The Anatomy of Esports in India
Startups and **** Series
What defines a sport? Dictionaries define sports as a contest or game in which players do certain activities according to a specific set of rules and compete against each other. Esports is a billion-dollar industry that does just that. One can define each game that classifies under the genre of esports as sharing a common theme, “they are multiplayer games where all teams participating compete to win, applying strategy, skill, and teamwork to achieve their goal”
From arcade competitions in the 1980s to LAN parties in the early 1990s6 to the rise of multiplayer online games in the 2000s, gamers have spent decades building eSports foundations. The development of advanced computing and graphics platforms, along with the growth of social media and high-speed internet access, has helped enable the creation of highly responsive and deeply immersive shared gaming environments. Today the esports market is as big as traditional sports and is offering media companies access to a demographic that was far from its reach.
In India, the esports market is fragmented as multiple platforms and publishers organize esports events regularly to generate sponsorship and advertising money.
Individual players can either stream their own games to earn or join large organizations to compete for substantial cash prizes. Esports tournaments have a major following with many fans logging in to watch their favourite team in regional and global competitions. According to Inc42 Worldwide around 1.7 Bn, people watch esports. (already among the top 10 watched sports)
*Viewership of esports in India doubled to 17 million in 2020 while prize money pool grew 25-30%.
Overview
There's a lot of stigma around esports and the players are often subject to being called lazy and of ruining their own futures. However, respect is not far from governments and sports bodies recognizing esports as a sport with Asian games adding it as a medal event. Esports as a career is still in nascent stages and some fundamental issues need to be looked at, as of now it has been growing at an incredible pace and brands have not shied away from investing big in them.
Difference between Esports and Sports
Esports are digital native.
The “game” is an intellectual property that belongs to a company.
Streaming offers an alternative for talented gamers to competitive play.
Fan bases are not location-specific.
Most esports titles monetize their fan base at a lower rate than traditional sports.
Market and Background
Esports has a huge potential in the Indian market because of the large youth population. The esport segment and online gaming have witnessed significant growth in India in the past few years thanks to the penetration of smartphone at affordable prices, as well as the rise of mobile games such as PUBG mobile, Free Fire, Clash of clans, call of duty Mobile among PC and Console games, with deeper penetration of high speed 4G internet and a rise in the number of online gamers the esports market has all the ingredients for growth. The aggregate revenue of esports startups and companies in India reached $68 Million in FY2020 and is projected to grow by a CAGR of 36% in the next 3 years, as per Inc42 Plus analysis.
“Esports is the only sport that can outrun cricket easily. We need government support to recognise it as a sport and not mix it with online gambling,” said Lokesh Suji, director of Esports Federation of India, who estimates there are 200 million esports enthusiasts in the country. “
In the aftermath of the pandemic, mobile esports and streaming witnessed a significant surge in user base as people had more time on hand. To cater to this audience, multi-gaming platforms, streaming players and telcos have started to invest in esports tournaments to capture or engage their users.
India is not very behind the US and China and soon may emerge as a powerhouse in esports. The coming Asian games will be a debut for esports and will go a long way in establishing its legitimacy as a sport.
The industry today is valued at over a billion dollars and is expected to grow multifold in the coming years. Standardization, legitimization, and monetization will be the core focus of the industry.
Journey
*The first esports game was organized in Stanford University in October 1972, where over 10k participants played the video game space war.
Trends
Emergence of Esports Cafe’s: Esport cafes are not only a way for people to play games without owning the requisite hardware, but this is where the competitive mentality is built through amateur tournaments. India is home to an estimated 350-plus such eSports cafes with NVIDIA announcing plans to expand its gaming footprint in India by adding 100 more cafes. Nemesis Gaming, League of Extraordinary Gamers (LXG) and Circle Gaming are few major eSports cafe startups in India.
Rise in Startup Investments: The market opportunity is accelerating the interest of investors to bet on the industry which is on the inflexion point.
India is seeing increased adoption of esports by brands, advertisers and the growing number of users and viewers are likely to ensure that the market keeps growing.
Future Trends
Mobile esports will become mainstream - Key to the success of mobile is global smartphone penetration rates and advancement in wireless technologies providing good internet speed.
Monetization will improve: Brands are starting to increasingly invest in esports and the growth in viewers and users is likely to open more avenues of revenue. Currently, players monetize via creating content or winning competitions. The average revenue per user ARPU is very low as of now as compared to traditional sports and has the potential to grow to a larger value. publishers/leagues will have to share a greater piece of the pie. Merchandise
Winners will emerge in live streaming wars - There are two sides to consider. The first is the streaming platforms themselves, and the second are the content creators. Content creators are likely to prosper. The prospect for platforms is mixed, the platforms that attract and retain the best talent while providing a positive user experience will thrive.
Top games like counter strike, Fortnite, Dota, call of duty, PubG will continue to dominate the space.
*89% of all game revenues in India are generated from mobile games
Challenges
Absence of formal recognition: Despite the popularity of esports in India it is yet to be recognized as an official sports category. There is minimal government involvement in this segment. Governments all over the world have been supporting esports. This is one of the primary reasons why the Chinese esports industry has risen so quickly.
Health Hazards: There are significant health concerns due to the sedentary nature of the sport.
Average Revenue per User: ARPU in esports is significantly low.
Revenue Streams: Sponsorships, Advertisements, Merchandise, winning tournaments, League revenue sharing
“in the next 5-6 years, an incredible number of digital athletes will emerge from India and win medals”. The company held a total of 432-speed chess, carrom, and pool tournaments last year. “As data becomes cheaper and devices become more accessible, the best way to enable physical sports is through digital sports,” - Sai Srinivas (Founder, MPL)
Conclusion
I believe that esports is at the inflection point in the country, we will see the rise of digital athletes, acceptance will improve, the inflection of capital will ensure rapid growth and soon we will become a major hub for esports in the world. However, the government and the stakeholders need to work hand in hand to ensure stable growth.
Sources: Medium, Inc42, Economic times, Deloitte, kpmg, roundhill, esports observer, the verge, scroll.
Great Insights. I am myself looking forward to esports in the racing community!