Sebastian Quinn, Founder of Web3 esports engagement platform Yesports, writes for Esports Insider to discuss new revenue opportunities and audience demographics that can help revive esports in 2024.
2023 was a rough year in the world of esports. The combination of layoffs and the shuttering of various teams has led to what some are calling the “esports winter.” Even well-established esports organisations, like FaZe Clan, reported millions in losses in 2023 and have resorted to laying off 40% of their employees.
Many, however, see the previous year as a sort of ‘“rebalancing’” to the industry that was riding high after the global pandemic brought new interest into the esports field. But, as time has passed, it’s clear that the hype has gone, leaving the industry in dire need of revitalisation. As we continue into 2024, esports teams will need to take another look at how they generate and spend their revenue. Fortunately, the ones that do will benefit from the growth potential that the esports market has only begun to tap into.
This Slowdown Isn’t The End, It’s The Beginning
The esports industry’s market correction has resulted in a slowdown in growth, and as a result more conservative business moves by esports teams. Expanding fan bases and revenue can no longer be taken as a given, and more and more organisations are beginning to explore how they can build solid followings and long-term cash flows.
Furthermore, we are unlikely to see the same types of spending that have occurred in the past. Instead, we will see more thoughtful use of funds, with capital more evenly distributed between player acquisition, marketing, and other expenses. The focus will shift towards a more sustainable model to ensure these teams will still be around in five or ten years. This will mean taking a hard look at how every dollar is spent and what it actually brings to the brand.
“The last year definitely poured cold water on some of the hype we’d come to take for granted in years past,” said Sean Zhang, Talon Esports CEO and co-founder. “The slowdown in market growth serves as a wake-up call, urging teams to prioritise sustainability and innovation over rapid expansion.”
As the demand for esports stabilises, one of the most important pillars of rebuilding will involve teams figuring out how to generate more consistent, longer-term revenue. In the past, a lot of this money came from investors and advertisers. However, in 2024, that is beginning to change, and more teams are looking to their communities for new forms of income.
The industry is coming to understand that esports is unique from traditional sports viewing, which has always been passive. Video games offer possibilities for more complex forms of engagement and, by extension, monetisation. Take Dota2’s spectator mode, for example; Instead of merely watching a stream of a match, users can actually control a free-roaming camera, as well as snap to the point of view of any unit in play. This is far more intimate than what is possible with physical sports recordings. Bringing perks like these to fans for a nominal entry fee is one viable model that could bring new money into these franchises.
Another way that these teams can quickly generate income while increasing fan engagement is in the form of digital collectibles. Major league sports have already paved the way with programs like NBA Topshot, NFL All Day, and MLB Champions. Now it’s time for esports to throw its hat in the ring. This could be a match made in heaven, as these events are digitally native, and fans are generally very technologically savvy.
This opens the door for digital goods like exclusive avatars, never-before-seen footage, VIP passes, and more, which can all be sold as promotional items. Giving these collectibles real value in a variety of ways can help ensure fans want to own them, providing a potentially lucrative source of ongoing funding. Of course, for these strategies to work, organic growth does need to return to this market. Fortunately, it looks like 2024 has a lot in store on that front as well.
Esports Can Expand Into Whole New Demographics
Despite the broader industry slowdown, it’s important to remember that there is still growth in the market. Bear in mind that it can take many years to turn general viewers into die-hard fans. Esports is a much newer field than traditional sports like football, basketball, etc. In time, it will likely blossom into a similarly large industry, but there will be booms and busts along the way.
One region that will likely be key to the next boom of growth in esports is the Middle East. In recent years, there has been growing interest from places such as Saudi Arabia, which is investing $38bn in esports and gaming as part of its National Gaming and Esports Strategy. The Middle East and North Africa (MENA) region is also projected to be home to over 318 million gamers by 2025, Arabian Business reported. Given this level of engagement, we can expect 2024 to be a time of intense expansion coming out of the region as the market begins to rebuild from esports winter.
Another area in which we may expect to see growth next year is from women and other underrepresented genders. Traditionally, non-male gamers struggle from a lack of representation and overall toxicity they encounter in the space. However, this is already changing, with events like VALORANT’s Game Changers Championship held specifically for women.
Additionally, just this year, EA began awarding the “Positive Player Award,” given to esports leaders who show respect and humility towards other players. If the industry can keep pushing initiatives such as these, the whole esports space will become increasingly accepted by different types of people, undoubtedly fueling new interest and engagement in 2024 and beyond.
One more expanding frontier for esports is in colleges and high schools, which are increasingly embracing the field as an extension of their other competitive offerings. Now, the students who used to go home after school to play video games can now work their passion into their extracurricular activities. Expect 2024 to only expand on this trend, bringing in a new generation of gamers who will finally have systemic support in beginning their esports journey.
If 2023 was something of a reckoning in esports, 2024 will be a time to rise from the ashes bigger and better than before. The sheer amount of room for growth in this space is massive, and new demographics are being tapped into all the time. If the leagues and teams can revise their monetisation models utilising the latest advancements in digital collectibles, then there is a considerable well of potential value to be tapped into by these organisations. The coming year will show everyone who is ready to compete on a new level and who will become a memory in the field.
Supported by Yesports