Esports continue to gain popularity. Oliver Niner, PandaScore’s head of sales, analyzes how the industry performed in 2022. He believes that the best is yet ahead.
Esports have been the subject of much talk over the years. It is believed that there will be a moment of critical mass, where esports will explode into the potential hype. Much of the communication at that time was driven by the excitement associated with esports being at forefront of entertainment and a melting pot sports, gaming and pop culture.
The esports industry is experiencing a market correction in 2023. Esports has seen a decline in headcount, decreased advertising spending, and project closures. Businesses that value substance and sustainability will be the ones that last.
These changes also have implications for esports gambling. It’s not all about the big bang theory that has dominated conversation. This is a big, brash marketing campaign with lots of hype and little substance. Gambling is generally a recession-proof business, and esports betting is going to take stock of the true essence and measure for growth.
Sustainable growth of the pie
We are confident that esports gambling will grow in the future, as we have seen it do through PandaScore’s steady, sustainable growth. Operators and suppliers need to offer a robust, comprehensive product that is both comprehensive and robust, rather than trying to chase big bang growth, or relying on tournaments for the legwork.
Our research showed that PandaScore members who joined in 2022 saw an average 33% increase in their overall turnover for their esports betting product. The overall composition of the main and side markets has not changed but the total turnover has increased. All our customers saw a 61% increase in total turnover for the Winner and Main markets between 2021 and 2022.
Side markets betting grew by 54%, while maintaining a similar share overall turnover. This indicates that new players aren’t going away from these markets or products like player props.
2023 will see small and medium-sized operators, as well as Tier-1s, increase their overall turnover. They will also continue to improve the quality of their products by incorporating customer feedback into product iterations. There are many strong indicators for sustainable growth in the esports industry.
Stabilizing the Esports Calendar
The first wave of capital investments and professionalization of esports has made it difficult to maintain consistency in competitions, teams and the overall calendar. There were many teams that came and went, as did tournaments. This led to franchising for good or bad and the establishment of structured and returning competitions throughout each year.
Operators can guarantee more content for bettors if there is greater consistency across the esports calendar.
For a number of years, the top-tier competitions have been consistent. We are now seeing that same consistency in lower-tier tournaments as a way to fill the gaps left from your A-tier and S-tier competitions.
Counter-Strike has been granted a tournament outside of the top league for teams. It allows them to compete in a professional setting that is long-lasting and with worldwide reach. The inaugural Central Europe Finals, which will take place in Malta from 16-19 February, will serve as a benchmark for the popularity and acceptance of CS:GO at this level among bettors.
Valorant is still growing rapidly as an esports and betting platform. Riot Games-endorsed tournaments are clearly leading the way. However, we also saw an increase in regional and local tournaments last year. This enthusiasm was matched by enthusiastic bettors, who saw overall bet volume for B, C, and D-tier competitions triple from 2021 to 20, while maintaining margins of almost 10%.
The Valorant Champions Tour will be restructured and the Partner Programme will be introduced. This will ensure a consistent schedule for top-flight competition and, hopefully, the same longevity League of Legends enjoyed.
Diversification and regulation
Everybody is closely following the US market, and with good reason. Sports betting has seen a boom in popularity since PASPA was passed and gradual legalization by each state.
This is because esports are not regulated uniformly and has varying parameters that may help or hinder their performance. Esports legislation that is specific to esports and has a clear understanding of the structure of competition and calendar will be more appreciated than general sports regulation.
Esports will not burst like a dam, but rather a steady stream that builds momentum over time, provided the regulatory conditions are right.
We expect to see a widening of data access methods, from how it is collected and distributed to operators to the way it is presented to bettors via product.
Operators won’t be content with esports falling into the bargain bucket. Tier 1 operators seek esports specialists who can provide products that are tailored to the needs of their audience, rather than just a trading instrument.
The esports community is growing
The market correction has not affected the actual viewing audience of esports, which indicates that the customer base isn’t shrinking in spite of it. Equitable partnerships that are based on solid products, research, and development will bring sustainable growth to 2023.
We want operators to succeed. PandaScore partners with its partners on a revenue-share basis. We are not just cashing in on the asset’s value now; we are putting in the effort to grow the vertical over the long-term. Our success is the success of our customers and the success for the esports betting Vertical.