Esports (electronic sports) is a form of video game competition. Often, it comprises multiplayer video gaming competitions, or they play games individually and as teams. Multiplayer video game competition culture prevailed among amateurs. By the 2010s, Esports was a major part of the video game industry, game developers started funding and developing multiplayer video gaming tournaments. Today, we’ll discuss the PESTLE analysis of Esports; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Esports
Some of the main political factors in the Esports PESTLE analysis are as follows;
I-Government Regulations
The government regulations and policies are very strict and tight for the video games and Esports industry. They focus on areas like betting, gambling, consumer protection laws, online money transfer laws, age limits, data privacy, and others. However, the objective of strict government regulation is to protect the interests of ordinary users, young kids, and the health and wellness of users.
II-International Trade Alliance
The Esports industry has users and video gamers all over the world with stable internet connectivity and digital devices. Many countries of the world are moving towards digitalization and they have flexible laws and regulations regarding video games and the Esports industry. Some countries are now introducing new laws regarding age limits for video games, health and wellness, and money transfers.
III-Political Stability
The stable political environment of the country plays a key role in the growth of video game businesses and companies. When the country is going through political turmoil and violent procession, then it negatively impacts the availability of utility services like power outages and internet disconnectivity. However, video gamers and users won’t play their games due to the country’s unstable political environment.
Economic Factors Affecting Esports
Some of the main economic factors in the Esports PESTLE analysis are as follows;
I-Economic Growth
According to an estimate, the market value of the Esports industry will reach approximately 3 billion USD by the end of 2025. The Esports industry is generating annual revenue of approximately 1.44 billion USD with a growth rate of 14.5%. However, it is creating a lot of employment opportunities for game developers, service providers, and digital users in various ways.
II-Consumer Spending
According to an estimate by the Interactive Advertising Bureau, consumer spending on digital entertainment like films, movies, and Esports would reach approximately 40 billion USD. The higher overall spending on digital entertainment would further amplify the growth of the Esports market. An average digital user allocates 25% of the budget to digital entertainment including Esports.
III-Inflation Rate
The inflation rate is the key economic indicator and it directly impacts the growth of businesses and companies. It happens when the government starts printing more currency notes than the required level, then it decreases the per unit value of all the currency notes. As a result, the cost of data centers, internet access, utility bills, labor costs, tech, and digital devices would increase and they become expensive for Esports users.
Social Factors Impacting Esports
Some of the main social factors in the Esports PESTEL analysis are as follows;
I-Popularity of Esports
The growth and popularity of Esports and the video game industry have been increasing for the past few years. Many people have created their video gaming groups, video channels, and pages to share their video gaming experience and tips with their followers and viewers. According to an estimate, the global Esports industry will reach approximately 6.8 billion USD by the end of 2027.
II-Demographic Shift
According to an estimate, the target audience demographic of Esports ranges from the age of 18 to 34 years old. Roundabout more than 70% of the target audience of Esports Industry and video gamers are below the age of 24 years old. It shows a significant shift in the target audience demographic.
III-Social Media Influence
Social media platforms play a key role in the growth and development of various types of trends for the customer market. According to an estimate, approximately 50% of video gamers and Esports industry users become aware of the latest video games on social media platforms.
Technological Factors Affecting Esports
Some of the main technological factors in the Esports PESTEL analysis are as follows;
I-Advanced Technology
The esports industry and video game developers are investing a significant amount of capital resources in the latest advanced technology. It comprises AI, ML, data analytics, and automation technology to develop unique, interesting, realistic, and top-quality video games with great user experience. Most importantly, it is guiding them to find the unique methods of the presentation of video games and Esports. For instance, live streaming of video games has approximately over 1 billion watch hours time.
II-AR and VR Technology
Esports Industry and video gamers are investing a significant amount of capital on the latest AR (augmented reality) and VR (virtual reality) technology. It allows them to develop and offer real-life gaming experiences to the customers and the users. The market of AR and VR technology will reach approximately 33 billion USD by the end of 2025.
Legal Factors Impacting Esports
Some of the main legal factors in the Esports PESTEL analysis are as follows;
Regulatory Compliance
Esports Industry needs to comply with the government regulations and policies of different countries. They comprise data privacy laws, consumer protection laws, health and wellness of users, age limits of users, cybersecurity, and others. Regulatory compliance would help them to smoothly perform their operations without any delays and disruption.
Environmental Factors Affecting Esports
Some of the main environmental factors in the Esports PESTEL analysis are as follows;
Sustainability Initiative
Esports Industry consumes a significant amount of electricity to run their digital and electronic devices. They need to make a strong commitment to environmental sustainability by investing in renewable sources of energy, recycling electronic waste, and biodegradable packaging to reduce the carbon impact. Environmental sustainability initiatives would help them to keep up with the growing sustainability trends.
Conclusion: Esports PESTLE Analysis |PESTEL Analysis of Esports |External Environmental Analysis of Esports | Strategic Analysis of Esports
After an in-depth study of the pestle analysis of Esports; we have realized that Esports and video games are the world’s leading business. If you are learning about the Esports PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
