Esports downers, uppers and data

As the gambling industry gears up for ICE 2024, iGB is here to navigate you through the latest trends and developments post-2023, especially in the dynamic realm of esports.

The esports market is poised to be a central topic of discussion at ICE 2024. During the COVID-19 pandemic, we witnessed a meteoric rise in esports betting, with unique offerings like virtual sports, Belarusian football, and Armenian ping pong capturing the attention of bettors, alongside major titles such as FIFA, Dota 2, and League of Legends.

However, despite that initial surge, the momentum has not been sustained. The esports sector experienced a notable decline in 2023 and now appears to be plateauing, prompting industry experts and stakeholders to reassess their strategies.

This year has been defined by contrasting performances among operators: on one hand, rising stars like Rivalry have thrived, while on the other, companies such as Entain and Esports Entertainment Group have encountered significant challenges and setbacks. Furthermore, the competition for data supremacy in esports has intensified, with market players like Bayes and Grid vying for dominance.

Esports: The Challenging Landscape Ahead of ICE 2024

To comprehend the current state of esports, it is crucial to analyze the challenges faced by industry giants. A prime example is Entain, which has historically been known for its aggressive market investments. The company made headlines with its acquisition of Unikrn, a pioneering esports-focused operator, in 2021.

Entain and Unikrn: A Cautionary Tale

Following bold ambitions, Entain relaunched the Unikrn brand in December 2022, aiming for significant market influence. However, less than a year post-relaunch, the company has seemingly hit the brakes on its aspirations. According to a recent statement from Entain, they plan to scale back on direct-to-consumer operations via Unikrn. The rationale? To optimize their business structure for more effective growth.

Nonetheless, there may still be potential for resurgence. In June, Entain expanded its portfolio by acquiring Tiidal Gaming NZ, the parent company of esports betting provider Sportsflare, for £7.9 million. Observers will be keen to see how Entain leverages this acquisition moving forward.

The Dilemma of Esports Entertainment Group

Turning to Esports Entertainment Group (EEG), the narrative is starkly different. In its Q1 2023 report, EEG revealed a staggering 71.9% drop in revenue, with figures hovering around $2.7 million—a dismal indicator of its financial health. The company has been under scrutiny since May 2022, when it publicly acknowledged doubts about its sustainability.

After the departure of previous CEO Grant Johnson, new leadership under Alex Igelman has initiated a transformative strategy for the company throughout 2023. This reorganization included selling its Spanish gaming license for just under £1 million and divesting the Bethard brand for £8.3 million. In pursuit of a content-driven future, EEG also acquired esports content producer Drafted.gg, signaling a potential shift to provide a comprehensive entertainment experience that integrates betting and content delivery.

Esports: The Success Stories Ahead of ICE 2024

Amid these challenges, one company has clearly emerged as a beacon of success: Rivalry. This dedicated esports betting operator has captured significant attention and is set to play a prominent role at ICE 2024’s esports conference. With robust revenue growth and a relevant market position, Rivalry has effectively filled the gaps left by competitors like Entain and EEG.

Based in Toronto, Rivalry has exceeded revenue expectations, establishing itself as the go-to brand for Gen Z and millennials, with 80% of its customer base under the age of 30. Its innovative marketing strategies resonate with younger audiences, employing colloquial language, memes, and influencer partnerships to create an engaging brand identity. To diversify its offerings, Rivalry launched the Casino.exe mobile app in Ontario, an endeavor that aims to leverage unique insights into Gen Z’s betting behaviors.

Esports: The Data Battle—A Critical Battleground

Finally, the ongoing struggle for control over esports data is a crucial battleground for the industry’s future. Key players Bayes and Grid dominate the landscape as providers of official esports data for B2B operations. Their rivalry resembles the competition seen between Genius Sports and Sportradar in traditional sports.

The challenge lies in the proliferation of third-party suppliers offering unofficial data solutions. While these alternatives often come at a lower cost, they sell data that could be considered pirated, posing significant legal and ethical concerns. The ongoing battle over intellectual property rights highlights the complexities of data ownership and the implications for market growth.

As we look ahead, defining the parameters of esports data usage will be imperative, and the industry can expect continued litigation and uncertainty around this topic. Addressing these challenges will be vital for unlocking the full potential of esports in the coming years.

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