The astonishing growth of eSports has been widely discussed and even more widely hyped amongst established operators and start-ups alike.
This year’s Pitch ICE, the start-up competition held at the annual ICE expo, highlighted the ever-increasing popularisation of eSports, featuring numerous start-ups who are looking to tap into this potential gold-mine.
These bright-eyed self-starters have developed specialised platforms specifically designed for an eSports-betting Millennial audience. Similarly, larger operators have started to offer odds on eSports tournaments in an attempt to cash in and catch the widely coveted attention of the largest generation yet, creating an $892.4m industry in 2016. With both industry goliaths and flourishing start-ups eager to profit from this market, who will the eSports punters eventually flock to, and why?
One of the first things to consider is if these companies can apply the conventional models of traditional sports betting to the eSports betting market, or whether there are other variables that must be considered.
Tim Hurks, Founder and CEO at ArcaneBet.com, states: “In my opinion there is no huge difference between eSports betting and betting on regular sports. The eSports tournaments themselves are very competitive and have a live crowd atmosphere just like any other sport. The betting scene evolving around it is nothing more than a natural phenomenon.”
However, other industry experts have suggested that there is a world of difference between these two markets that must be taken seriously by operators looking to adopt eSports in their offerings. This first is, of course, the target demographic; it is widely accepted that Millennials take centre stage in the eSports market, and operators need to know how to cater for this unique generation of future bettors.
“In my opinion, traditional sports betting has flourished rather slowly, and only because operators have felt the need to cater for the wants and needs of Millennials,” says Suraj Gosai, Co-founder of Blinkpool.com. “Right from the very beginning, eSports has been tailored to this coveted demographic; Millennials are used to products with high-quality graphics, and which allow them to multitask and handle a lot of information at one time. All the data gathered about this demographic would indicate that they would like gambling, yet the products they are offered do not spark their interest. I believe eSports offers the industry a chance to innovate on the prolific gambling and viewing experience together.”
Mark McGuinness, eGaming Futurology Consultant at Mainstream Marketing and Communications, further argues that this particular form of sports is much more relatable to the everyday lives and interests of the younger generations: “eSports players typify the true Millennial generation in that they have grown up and are fully au fait with digital technology and media. Their consumption and media patterns are different; they understand Bitcoin, social media, the decentralised internet and so forth.”
While this form of gaming is already popular with this sought-after group, James Watson, Head of eSports at Betradar, suggests that the consumer demands of this generation will not be particularly easy to appease: “They are typically a younger demographic, perhaps not particularly accustomed to betting, and react quite unfavourably to poor user experiences. This means that the most successful eSports betting operators to date are those who have tapped into the mindset of the end-user, creating easy to navigate and simple to understand offers that resonate with them and their lifestyles.”
Indeed, Hurkss also believes that speaking the language of Millennials is no easy business, particularly in terms of marketing: “ESports is a relatively young and currently fast developing industry. It is a new market with new users compared to other sports. Partly because it’s main audience can only be found online, it is a challenge finding successful ways of approaching and connecting to this audience. It is still difficult to estimate the true potential and value of both the audience as well as channels such as YouTube and Twitch. With a lot going on in an immature market these aspects can either be under-valued or over-valued, which can have a big impact (both negative and positive) on the profitability of eSports betting.”
McGuinness points out that amongst eSports consumers, you’ll find “huge loyalty, tribal behaviour and engagement with one particular video franchise in the value chain” and therefore the opportunities for betting crossover on eSports can often be scarce when compared to traditional sports betting.
Another significant difference between eSports and the traditional market is the nature of the games themselves – particularly their tendency to be continuously updated and reworked by gaming publishers. While Michael Doyle, Chief Marketing Officer at PVP.ME, believes that the “changes in mechanics keep the games engaging and extend their eSports ‘lifetime’”, these changes can make the production of odds for eSports tournaments especially tricky.
This is further complicated by the vast amount of factors to consider when generating odds on games such as DOTA II, which has approximately 500 in-game variables – not to mention the competencies of the teams themselves.
“The monthly revisions of rules and mechanics in the game have a major impact on performance and results. In comparison to traditional sports, eSports is a very dynamic and fast-developing sector dedicated to answering the audience’s requirements for thrills, entertainment and a superb betting experience,” notes Mario Ovcharov, Chief Marketing Officer at UltraPlay. “Teams need to be up-to-date with the current environment. Teams that quickly adapt will possess more advantages in the game and be more successful. That’s why it’s really difficult to create odds in eSports and for betting players to follow the trends of gaming performance of all eSports teams.”
“The subject matter is several magnitudes more complicated than the majority of more traditional sports; try showing a Data II stream to an eSports newcomer, and they’ll walk away with a very blank expression,” adds Watson. “This is down to the sheer amount of micro-events and activities taking place every minute. This has several knock on effects when it comes to effectively creating mathematical models and dealing with the vast quantities of live data during a match.”
ESports also suffers from a lack of regulation, which also has an effect on the betting market; consumers are discouraged to bet on matches which may have been fixed with an operator who is not complying to any formal regulatory standards.
Fortunately, many countries have made huge strides in terms of regulating the eSports betting market. “For most jurisdictions, including the UK, eSports betting is already regulated and accepted just as any other sport,” explains Watson. “Indeed, there are now almost 100 licensed bookmakers globally offering eSports betting options. There are some exceptions to this rule; for example Italy and France, where the regulation process is a bit more complex, although these territories are also making remarkable progress.
“The more complicated story surrounds skinbetting and other more informal betting mechanisms. The UK Gambling Commission has taken a firm stance on such activities in recent weeks, announcing that any gambling operator dealing in these pseudo-currencies will require a license. This is a trend that will most likely continue in some of the more heavily regulated markets.
However, the regulation of eSports tournaments themselves remain a huge problem for this market, as Gosai explains: “A formal regulatory body for eSports needs to be put in place and there needs to be an improvement in tournament standards, including a base threshold of what is expected and permitted. One of the greatest threats to the market is the increase of match-fixing especially if the gambling market grows at a faster pace than the professional scene. Players themselves need to be protected, assured they are competing on a level playing field and being paid enough so that financial incentive to fix a match is diminished.”
McGuinness notes that “operators need accurate data in order to offer odds on eSports events”; so if the lack of regulation continues, operators may be put off by this market due to the complications of predicting odds for an unregulated sport. This will in turn limit the competition between operators, ultimately stunting or decelerating the growth of the betting market itself. However, Ovcharov warns that regulators will need to consider “how to improve and enrich eSports tournaments rather than restrict and encapsulate the market sphere”.
