(7 min read – Published on 29th August 2024)
When thinking about Sports and Gaming, most people think of Madden, NBA 2K or EA FC. Some others think about the rise of competitive esports. However, most fail to see the greater commonalities between both industries. When you pay a closer look, there is much more than meets the eye. Here are the 6 key parallels between the Sports and Gaming industries.
1) Media businesses at core
Buying a ticket to attend an F1 race or the Super Bowl, and buying the latest Call of Duty or Legend of Zelda video game will all give you access to an entertaining piece of media content. The means of distribution and consumption are vastly different, but at the end of the day, the Gaming and Sports industries are both about creating and selling content that captivates audiences. Both have managed to generate passionate fan bases that have lasted for decades. To this effect, each industry differentiate the ‘creatives’ and the ‘corporates’. The former being in charge of making the magic happen, with icons such as Lionel Messi – the GOAT of soccer – or Shigeru Miyamoto, Nintendo’s legendary game designer. And the latter in charge of monetizing the content and marketing it, also with some key figures such as Ferran Soriano – CEO of City Football Group – or Tim Sweeney, CEO of Epic Games. In Gaming, the ‘creatives’ are usually referred to as the ‘devs’ and are part of ‘gaming studios’, while the ‘corporates’ are referred to as the ‘publishers’. More often than not these two cohorts are not part of the same company. Some independent studios choose to launch their game by signing commercial deals with publishers to market and distribute their games.
2) Cross-media trend
Expanding your brand across other mediums is not a novel idea. However, this trend has skyrocketed recently across both Gaming and Sports. It started in Sports with some individual teams having their own docuseries, with Amazon All or Nothing series for instance featuring the likes of NFL teams (2016-2020), ManCity (2018), or the All Blacks (2018). However F1’s partnership with Box to Box moved the goal post with docuseries across an entire sport. F1’s Drive to Survive (2019) success paved the way for more, with Tennis (Break Point), Golf (Full Swing), Rugby (Full Contact), Cycling (Unchained), Athletics (Sprint), and Surfing (Make or Break) following the lead. This cross-media strategy is even conquering cinemas with F1 due to release its own movie starring Brad Pitt in 2025. Similarly, movies or TV shows inspired by Gaming Intellectual Properties have been around for a while. However, what is new is not only the volume of such releases but their quality and global acclaim. Examples are many with Arcane (2021), Cyberpunk: Edgerunners (2022), Halo (2022), The Last of Us (2023), or the Fallout (2024) series. There are also many successful movies based on Gaming IPs: Pokémon Detective Pikachu (2019), Sonic the Hedgehog (2020 & 2022), Uncharted (2022), Gran Turismo (2023), or The Super Mario Bros. Movie (2023).
3) Volatile results and uncertainty
It goes without saying that Sports is as unpredictable as it can get, with upsets such as Leicester winning the 2015-16 Premier League title or unscripted comebacks like the 2017 New England Patriots SuperBowl victory after a record 25-point deficit. Gaming has also had its fair share of unpredictable successes, more recently with games such as Among Us during the pandemic or Palworld in January 2024 taking the gaming world by storm. Conversely, hype and expensive budgets do not necessarily mean a title in Sports nor a success in Gaming. Stories like the 2012 Lakers superteam disaster – with Kobe Bryant, Steve Nash, Dwight Howard and Pau Gasol – or the 2021 Brooklyn Nets shocking failure – with Kevin Durant, Kyrie Irving and James Harden – are not uncommon. Similarly Gaming regularly has had its fair share of disappointing launches with Cyberpunk in December 2020, Forspoken in January 2023, or more recently Concord in August 2024. This unpredictability makes financial and growth planning extremely difficult across both industries.
4) Rising costs and new investors
Gaming has seen its costs skyrocket for AAA games (Triple-A). As reported by the CMA in 2023, budgets went from $50-$150 million on average per AAA Console/PC release 5 years ago, to $200 million and higher now. The reasons are many, from the race to making games with ever better high-end graphics resolutions, to newer development tools for next-gen consoles and PC, and larger marketing budgets. Similarly, the costs of success in sports is at an all-time high with the boom of salaries in American Leagues with increasing TV Rights and CBA agreements, and the exponential rise in wages and transfer fees in European football. And with these flourishing industries, more diverse investors came around over the years. Private Equity, Venture Capitalists, and Middle Eastern investors are now all the rage in both industries. The Saudi Arabia Public Investment Fund (PIF) for instance is heavily invested in gaming with ownership of Savvy Games, owner of the top grossing mobile game Monopoly Go!, and LIV Golf as well as Newcastle Football Club. Private Equity is also widespread, with entities like CVC who are heavily invested in sports, from rugby to volleyball and football, as well as gaming with their acquisition of Jagex in February 2024.
5) Aggregation of power
Both the Gaming and Sports worlds have seen a wave of aggregation over the past decade. In Gaming, companies like Microsoft Xbox and Sony PlayStation have grown significantly via M&A. Microsoft acquired Mojang (2014) for $2.5Bn, ZeniMax (2020) for $8.1Bn, and Activision Blizzard (2022-23) for $68.7Bn, while Sony acquired more than 20 first-party studios since 1993, with notably Bungie (2022) for $3.6Bn. Similarly Fortnite’s maker Epic Games acquired successful games via M&A, with Rocket League (2019) and Fall Guys (2021) via the acquisition of Psyonix and Tonic Games Group. Sports is going through a similar phase with owners spanning multiple sports. Stan Kroenke owns teams in the NFL (Rams), NBA (Nuggets), MLB (Avalanche), MLS (Rapids) and Premier League (Arsenal FC). Other notable examples are Liberty Media (F1, Moto GP, Atlanta Braves), Fenway Sports Group (Red Sox, Liverpool FC, Penguins) or City Football Group (ManCity FC, NYCFC, plus 11 other soccer clubs).
6) The Direct-to-Consumer Revolution
The Direct-to-Consumer (D2C) Revolution is not a new phenomenon across both Gaming and Sports industries. Historically both generate most of their revenue via Business to Business (B2B) channels. Football clubs like the reigning Premier League Champions Manchester City generates 10% of their revenue from Direct to Consumer operations (D2C), while NFL teams generate 19% of their revenue from D2C. Leaving respectively 90% and 81% to B2B deals, mostly driven by TV Rights and Sponsorship deals. Likewise Gaming organisations mostly operate in a B2B2C model by selling their games to end-consumers via retail stores and digital first-party storefronts such as PlayStation, Xbox or Steam. These platforms thus control the purchasing experience and more importantly, the end-consumer data.
For the Sports industry, the D2C Revolution is mostly impacting the TV Rights distribution with more rightsholders bypassing traditional TV broadcasters to distribute directly to fans. For instance F1 has its F1TV, the NBA has its League Pass and the NFL has its Game Pass service. This strategy is effective to self distribute in markets with limited traction from bidders, and to use as a bargaining chip in negotiations. For the Gaming industry, the D2C Revolution represents the rise of the microtransaction business model over the traditional ‘boxed’ game model, where players buy access to the game itself via a retail or digital ‘box’. League of Legends (2009), Fortnite (2017), and PUBG (2017) are extremely successful free-to-play games with no ‘box’ revenue that monetize by selling in-game content directly to players. EA Sports FC – formerly known as FIFA – represents an even better example of this shift. Traditionally a ‘boxed’ game, EA Sports launched its Ultimate Team mode back in 2008, and it now generates far more revenue via microtransactions than the game box itself. EA Sports generated 73% of its $7.6Bn annual revenue via microtransactions in its latest fiscal year.
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Author’s note: This is a personal article. Any views or opinions represented in this article are personal and and do not represent those of people, institutions or organizations that the author may or may not be associated with in professional or personal capacity, unless explicitly stated.
Max Métral 