UKSA Sponsorship Case File 6: eSports

In a recent report, Deloitte Global predicted that eSports would hit US$500 million in revenues in 2016, up 25% year on year. It also estimated a global audience of around 150 million regular and occasional viewers. “Today,” says Deloitte Global, “a major eSports event may attract 40,000 people watching live, and tens of millions watching over the Web.” For a useful analysis of the industry read this story:

http://www.espn.com/espn/story/_/id/13059210/esports-massive-industry-gr...

What is eSports? Sky Sports calls eSports “the umbrella term for organised, competitive computer gaming, usually between professionals”. Although the sector has existed since the 1970s, it exploded in Asia at the turn of the century and has now extended to Europe and North America. World class events can attract multi-million dollar prize pools, which makes them as lucrative to competitors as traditional real world sports. If you want to get a feel for the sector try visiting Twitch, a video streaming site that has around 100 million monthly viewers (http://twitchadvertising.tv/audience/). A sign of the platform’s significance is that Amazon bought it for US$970 million in 2014.

Why do they matter to sponsors? The obvious answer is in the numbers outlined above. eSports appeal to a large section of the hard to reach male youth demo so any brand that can engage with this community secures a commercial advantage. Analysts point out that the fanbase of eSports skews much younger than franchises like Major League Baseball for example. It’s also worth noting that high-profile rights holders are circling around the eSports sector. For example, Premier League club Manchester City recently formed a partnership with leading eSports player Kez Brown. Explaining why, Diego Gigliani, SVP, Media and Innovation, City Football Marketing, said: “As eSports continues to gain momentum, it makes sense for our Club to be part of the action and get closer to our fans, who love playing EA SPORTS FIFA as Manchester City. We will be a bigger presence at gaming tournaments, we will have more content through our digital channels and we will activate even more with our fans at matches and Club events.” French soccer clubs to have already entered the eSports arena include Paris Saint-German, Monaco and Olympique Lyonnais. Sporting superstars like Magic Johnson have also invested in eSports.

Which sponsors have already joined the eSports party? The eSports Industry Awards are a good indicator of the kind of brands that are now working in this arena. The headline sponsor of the 2016 edition was Now TV while category partners include Xbox, Windows 10, Domino’s, Omen by HP, Snugg and Gillette. The eSports Commercial Partner of the Year was Monster, a brand with a strong eSports profile. Other brands that have a long-running presence in the sector include Dr Pepper, which works with Major League Gaming on reality show Ultimate Gaming House. Coke, Nissan, Red Bull and Logitech are some of the big names to have entered eSports. The profile of the sector makes it of obvious appeal to digital brands of all descriptions. Online retailer Ebuyer.com, for example, recently signed a deal with UK outfit FM-eSports.

Any other recent deals of note? In the US, Snickers has just become the official chocolate bar of Eleague, a televised competition formed via an alliance between Turner Broadcasting and WME/IMG. The partnership links eSports to Snickers’ brand strapline – You’re not you when you’re hungry. “The Eleague partnership aligns perfectly with the Snickers brand and the ‘You’re Not You When You’re Hungry’ campaign,” says Snickers marketing director Allison Miazga-Bedrick. “The brand craves getting closer to Eleague’s dedicated millennial fan base who looks for the kind of fun that aligns to the solution that Snickers offers.” Other Eleague sponsors include Arby’s, Credit Karma and Buffalo Wild Wings.

What opportunities exist? eSport partnerships are analogous to sport. There are leagues sponsorships such as Coca-Cola’s heavyweight partnership with Riot Games’ phenomenally successful League Of Legends. There are also media partnerships – such as the deal which saw cereal giant General Mills sponsor Yahoo eSports Live. Echoing regular sports, there are numerous team-based opportunities. For example, betting firm Betway recently signed a six-figure deal with Swedish eSports organisation Ninjas In Pyjamas. In terms of price tag, market analysts say eSports sponsorships can start at a few thousand dollars a month and go as high as low seven figures.

What are the challenges? As in any fast-growing and rapidly-shifting sector, sponsors need to be careful they are backing the right horse. So length of contractual terms is probably something to think about. The sector also has a problem with unregulated/illegal events – which are an opportunity for match fixers. It is starting to address this via the eSports Integrity Coalition but companies need to ensure that their brands don't get caught up in issues like this (though to be fair, traditional sports have their own problems ranging from drug abuse and match fixing to the new issue of child abuse). Authentic activation is also key, because brands that don’t engage in the right way simply won't connect with the target audience. Close co-operation between the two sides is needed to find creative ways of connecting with fans. Popular eSports teams have a counter culture feel about them and will resist teaming up with brands they don't like. Equally, fans can be hostile to brands they don't think have a genuine interest.

Any interesting examples of brand/sponsor innovation? Perhaps not surprisingly, energy drink maker Red Bull is actively involved in the eSports sector (since 2008, in fact). It is currently building an eSports training lab in Santa Monica to help eSports athletes improve their skills. The Red Bull High Performance eSports lab will measure, deconstruct, and train key gaming skills—with the goal to enhance the performance of novice and pro gamers. “There are obvious differences in an eSports athlete verses a traditional or action sports athlete in that they aren’t propelling their bodies during their sport,” Kimberly Popp, eSports performance manager at Red Bull, says. “However, eSports players utilise skills and mechanics such as hand-eye coordination, and their physiology impacts performance. Players train for hours throughout the day to perfect their craft, but only playing the game is no longer enough to remain competitive.” There’s an important message to would-be sponsors here about how to approach eSports.

What are the legal issues involved with eSports sponsorship? The eSports Observer recently ran some useful advice columns on this subject from Daniel Alfreds at law firm Couchmans. For his assessment of issues like intellectual property, rights, contracts, payment terms and jurisdiction start with this link: http://esportsobserver.com/legal-issues-to-consider-in-endorsements-and-... (and then see part 2).

Further Reading: If you’re looking for more good reasons why to get involved with eSports, take a look at this report:

http://www.gamesindustry.biz/articles/2015-11-03-esports-are-big-adverti...