Esports: The Year in Review and a Look Ahead

December 23, 2021

As the second year of the pandemic comes to a close, esports—competitive organized video gaming—continue to see viewership and revenue growth in a way that traditional sports have not. Esports viewership is expected to reach 474 million people this year, garnering more than $1 billion in revenue for 2021—a 14.5% increase from 2020—and to grow to $1.6 billion by 2024. As COVID-19 restrictions ease for more traditional sports, the future of the esports industry, its role in the traditional sports space, and potential legal challenges remain in question.

Looking Back at 2021

  • When pandemic-related restrictions cancelled some of the sports industry’s biggest live competitions over the past two years, esports benefited from an audience looking for entertainment. The International Olympic Committee hosted its first-ever virtual sporting event, the Olympic Virtual Series, with competitors playing in virtual versions of Olympic sports. And for the first time, Sports Illustrated featured esports players on its cover.
  • Esports did not, however, move fully into the mainstream as some expected, exemplified by ESPN closing its esports division in November 2020 after only four years. The network continues to cover esports on an ad hoc basis by focusing on major events and breaking news, but its move away from full-time coverage underscores that esports has grown—and will continue to grow—in a more niche audience.

2022 and Beyond

  • As esports heads into 2022, a greater focus will be paid to evolving sports betting laws, as Nevada, New Jersey, and Connecticut recently allowed gambling on esports. Betting on esports is made more complicated due to the degree of control publishers and developers have around the game.
  • Video game publishers finance and distribute the game itself, ultimately paying game developers to design a game that will appeal to the publisher’s fan base. Esports leagues, much like traditional sports leagues, are then tasked with attracting the best players to play the game. Unlike traditional sports, however, a publisher can shut down a league’s access to the game absent a contract at any time. Pundits are expecting creative deals on sponsorships and media rights in the year ahead, as publishers and leagues seek longer-term publishing and naming rights deals.
  • As esports continue to rise in popularity, so do players’ salaries. But esports leagues and team owners are having a tougher time leveraging their still-growing advertising revenue to meet those salary expectations. Employment-related issues are always front-and-center of traditional sports leagues, and we expect esports to follow suit.
  • The increased interest in regulation of video game playing by minors in some countries could negatively impact professional esports players, many of whom range from 15–17 years of age. For example, China’s recent rule that minors cannot play video games more than three hours a week will significantly change the competitive gaming scene in China, where esports gamers often play 20-plus hours a day.

If you are interested in Esports 2022: The Year Ahead, as part of our Digital Disruption and Innovation Webinar Series, we invite you to subscribe to Morgan Lewis publications to receive updates on trends, legal developments, and other relevant areas.