Learning from the esports tech adoption curve

There is something instructive about esports being mentioned by GVC – now renamed Entain – in the same release that the company spoke about being a technology-led entertainment business. As part of the transformation of the company to its new name Entain, the firm said it would be “bold, ambitious and disruptive” and the world of gaming was identified by chief executive Shay Segev as a “vast untapped” market.

“Gaming is fast becoming the hub for other digital activities, creating a whole new ecosystem where customers interact with the online market, including betting,” he told investors.

There can be no doubt that technology and esports are interlinked and entwined in a way that is not quite the case with traditional sports. While advances in betting technology – and in-play in particular – are clearly vital to the sector’s development, within esports that relationship is perhaps even more intrinsic. It starts with the data. In esports, the data is part and parcel with the game in a way that is not the case with traditional sports.

“The games generate data in a way that traditional sports don’t,” says Werner Becher, regional CEO for the Emea and Latam regions at Sportradar, which established Bayes Esports Solutions in 2019 as a joint venture with Bayes Holding. “The data is generated on the servers; all we have to do is collect it direct.”

Flavien Guillocheau, chief executive and founder at PandaScore, concurs. “Esports is data-driven by design; the games all have granular scoring systems even in casual gaming, which is requiring more data for the esports fan experience, betting included,” he says.

It might be said the centrality of data in esports and traditional sports is no different, but where data really comes to the fore in esports is in how it reflects the stream of rules changes. This is very different to the traditional sports environment, says Marco Blume, trading director at Pinnacle. “In terms of variety, there is a lot happening and esports is also an area where the rules are changing constantly,” he says.

This is very different to sports such as tennis or football where rules changes are few and far between, and usually amount to tweaks. “In esports they can decide on a monthly basis that rules can change, including such basic things as how the scoring system works,” says Becher. “That obviously affects the modelling for the betting operators. Rules can change one way and change back a month later. It puts the onus on the providers to respond with the data and the algorithms. The whole infrastructure has to adjust with the changes.”

Structural basis

The need for agility to respond to changes in the basic rules of the game cuts across the entire supply spectrum on esports, from data provision to odds and liability systems. Indeed, it puts even more emphasis on these areas than traditional sports and it means that any operator looking at the area – whether an endemic esports operator or a traditional book working in the esports arena – is more reliant than ever on the providers.

Even a tech-led endemic bookmaker such as Rivalry says that with the back-end aspects of esports, there is “no need to reinvent the wheel”.

“We are builders by nature and default to that versus using third-parties for our technology needs,” says chief executive Steven Salz. “[But] the key outsourced items would be our third-party odds providers, KYC providers, given our regulatory requirements, and payment providers.”

Similar decisions are prevalent in traditional sports betting, of course, but Becher believes that in esports the need for specialist provision reaches to the very top betting operators. “Even the tier-ones are outsourcing odds generation in esports, and even the liability management,” he says. “Just keeping pace is a big challenge for everyone and this is where the outsourcing really shines.”

Indeed, much of the innovation in esports betting is happening at the supplier level and in particular among the data providers. Blume mentions Sportradar’s joint venture with Bayes as well as GRID Esports, for instance, and says that 2020 has been “a golden year for data providers”.

Moritz Maurer, founder and chief executive at the latter, repays the compliment, pointing out that it is operators such as Pinnacle which invest properly in esports that stand a greater chance of success. “If esports is part of the strategy, it will need more commitment than simply offering basic markets to succeed,” he says.

In part, this is about the audience in esports. Everyone appears to agree that the demographic for esports is significantly younger than that for traditional sports. Moreover, this audience comes with preconceptions about technology and how they use it. “Esports fans are typically younger, early adopters of tech, [perhaps] three-to-five years ahead of their traditional sports counterparts who still tend to use linear media,” says Maurer. “This gives the user a stronger sense of ownership in the type of content they consume.”

The tech challenge for esports betting, therefore, is to ensure the offering keeps up with the demand of the audience. Hence, Salz says his team’s efforts, for instance, are aimed at developing IP around the betting experience, from betslips to site navigation, the “look and feel” and the wallet.

Immersion therapy

Intriguingly, though, it is the prospects for esports betting provision to inform that of traditional sports betting that could yet turn the relationship between the two on its head. Streaming is one area, for instance, where what is potentially going to happen in esports will be of great interest to traditional sports.

Twitch, of course, has been one of the most well-known areas of esports advance. But Becher points out that for betting purposes, the delays in the Twitch stream (over 30 seconds) make it virtually unusable from an in-play betting point of view. Hence, Sportradar provides real-time streaming feeds to ensure as small a delay as possible.

But that is only the start of what Becher believes will be possible with streaming in the near future. He says that a lot of esports fans are already using VR headsets to actually take up a position within the field of play, albeit virtually. “Is intrinsic integration possible? I think so,” he adds.

“It’s all about engagement – these younger demographic target groups are just not interested in watching a 90-minute game of football. They’re used to two-minute YouTube clips. They get bored very quickly and streaming is just not enough; they want overlays, with stats and probabilities and social interaction built in.”

It is this potential that is exciting those at the top of traditional sports in Europe and the US. With fan engagement, one of the arguments being used in the debate around regulating sports betting is that augmented reality (AR) may have a key role to play. “That’s a big discussion point for the future. Some sports are very interested in what AR might mean for fan engagement,” says Becher. “So the experience in esports could be something they look to emulate in the future.”

Ultimately, it could be that the gaming and betting world has much to gain from esports over and above simply looking at the provision of betting on key products such as CS:GO and League of Legends. Partly this is about understanding a different demographic. But it is also about seeing how technology with a purpose is the prime route into this cohort.

It might be that the more the sector learns about the gaming world, the more it will get to like where interaction with that sector is leading it. It may only start with the tech but where the end destination might well be is an interesting tale to tell.