Hundreds of excited fans packed in bursting stadiums. A-class teams with young players and huge prizes. This is the face of esports today. As a power-packed gaming experience, esports is the most interactive and community-driven side of the video game industry.
Let’s take a step back, pre-Covid-19, and see where the industry was at the beginning of the year. According to the research firm NewZoo, 2019 was a milestone year for the growth of the esports industry, with an estimated audience base of 453 million. NewZoo also forecasts that esports is ripe to exceed the billion-dollar revenue mark for the first time, matching revenues generated by high-paying traditional sports such as NBA. With new growth avenues in the US, China, and India, the esports industry will continue to stay bullish, making it an attractive niche for investors.
And now: Covid-19 has blurred the line between traditional sports and esports, with changes likely to last far beyond the pandemic’s reach. For example, racing giants Formula One and Nascar are taking their events virtual, featuring celebrity drivers, and broadcasting on Sky Sports and Fox. All of this means more opportunities for brands to leverage esports to build brand affinity, customer loyalty, and drive sales. Let’s dive in and see how.
Huge paybacks from sponsorships
Source: YouTube screengrab/Mastercard
Lucrative brand partnerships make up for a significant share of esports revenue. In 2019, over $450m in esports revenue came from these types of deals. Esports sponsorships work similarly to those in the Super Bowl or NBA: merchandise, brand logos, etc. In the last couple of years, both endemic and non-endemic brands have tapped into esports' huge audiences through such funding partnerships.
PepsiCo’s Brisk was one of the first brands to enter esports when it sponsored the Rocket League Championship Series. Soon after, Mastercard’s multi-year partnership with Riot Games to sponsor League of Legends in 2018 was the first collaboration of its kind. Intel, a brand not traditionally associated with gaming, made history when it sponsored the Overwatch League. Other brands like Mercedes-Benz, in partnership with ESL, recognize the power of simply being present on the large screen during an esports event.
By associating themselves with premium events, brands can take advantage of the clout of the growing esports world, similarly to how names like Pepsi, Adidas, and Coca-Cola became synonymous with traditional sporting events due to the nature of their active participation. The possibilities are big: new physical training programs for esports athletes, branded replays, live in-stream stunts, remote streams at events, sponsored giveaways, and more.
As esports become more widely adopted, new international sponsorship opportunities will help brands reach a wider audience, taking their products further and further.
Experiential brand visibility
In 2019, the majority of esports fans were between the age of 18-24, a number up by more than 60% from 2018. The viewing habits of this young group are starkly different from other sports audiences. In fact, the esports audience is already 10 times bigger than the number of people who watched the 2019 Super Bowl.
IAB found that 43% of esports fans have an annual household income of $75,000. This spending power is especially attractive for brands who want to acquire new customers. Young millennials and Gen Z’ers want more authentic interactions with brands. In turn, brands are beginning to recognize that in order to appeal to these demographics, they need to find ways of advertising that are organic and authentic in nature. Esports give this to them.
Traditional sports have very limited offerings in terms of brand advertising--usually restricted to billboards, jerseys, and commercials. Esports provide a bigger canvas. For example, the Gillette Gaming Alliance with Twitch allows streamers to collaborate with Gillette to create customized content. It gives fans a sense of closeness with their favorite streamers through the “Bits for Blades” program.
Herein also lies a big opportunity for non-endemic brands, which have so far stayed away from the niche esports market. Take for example French luxury house Louis Vuitton, which recently announced a collaboration with Riot Games in which it designs virtual items in League of Legends that players can buy with real money within the game. Going a step further, the luxury fashion house spent 900 hours creating a custom trophy case for the League’s esports finals.
Esports in pop culture — and creative opportunities for brands
With esports, the convergence of gaming and pop culture has taken on new significance. The viewership of esports is growing wider and wider, especially as famous names in the music industry, such as Drake and Travis Scott, associate themselves with leading esports tournaments. Esports are also more dynamic by nature, offering players and streamers a closer channel to reach out to fans through live interactions and chats within the game, as well as through social media.
Additionally, live-streaming of games on platforms like Twitch and Mixer has also shifted the dynamics. Players are not only involved in active esports, but also have the opportunity to interact with the fans directly. This reduces the virtual distance between the fans and the players.
And brands are now recognizing that streamers are celebrities in their own regard. Sometimes, even a mention of a brand by these gamers is enough to send sales sky-rocketing! Take for example when Ninja broke the sales record (and the website!) of an underwear brand just by mentioning it on a stream. His popularity also led Adidas to create signature sneakers with the popular streamer, which sold out in under an hour after the launch.
This growing popularity of leagues and bankable “stars” has created more creative ways for brands to boost recall and affinity. The food chain Wendy’s, for instance, promoted its “fresh not frozen” ideology by executing an online stunt to live stream on Twitch and attacked areas of the map branded with rival companies. Burger King, too, promoted the launch of its Impossible Whopper burger in a partnership with popular streamer FaZe Clan who produced challenge videos and integrated a taste test.
The virtual world presents infinitely more creative opportunities than the real world. This means that soon, the industry will be witnessing, and driving, completely new and innovative approaches to advertising in esports. Unlike in traditional arenas, these methods can be precisely measured and adjusted to drive higher brand recognition and brand affinity, and can serve to unify online and offline campaigns, creating more touch points across the modern user’s daily experience.
Advertising in esports — and the road ahead
Esports has been taking its place in the mainstream and is set to grow even bigger. In 2019, 6.6bn hours were spent watching esports videos worldwide. According to a report by Business Insider, the esports market is on track to surpass $1.5bn by 2023. To round it off, a recent survey by Foley and Lardner LLP and The Esports Observer revealed that along with sponsorship, advertising in esports is one of the driving factors for the revenue growth. “The jump from 41% in 2018 to 51% in 2019 reflects the growing involvement of both endemic and non-endemic brands,” cited this report.
The growth of advertising in video games and esports means that brands can now interface directly with previously hard-to-reach audiences. And brands don’t need to go too far out of their comfort zones to benefit, since esports offers advertisers both familiar and new ways to reach their target audiences. Familiar ways may include showing ads on the objects that exist in traditional, real-life sporting events: billboards, jerseys, banners around the periphery of the playing field, blimps, and more. New ways include the ability to advertise in the esports games themselves, an opportunity that leaves room for unlimited creative possibilities.
Esports is on the rise and not slowing down anytime soon. Advertisers are already taking part in these exciting virtual events and stand to benefit from more collaborations as the year unfolds.