eSports is on the brink of becoming a billion-dollar industry. It’s growing exponentially fast, and in Asia it was recently announced that eSports would become a medal event at the 2022 Asian Games in Hangzhou, China.
Despite eSports’ swift audience growth, when it comes to brand sponsorships, the industry is lagging behind and investment is largely driven by partnerships with other sports properties and leagues. While this isn’t necessarily a bad thing, in order for the market to really mature, it needs to look beyond sport.
If you look at the current state of play, teams as varied as the Miami Heat, Manchester City, West Ham and the Philadelphia 76ers – who recently purchased eSports franchise Team Dignitas – are investing in players and teams in this space. For them, it’s a chance to grow and develop fan bases, while also creating new and appealing assets to sell to current and future corporate partners.
The NBA also recently announced a major partnership with Take-Two Interactive, a multinational publisher and distributor of video games, to launch the eSports Basketball League for the NBA 2K game. And you can expect to see the similar roll-outs among the other major leagues like the Premier League, NFL and MLB.
This approach presents significant revenue potential in merchandise sales and the ability to sell team branded eSports merchandise, as well as the ability to grow into and develop new fan bases. But for the market to really mature, the various games and leagues within the eSports umbrella need more brand partnership opportunities.
Currently, brand sponsorships are largely made up of endemic brands such as gaming accessory manufacturers Razer, Hyper and Turtle Beach. While other brands are slowly joining in – Coca-Cola, Buffalo Wild Wings, Bud Light and Gillette have struck some deals in this space – eSports remains largely untapped.
So why is this the case?
Partly, this is because the industry is still in its infancy, meaning it’s hard to prove its value to those not well versed and knowledgeable about eSports. While savvy marketers and brands will know of this space, key stakeholders who control budgets at big brands are far more likely to favour safer investments in traditional sports than venture into video games.
Without being at the arenas or tournaments, it can be hard to grasp for CMOs and CEOs of big, traditional brands that the industry really exists and that people will genuinely spend their whole day at a venue watching other people play a video game.
It takes a brave marketer to take the plunge into eSports brand sponsorships, but the benefits speak for themselves. The ROI for brands is huge; the industry commands an eager base of young people who are willing to spend hour after hour at venues and online providing plenty of opportunities for brands to engage with them. And, due to the fact the sport has yet to mature, its sponsorship costs are favourable when compared to sports with similar viewing figures.
However, this sector does need to be approached carefully. The fan base is made up of young millennial males, who are even more fickle and savvy to marketing than most people. Authenticity is important. You have to make sure the way that you activate your brand as part of a sponsorship or partnership fits with the tournament, game and/or venue of choice.
The first impression matters and if you mess it up, you won’t get another chance. But for those brands and marketers willing to invest in this new area, there are huge opportunities to build new fan bases and engage with this audience. Assets such as naming rights, branded content, experiential activation, tech integration, jersey branding and so forth are available for brands willing to invest in this space. As the market matures, further opportunities in co-branded merchandise will grow, as too will direct selling to fans while viewing livestreams of games.
The opportunities for marketers willing to take the plunge are obvious. But it will take brave marketers – and the correct insights – to ensure that eSports continues on its upward trajectory.
Zack Sugarman is senior vice president, properties at Wasserman