Published author and business professor Dr Joost van Dreunen answers a burning question: How has Covid-19 impacted esports?

Competitive gaming tends to bring out strong emotions. Caught in the moment with our favorite game or team, we stop thinking rationally and surrender to the moment. It is an important part of what makes esports so exciting. Irrationality is, however, entirely unhelpful when it comes to looking at the industry’s bigger picture. The business of esports is a game all of its own.

During a recent roundtable, someone raised the obvious question: “How has Covid-19 impacted esports?

It is fair to assume that most of us have been wrestling with many of the same challenges this year. Among them: not getting to hang out with our favorite people doing our favorite thing. The implication here is, of course, that because we’re not able to gather, competitive gaming is basically doomed and done for. 

Living two blocks from the Barclays Center in Brooklyn, NY where I’ve watched ESL One and witnessed London Spitfire win Overwatch League’s first championship, I can’t say that I miss the thousands of hoodlums taking up all the parking spots on my block every. single. weekend. 

I kid, of course. Being around other people is the whole reason I live in this neighborhood. But the empty streets and vacant sports arenas do appear to echo doom for the future of a still nascent entertainment category. Right as it started, it went away.

COVID-19 saw events cancelled worldwide in early 2020 as countries went into lockdown

Esports was soaring heading into 2020

At the beginning of 2020, competitive gaming had enormous momentum. The number of fans, investors, and interested brands had been growing, and expectations were high. To meet demand, teams and leagues were investing internally in the hopes of capitalizing on the momentum. And then Covid-19 took a big dump on all those plans.

Reading the news makes the impression that even the large, well-funded esports programs have begun to stumble. Activision Blizzard’s announcement that it is laying off 50 people mostly from its live events and esports activities, sent a chill through the industry. Granted, there’s been a question mark next to some of these top-down initiatives for some time now. But what do we make of one of the industry’s biggest firms cutting its sails at a time like this? 

Similar to much of gaming culture, it has taken a long time for it to penetrate society at large. Along the way we’ve seen many false starts. So, too, has competitive gaming. Back in 2007 we watched the thriving industry in South Korea collapse on top of itself. After an impressive rally that resulted in not one but three dedicated TV channels, audiences dropped esports like a hot potato. But what led to its decline then wasn’t the result of some faddish undercurrent that had run its course. Instead, it was the macro-economical shift from PCs to mobile devices that both figuratively and literally disconnected audiences from content.

Like today, critics at the time claimed it was precisely the type of extinction-level event that proved the point that esports were a statistical outlier, and not the shape of things to come. The disappearance of a novel phenomenon meant that its economics clearly didn’t hold water nor its content the attention of audiences. It was to be a fringe activity at best, destined to remain small. But small doesn’t mean weak.

Perfect World ran their Dota 2 Pro Circuit Regional League offline in Shanghai from January to March 2021

So did Covid-19 irreparably damage esports?  

Of course not. Don’t be stupid. If nothing else, the past twelve month have merely strengthened the industry’s resolve. It’s been encouraging to see companies like Astralis report stellar figures: in 2020 it generated $8.5 million, up +92% year-over-year. We also watched Electronic Arts pay a 36% premium for a total of $1.7 billion for Codemasters, largely because it had successfully transitioned its usual competitive gaming initiatives to an online-only format, and tripled its active user base. 

Similarly, investment continues seemingly at the same pace. Guild Esports managed to sign David Beckham as its patron saint, and esports betting platform Rivalry raised a cool $20 million. Both firms are publicly traded. Who would have imagined that a few years ago?

Arguably, one of the positive outcomes of this whole damndemic is that it has likely killed off all those half-assed initiatives by brands and game companies looking to ‘do esports.’ Good riddance. Take all your fake friends and go find some other category to clutter. What has inoculated competitive gaming against Covid-19 and every other cataclysm is the strength of the loyalty between fans, players, publishers, event organizers, and the compatriots that seek to build the bigger vision of what esports can be. 

The crowd for the 2020 Worlds Finals for League of Legends in Shanghai, China [Image courtesy of @lolesports]

An easily accessible and resilient industry

What drives the success of esports isn’t the mere novelty of the phenomenon. The momentum behind competitive gaming is two-fold: first, people have always and will continue to compete in things they enjoy. It’s instinctual and exists everywhere regardless of cultural context or historical moment. Second, esports provides an easily accessible entry point into the much broader world of live streaming as well as the reimagination of live experiences.

In response to the roundtable question, several people were quick to point out that esports have always been online. The glitz it borrows from more mature categories like conventional sports can blind you from its humble beginnings. But their struggles are their own.

As Astralis’ senior management gleefully pointed out in last year’s annual report:  “As other sports shut down entirely, esports quickly demonstrated its resilience by moving tournaments online, and with it, growing viewership among existing as new audiences, alike. We capitalized on this trend and continued to invest into our core product and asset: the size and breadth of our audience and the long-term performance of our teams.”

Like all forms of play, esports abides.

Joost Van Dreunen - Author and Professor

Joost Van Dreunen

Author and Professor | Twitter: @joosterizer

Joost van Dreunen is an academic and entrepreneur with an expertise in video games. He is author of One Up and teaches at the NYU Stern School of Business. Previously he was co-founder and CEO of SuperData Research, a games market research firm, which he sold to Nielsen in 2018. He is an advisor and investor, and writes a weekly newsletter on gaming, tech, and entertainment called SuperJoost Playlist. Joost received a PhD from Columbia University.