How can an operator prevent the esports bubble from deflating? Harry Lang, Managing Director of Brand Architects and Ex. CMO, Pinnacle


Esports has experienced fluctuating growth for some time now, however, it’s widely accepted that this vertical is one of the most exciting within the iGaming industry.

To assess and analyse the potential of esports and how operators can pivot throughout its fluctuating levels of popularity, we caught up with iGF friend and global esports expert, Harry Lang, Managing Director of Brand Architects and Ex. CMO of Pinnacle.

2020 hasn’t been a great year for most of us. Lockdown, furloughs and a looming recession linked to a global pandemic isn’t exactly the frivolous escapism most of us hoped nor prepared for, and yet some things have bucked the negative trend and blossomed in the face of adversity.

Research from the UK Gambling Commission (IUKGC) shows sports betting was decimated by lockdown with the number of active users falling by 11% YoY. 5,200,165 people placed a sports bet in March 2019 dropping to 4,635,552 in March 2020. The lack of betting markets in April was evident with a further 55% drop in player numbers to 2,073,998 before the coup de grâce in May, when there were under 2 million active bettors.

The lack of any traditional sporting calendar left betting operators bereft of markets to make, leaving the door wide open for virtual sports and esports to fill the void.

Data released by the UKGC is August show the significant increase in esport betting over the summer. What is perhaps more surprising is that this boom has been sustained, even when professional sports came back online.

Year on year the ‘Covid Boom’ enabled a 37% increase in virtual sports betting Gross Gaming Yield (GGY), 50% for poker and an astounding 2,922% in esport betting. As the UKGC’s table below shows, the UK esports betting market was worth just north of £50k in revenues in March 2019 growing to over £1.5m in May 2020. During lockdown the boom intensified as GGY of esports betting grew by a further 124% between March and April.

UK Gross Gambling Yield Data, UKGC, August 2020

March 2019 March 2020 April 2020 May 2020 % y-o-y change March % change March 2020 to April 2020 % change April 2020 to May 2020
Slots £162,345,550 £186,659,624 £169,033,423 £184,276,776 15% -9% 9%
Other gaming (incl. casino) £60,749,253 £57,829,567 £76,952,429 £77,891,649 -5% 33% 1%
Betting Real Event £85,516,233 £160,950,242 £61,938,466 £101,352,941 88% -62% 64%
Betting Virtual £6,618,687 £9,063,796 £12,818,108 £11,276,994 37% 41% -12%
Betting eSports £50,223 £1,517,548 £3,393,637 £4,616,610 2922% 124% 36%
Poker £8,070,102 £12,069,504 £20,068,939 £18,335,269 50% 66%

 

While the UKGC’s data shows the increase on virtual sports was a part time blip, rapidly cannibalised by the return of actual sports the GGY on esports betting continued to increase through lockdown, albeit at a less dramatic rate of 36% between April and May. On the face of things, the hypothesis would be that the return of top flight football, racing, golf and US sports simply stole back land lost to virtual sports whilst those bettors who migrated to esports betting have, to a large extent, stayed the course.

Now, we’re looking at localised restrictions rather than full lock downs meaning sports such as football and racing are still ‘live’, albeit with players living in bubbles and playing restricted event calendars. The forthcoming rugby Champions Cup Final between Exeter and Racing 92 looks to be at risk after a number of the French squad tested positive for Covid, showing we’re a long way from Kansas with respect to a normal sporting environment.

At some point it’s likely the Covid esports boom will settle and the huge GGR growth numbers will rebalance. Those operators who have benefitted from the boom will be keen to mitigate this realignment, and there are a number of ways they will be doing this:-

 

  • Positioning – ensuring that esports betting gets a premium sport in the top left of website tab navigation as a ‘tier 1’ market

 

  • Promotion – bringing esports betting in from the cold as a niche sport and placing it in the same category as football, tennis, golf and US sports in promotional calendars

 

  • Education – facilitating bettor’s understanding of new esports betting markets (such as player betting offered by puntt.gg) and team/ tournament profiles is key for esports to become a fully mainstream betting market

 

  • Skin Betting – by far the most popular betting on esports globally is done through illegitimate skin betting sites. Not only is this dangerous for young people but also it besmirches the legitimate side of the business. The sooner it’s understood and regulated by the UKGC the better

 

  • Data – as with any market making, sourcing accurate data, odds and platforms is key to offering a competitive product. New markets are coming out every month and companies like PandaScore are leading the way with manageable data solutions, APIs and mobile widgets so they’re not a bad place to start if you want to tap into the pulse of the market.

 

  • Mass Market Broadcasting – at present esports matches are predominantly on Twitch but the boom in fans, players and subsequently betting suggests it won’t be long before we’re seeing tournaments like The International (Dota2), Call of Duty World League, Overwatch League, HALO World Championship and PUBG Global Championships televised on Sky Sports, at which point sponsorship opportunities and a much broader audience will both put the volume up to 11.

 

  • Affiliates – the esports affiliate space remains a dust bowl with few serious contenders. This is largely down to the lower player values (LTVs traditionally hover around a maximum £80 mark) meaning CPAs of around £10 are common. Compared to sports, casino and bingo this is skinny, but the volume of potential traffic and available competitive environment mean this will likely change, especially after the Covid boom has shown just how many esports bettors are out there.

 

  • Digital Marketing – as with affiliates, PPC, display and social display are still relatively cheap for esports betting so if you’re planning a land grab, the time to move is now before everyone jumps on the bandwagon and keyword prices spike.

Esports betting has been on the rise since Pinnacle took the first bet in 2010. Now, with help from a global Pandemic it’s making a push for the summit and as usual it will be the savvy operators making good decisions now who will reap the greatest regards.

Harry is the founder of Brand Architects, a UK based strategic brand and marketing consultancy specialising in digital start-ups, online gaming and esports. You can contact him at [email protected] or connect on Linked In

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