The impact of COVID-19 on sport live events
As the major sport live events were being cancelled, people started to realize the COVID-19 pandemic was real and impacting their everyday life. On top of fans, also sport leagues, clubs, athletes and broadcasters started to struggle, especially from a financial standpoint. In fact, because of the pandemic, an estimate of about 120,000 sponsorship contracts were cancelled, for a total amount of about $10 billion, as reported by the consulting company IEG.
What about video games and eSport?
At the same time, the situation was boosting even more the video game space. While people may still think of video games as played individually or in a duo (like in the ‘80s and ‘90s, for games like Super Mario or Mortal Kombat, on non-internet connected consoles like Nintendo or Playstation 1), there are today popular games that are played online or in large stadiums, in true competitions that involve multiple teams of players working together to win over their rivals (other teams of players). This is the core of “eSports” i.e. video games that resemble competitive (traditional) sports, and involve formalized championships, press coverage, advertising commercialization, merchandising, licenses and so on.
The growth of eSport
In 2019, eSports grew about 15% compared to 2018, achieving a global audience of around 450 million people. COVID-19 saw eSports peaking, with a connected growth of also viewership (Twitch, the biggest streaming platforms for gamers globally, has grown its audience by up to 30% in this period) and video games in general (according to Verizon, in the first week of quarantine, the US domestic playing time was up 75%). The places most affected by the pandemic saw even bigger increases – as an example, in Italy, live stream gaming has increased by up to 70%.
In terms of revenues too, the gaming industry has tremendous numbers, with the market estimated to be $160 billion in 2020, according to Newzoo. This is twice as big the sum of revenues of both global recorded music ($19 billion) and worldwide film box office ($43 billion). In this, the eSport market was expected to be worth over $1 billion in 2020, even before the current global pandemic, with sources of revenues that are coming mostly from sponsorships and media rights (75% of the total).
NASCAR riding the wave
One of the organizations that best leveraged the current environment, riding the wave of the emerging trend of eSport and digitization of gaming and viewership, was NASCAR, the most popular auto racing company in America, globally famous for its stock car racing. As the pandemic prevented NASCAR to run its traditional operations (real-life races), NASCAR could have gone bankrupt, given the loss of sponsors, tickets and merchandising. In a moment of great threat for its survival, NASCAR had to transform itself and find ways to keep audience engagement and sponsorships, making it through the COVID-19 lockdown. By following the intuition of their CEO, NASCAR quickly shifted to the eSport format and announced they would replace all the real-life races with online video game (race) competitions. This way, their hope was to avoid losing sponsors and undergo significant financial distress, as it was happening already for many different sport events, due to the prolonged period without competitions. With eSport, NASCAR wanted to give fans an alternative to races, to guarantee eyeballs for their sponsorships – to do this, they replaced live audiences in real-life events with eSport (virtual) audiences.
Coordinating the ecosystem
As of March, the traditional NASCAR race schedule was stopped but the new NASCAR iRacing Pro Invitational Series was created. To make this happen, the NASCAR team had to work with multiple partners in the ecosystem. First, the Massachusetts-based online racing simulator company iRacing supported the NASCAR iRacing Series with technology. Second, Fox Sports agreed to broadcast the virtual races for the entire period of lockdown, where fans and drivers had to stay home, far from real life races. Third, last but not least, there were sponsors – they are a core part of NASCAR, as they fund the races that can monetize audience via advertising on cars. NASCAR managed to convince the four major sponsors (Coca-Cola, xFinity, Geico and Anheuser-Busch) to keep their deals also in the eSport set-up.
The first NASCAR iRacing Pro Invitational Series event had the largest TV audience for an eSports event. According to Nielsen, they had more than 900,000 viewers on Fox Sport, significantly more than the previous peak of 770,000 viewers (Mortal Kombat, in 2016). Afterwards, the NASCAR iRacing Pro Invitational Series mirrored the original racing schedule, by simulating races in the location where original races were supposed to happen. Viewership increased up until 1 million viewers on Fox Sport, almost matching the viewership of original races!
Opportunity to learn and reapply?
The numbers achieved by the first virtual races is a testament to the successful digital transformation NASCAR went through in an incredible short time, by (1) leveraging the increasing trends of eSport and (2) aligning all partners to it (from technology partners, to broadcasters and sponsors). This is potentially one of the best cases of turnaround of an existing non-digitally native business – a great case study for other sport events that had to stop because of COVID-19.
Considering that the financial resources are there, given that the “ad spend always follows consumption”, this potentially will also launch a new era, where everybody can become a potential star, with eSport gaining more traction in our everyday lives and with the corresponding business support structure of broadcasters and sponsors. In fact, in this context, sports and broadcasters may start leveraging eSports even post COVID-19, with audience and sponsors in the loop.
Many brands started to leverage this growth trend of audience migration, moving budgets to eSport (virtual) events. Brands like BMW, Nissan and Verizon started to aggressively invest media budgets in the eSport arena, in a moment where videogames are booming. BMW announced its largest esports play to date, partnering with five top esports organizations around the world, in a multi-year partnership includes different activations.
With increasing money flowing into the space, will we see more sport events turning successful into eSport competitions?