If the first few weeks of 2022 are anything to go by, the media and entertainment industry should buckle up and brace for a year of continued trailblazing transformation and innovation. Just three weeks into the year Microsoft announced its titanic acquisition of Activision Blizzard, expanding its stake in the gaming industry in a monumental way and placing live gaming front-and-center as its lead entertainment format.
The magnitude of Microsoft’s $68.7 billion acquisition is on par in scope with AT&T’s acquisition of DirecTV – which made it the largest pay-TV provider in the world at the time – and Disney’s acquisition of 21st Century Fox. Microsoft’s announcement was quickly followed up by deals from Sony, which purchased the independent studio and publisher Bungie for $3.6 billion, while ESL Gaming and FACEIT, two of esports’ most prominent tournament organizers, were purchased by Saudi Arabian government-backed Savvy Gaming Group for $1.5 billion.
The entire entertainment industry – from Silicon Valley heavyweights to broader media companies – is seemingly heading full steam towards the era of interactive engagement with consumers.
Building on strong foundations
Although these deals captured the attention of those not directly involved in the industry, particularly the Microsoft deal, gaming and esports’ resilience and commercial interest has been widely documented and discussed over the years. Esports’ global audience rocketed to 474 million in 2021 – up from 436 million in 2020 and 398 million in 2019 (Newzoo). 2021 revenues were up 14.5%, with over 75% of the total coming from media rights and sponsorship.
Microsoft CEO Satya Nadella summarized the rationale behind the acquisition in the perfect way when he said: “Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms.”
These words could not be truer. When you reflect on the curveball thrown at the broader sports and entertainment sector during the pandemic with venue closures and travel restrictions rife, it is clear gaming and esports is in a stronger position than ever and is poised for its biggest year yet.
To start with, 2022 is shaping up to be the year many gaming events that had gone virtual go live again at physical venues. While a huge number of fans are geared up to go back to venues to watch esports in person after the long pandemic-enforced hiatus, many are also looking to visit new worlds to make the live esports experience even more vivid this year. And many of the pioneers who created the vivid virtual worlds of the best video games also now have the backing from big tech to demonstrate just how much they can achieve. So not only is the esports industry already bringing back the magic and power of live tournaments, but the potential to create new immersive events in simulated digital environments opens a Pandora’s box of opportunities for both fans and esports organizations. Simply put, if you want to create the best virtual worlds, hire the best world builders.
Betting on themselves
Esports leagues have more sponsorship dollars this year than ever before. With advances in remote and cloud-based production technologies offering unprecedented flexibility in how they take their shows to market, they’re in an excellent position to invest in bigger and better live event productions.
Virtual tournaments proved to be a viable means of income for esports leagues during the pandemic. The continuing success proved just how strong the appetite to watch live events among growing gaming audiences – and increasingly among regular sports fans looking for fresh, live content to watch.
While organizing physical live events may seem unnecessary following successful pure online competition through the pandemic, many esports organizations are committed to getting back to the arena as soon as they can. They know their fans and know that live, in-person tournaments are the way to build on the momentum and growth they achieved during periods of lockdown and other restrictions over the last two years. Virtual competition will never match the excitement level of a live event and organizers are ready to get back to the big shows.
This year, the line-up of live esports events is already shaping up to be an exciting one. League of Legends will be touring North America towards the end of next year, while ESL’s Intel Extreme Masters is set to take place in Katowice, Poland, and Cologne, Germany. For the first time, the 2022 Asian Games in Hangzhou, China will include esports amongst its usual roster of traditional sports. This return to physical events presents a range of opportunities to engage fans and grow the sport.
Distributed production workflows will continue to form the bedrock of many new live esports event opportunities, combining cloud, remote and mobile elements. Tapping into cloud-based workflows will give leagues the flexibility, scale and robustness needed to deliver the full palette of live events over the next year, from stadium tournaments with superstar players to smaller regionally focused competitions.
Pandemic travel restrictions remain uncertain over the next 12 months, and leagues must prepare for the possibility of having minimal onsite personnel – often with abrupt notice. Cloud-based tools allow production teams to work from anywhere in the world, using just a computer and an internet connection – making distributed production workflows a logical investment.
Pioneering the interactive virtual world
We will also see in the coming months just what Microsoft, Sony and others in the world of big tech aim to do with their expanded gaming assets. Nadella clearly signaled that acquiring the “building blocks for the metaverse” was a key component of Microsoft’s decision to buy Activision Blizzard.
This concept has existed within esports for decades, with gamers using avatars of themselves to explore and interact within virtual environments. Apply today’s technologies to the concept and we could see gamers virtually attend live tournaments on the opposite side of the world through AR/VR technologies. And no doubt Microsoft is looking at deploying the vision, talent, skills and expertise it acquired with Activision Blizzard to build parts of the Metaverse beyond the realms of pure gaming – starting in 2022.
The main driving forces behind the growth of the Metaverse will initially be digitally savvy younger players and the quality of content available. However, I have no doubt we’ll soon see the idea of investing wholeheartedly in the digital world engage the next generation of gamers – as many already use the internet to buy clothes and groceries, communicate with one another, work, and play. The Metaverse is simply an extension and the next evolution of that type of digital interaction.
Ready, Set, Play
It’s already been a blockbuster start to the year for the world of digital gaming and entertainment, and it heralds more to come in 2022.
We can also expect to see the esports industry continue to flourish with the return to more live venues with the support of cloud-based tools. Organizers’ ability to draw on the best production teams available by breaking away from geographical constraints means we are primed and ready to witness one of esports’ most exciting years of competition yet.
It’s been an interesting journey to get here and there are certainly more acquisitions and innovations to come. The result will be a continued evolution in the scale and ways in which fans can connect and interact with the gaming content they love.
Charles Conroy is The Switch’s VP Gaming