Playing for keeps: How the GCC is developing its esports industry
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Playing for keeps: How the GCC is developing its esports industry

Playing for keeps: How the GCC is developing its esports industry

The GCC and its esports stakeholders can leverage the momentum to build a true gaming/esports ecosystem for the region


It goes without saying that the esports sector is booming.

While much of the talk is around money spent by publishers in supporting tournaments, there’s a lucrative adjacent industry fuelled by investors, sponsors and fans.

As the GCC moves to develop its esports product, nurturing the entire ecosystem will be key to success. During ESI Digital Winter, a virtual esports event organised by Esports Insider, experts explored how the ecosystem can thrive, with pertinent lessons for the GCC.

Investors looking to diversify their portfolios are looking at esports, which offers much better returns than traditional assets and promises a positive future growth path. Christian Christoefl, vice president for Investment Banking at Deloitte, says there was a 25 per cent increase in investment activity in the sector from 2018 to 2019. The expectation was for continued robust growth and investment in 2020, based on these stats. However, Covid-19 did dampen investment activity, with declines both month-over-month and year-on-year from February to April, Christoefl says.

Hosting large esports tournaments such as League of Legends has a significant economic impact on cities, a fact not lost on regional authorities. NEOM, the futuristic city being built in Saudi Arabia, will have a dedicated gaming/esports zone. Meanwhile, Dubai has plans to build a large esports venue, dubbed the X Stadium.

Ronnie Hansen, director of Sport, Culture and Media at Geelmuyden.Kiese, a media and communication company, says one of the reasons why gaming is so lucrative for host cities is the international nature of esports. Dedicated fans gather from all over the globe to cheer on their favourite stars and take in the latest trends in the sector.

“For other events, even though they’re international, the critical mass is largely local or near locals, whereas esports events will have people travelling from all over the world.”

Another reason is sheer demographics, says Hansen. Contrary to popular opinion, the average esports player/enthusiast is not a kid. “Fans are typically male, well-educated and relatively well-incomed. And they’re quite interested in all sorts of other cultural/social events and will frequent restaurants and bars in the host cities, in addition to hotel stays.”

Although cities are increasingly attracted to hosting esports events, the level of sophistication with which they do that varies greatly.

Ulrich Schulze, senior vice president – Product at ESL Gaming, which organises large-scale gaming and esports events, says the ideal host is not necessarily a large city. A megacity like New York will typically have so much else happening, any event would struggle to grab public attention, Schulze says. Additionally, such cities tend to be very expensive for travelling fans.

“We are not necessarily looking for a big city name, but rather the infrastructure. And what we tend to see is that second or third-tier cities often have a stronger focus on making sure that things work well. This means there’s more room to work with them,” says Schulze.

Paul Petersson Rebello, esports coordinator for Malmo in Sweden, says the relatively small city goes the extra mile to give event organisers added value when they host events there. Malmo hosted the Dreamhack Masters esports tournament in 2019, attracting over 24,000 fans during the weekend.

The city was also expected to host the League of Legends European Championship (LEC) summer 2020 finals before Covid-19 struck. Hansen says event companies that can build long term assets in the host city will win in the end.

“They should look beyond immediate financial gain but aim for meaningful and longer-lasting impact on the community. Events that are just passing through with little local input do not receive the same sort of support from the host cities,” he adds.

Having engaged local leadership helps cities that want to host esports events. “We invite local politicians to come with us on trips to watch esports to make sure that they understand gaming and esports and what they are worth,” says Rebello.

Hansen notes that countries such as Scandinavia have politicians that are much younger than other countries. He gives the example of the Minister of Business in Denmark who is 31 and very interested in gaming. The Minister of Culture in Sweden, who is yet to turn 40 is also a gaming enthusiast. “Such leaders have gaming instilled in their upbringing, which helps,” he adds.

Millions of dollars in corporate sponsorship money is being invested in esports. Spike Laurie, head of Sales, Marketing and Business Development at Prize Payments, a platform for distributing winnings, says major corporate brands want to sponsor esports/gaming but don’t necessarily know where to put their money. Also, investors who want to buy into teams, are having trouble in valuing their worth.

“If you were allowed to buy Manchester United football club 50 years ago at 10 times the market value, you would have thought it was a terrible deal because it would have been overpriced. Today, that price would seem like a steal. Similarly, investors are struggling to value esports teams,” he explains.

Debs Scott-Bowden, account director at CSM Sport and Entertainment, says there are various pathways available for brands looking to get into esports sponsorship. They may choose a more traditional approach similar to sports teams, or sponsor tournaments. Creating content offers much more flexibility, she adds.

Yann Salsedo, head of Esports EMEA at Razer, a manufacturer of gaming hardware, says esports offers brands the opportunity to engage as much or as little as they wish.

“Commitment could be as narrow as having a logo on teams’ jerseys to sponsoring tournaments or working with federations,” he says.

The business model for esports sponsorship is changing as the space matures. Salsedo says Razer – for instance – chose to work with fewer teams but to deepen its relationships with those it picks. “We may choose to design future products with athletes or generate content in collaboration with teams.

“We don’t want to be mere sponsors. We want to be partners and prefer long-term collaborations. We’re looking to create sound connections with teams, players, as well as communities,”
he adds.

Juandre Bekker, senior online manager, Europe for Samsung says the company is also not keen on mindless investing in teams and tournaments. “We are a lot more selective in what we’re doing,” Bekker says.

Although there has been tremendous growth in esports in the last decade or so, the sector still lacks the deep roots you would find with conventional sports.

Grant Johnson, CEO, Esports Entertainment Group notes that investment in esports is lagging when compared to traditional sports: “There’s not a town in the UK that doesn’t have a soccer pitch. Yet I bet you there are not five esports facilities in the whole country. To have a healthy pro league system, you’ve got to have the underlying infrastructure as the feeder system. As investors, we do plan to be aggressively putting those facilities throughout North America and in the European markets.”

But esports is more inclusive than sports and therein lies its greatest potential. Hansen of Geelmuyden.Kiese describes esports as a truly agnostic product. “It doesn’t matter what gender you are, how you look or how old you are. It is very easy to get involved in esports and gaming in general.”

He says communities that understand how to utilise esports as an agent of social change will derive the most benefits out of the genre. “Economic benefits are one thing but using this medium to involve young kids who are not normally engaged with community affairs is an amazing catalyst for inclusion. This is sort of the only activity where it doesn’t at all matter what your social status or your background is,” he adds.

But for the sector to grow in the region and worldwide, it will have to shake off the Covid-19 blues. Gaming and esports startups have had a difficult time this year because networking events stalled, forcing them to lean on existing networks, Christoefl observes.

“Decision-makers are also more reticent about making decisions around the business in the uncertainty surrounding the pandemic,” he adds.

The esports live events circuit has borne the brunt of the pandemic, forcing a lot of events companies to pivot, almost going back to the old school way of doing things of developing the grassroots gaming scene, Christoefl says.

That said, industry players are already looking beyond 2020. “Interest will be even bigger than before as we see no decline in the general interest. So, it’s just about making the agreements now for future events,” says Hansen.

As the esports industry recovers from a difficult 2020, the GCC and its esports stakeholders can leverage the momentum to build a true gaming/esports ecosystem for the region and the world.

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