No longer a niche: The growth of Esports market in 2020

July 8

Regardless of how little you know about Esports today, chances are that you have heard the tech industry speak eloquently about the growing industry for a few years now. Currently on its way to becoming a $1.8billion-rated industry by 2022, Esports has grown in leaps and bounds over the past few years.

In case you did not know, over 600 million people have already emerged as a consistent audience, while professional Esports athletes have been growing more than 40% annually every year since 1998, according to a report in Forbes. The LA Times says that over 8 million people log in (via PC, XBOX, PlayStation and so on) every day to take part in various Esports events across various genres.

Looking back to 2015, Esports was commonly regarded as only a new “sport” which was an interesting area for gaming brands to keep an eye on, as various strategists and agencies mused over the possible marketing opportunities offered by it. Seemingly not long after, events started taking place at newly set-up Esports venues all across the world, and the amount of prize money also started creeping up in size along with audience figures. Before we knew it, reports were saying that tech brands were planning to invest over £200million into Esports throughout 2016 – and that was when the industry was first deemed “successful” in the eyes of market experts.

However, since then, fears that the growth of Esports is nothing but a bubble which was on the brink of bursting, have also been prevalent. But what do the stats indicate today?

Source: Newzoo

Well, there were approximately 380million Esports viewers in 2018, and that’s expected to surge to roughly 557million viewers by 2021, according to a report from Newzoo. And Goldman Sachs recently reported that total Esports revenues reached $869million in 2018, and that it is all set to triple in amount by 2022.

In a recent interview, Stepan Shulga – the head of Esports for Parimatch, a Cyprus-based betting company, spoke about how they have embraced the Esports market.

“We sponsor several Esports clubs, including Virtus Pro, the most successful and popular Esports team in the field, and we also partner with Esports content creators and high-quality video game providers such as DOTA2,” he said, before adding:

“We recently teamed up with ESforce Holding to host the DOTA2 Parimatch League Season One. The tournament, which had a prize pool of $75,000, provided the opportunity for young players to make a name for themselves – and we’re currently in preparation for the second season. It is complicated and expensive to organise your own tournament for traditional sports, but with Esports, it’s much more accessible.”

Shulga also agreed that Esports is one the fastest growing sports in the world right now, pointing out its huge popularity with young, millennial audiences. “Whilst the world of traditional sport already has an obvious structure and defined boundaries, there’s more of an opportunity to participate in the Esports market and make a real impact. It’s a hugely rewarding sector to operate in.

“With sporting events canceled across the world right now, sports fans are turning to Esports, which will see the industry boom even further,” he says.

Getting involved in the game

While all that sounds great, how and why should tech brands and retailers to get involved in Esports?

“The rise of Esports is a huge opportunity for tech brands and retailers on both a brand and supplier level,” insists Shulga. “Firstly, Esports audiences are vast, and Esports fans are typically loyal and extremely engaged. Esports provides a huge platform for brand exposure and is a direct channel to the youth demographic. Beyond marketing opportunities, there is an entire digital ecosystem which tech businesses could capitalise on. Firstly, in the distribution and streaming of tournaments and Esports content to worldwide audiences via digital platforms.

“Then there is the huge network connectivity requirement and the custom hardware needed for the players. Increasingly, there is also demand for innovative and interactive formats, as well as VR and AR experientials.

Shulga adds: “Finally, there’s an opportunity for creating tools that better connect players, and provide users with enhanced data analytics on their performance and others’.”

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 1 and NASCAR are taking their events online in a virtual environment, 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

Lucrative brand partnerships make up for a significant share of Esports revenue. In 2019, over $450million 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 favourite streamers through the “Bits for Blades” program.

Source: Newzoo

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 a 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 of an innerwear 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.

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 touchpoints 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, 6.6billion 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,” says the 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.

What’s next?

It seems the bubble certainly has not burst yet on the Esports market, but what can we expect to see happen in the arena in the coming years? Shulga believes that as Esports is no longer niche, in the current climate, it will be more popular than ever.

“Looking to the future, there will be a steady 25% increase in growth every year, with investment, viewership and revenues on the up,” he tells PCR.

Steven Chen, the Vice President of GIGABYTE Technology, said in a recent interview that there is even a chance that Esports might make its way into the Olympics, which would certainly solidify the seriousness of the sport.

“Many countries now officially recognise Esports as a sport and as a serious business sector. Many academic institutions even provide courses for Esports, and there is even talk about whether competitive gaming could become an Olympic sport,” he said, before adding: “With prize funds supported by governments and major sponsors, Esports is set to become even more prosperous.”

“Esports brings joy to people, whether they are participating or watching, and as an entertainment business, we expect to see significant investment. This will drive this community and sector to keep growing and innovating. And, as it has done from the beginning, technology will be at the forefront of pushing Esports into the future.”, Chen concluded.

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