opportunities for 5G Networks, Ribbon Communications, 14th September 2020