The Lucrative Esports Business is Attracting Big-Name Sponsors
In 1980, Atari held a national Space Invaders competition. The event is considered to be the first formal video game competition. The contest drew 10,000 participants, which is a pretty impressive number for the time. Yet, while Space Invaders was a cultural phenomenon, the competition didn’t move the needle for many beyond those who were participating.
Compare that to last year in Katowice, Poland, where 173,000 people attended the Intel Extreme Masters tournament, and another 46 million watched it online to make it the largest event in esports history. Viewers were treated to Counter-Strike: Global Offensive (CS: GO), League of Legends, and StarCraft 2 matches, and the players competed for $650,000.
The rising fan interest in esports has definitely attracted the attention of brand sponsors, who can no longer afford to overlook the esports as niche entertainment. Note the name of the Extreme Masters tournament, excuse me, the Intel Extreme Masters tournament. Intel has been sponsoring this event for over a decade. It’s an ideal platform for the chip manufacturer to promote its processors, including the Core i7 extreme edition (note the name).
Companies like Intel are naturals to jump on esports sponsorships. These types of businesses, such as software and computer component manufacturers, were among the first to sponsor esports events and teams. They are known as endemic sponsors.
However, a sure sign of the maturation of esports is the number of non-endemic sponsors that are now populating the scene. 2017 saw a glut of new companies sponsoring esports competitions, like The Kraft Group (owner of the New England Patriots) and Mercedes-Benz.
Esports puts brands in front of an audience that is becoming notoriously difficult to reach. That’s because this group, primarily comprised of millennials, is very savvy at avoiding traditional advertising. However, they aren’t opposed to brands or even the idea of consumerism, quite the opposite. In general, they appreciate brands that thoughtfully integrate sponsorships with the activities they enjoy — in this case, esports. They want to see that brands are actively helping to improve or benefit the scene. Meaning, you can’t just slap a logo on something and hope that will be enough.
Photo Credit: Fortune
According to Esports Courtside: Playmakers of 2017, a recent report released from the digital research firm Superdata, the esports market has a worldwide value of $1.5 billion and is viewed by millions of spectators – online. Yes, esports has yet to break through to traditional television, but that may be the wrong way to think about it.
The viewers of esports content are also less likely to consume media “traditionally”. They grew up watching YouTube and having content on demand. For this audience, heading to the popular video game streaming site Twitch to watch a match is traditional. It’s likely going to be the brands that must adapt to reach this group, not the other way around.
Investors account for 50 percent of that $1.5 billion worldwide esports market, and advertisers are close behind at 35 percent. The remaining portion is comprised of prize pools (6 percent), merchandise and ticket sales (5 percent), and betting and amateur tournaments (5 percent).
Superdata predicts this market to grow to 12 percent each year, hitting $2.3 billion in 2022. It’s no surprise that brands that were once weary of esports are now flooding the scene. Here are some of the biggest current sponsors of esports.
We’ve already mentioned this brand’s sponsorship (together with Electronic Sports League – ESL) of the longest-running esports tournament in existence: Intel Extreme Masters. Since 2006, Intel and ESL have held several small, qualifying events that all lead up to the massive final event that attracts a worldwide following. Participants from Europe, North America, and Asia have competed in the Extreme Masters tournament.
Coca-Cola is another company that has a long involvement with esports, primarily with Riot Game’s League of Legends. Not only has this soda giant sponsored several tournaments and the League of Legends World Championship for several years, but the brand is not above some outside of the box thinking to promote esports. In 2016, Coca-Cola and Riot hosted “viewing parties” throughout the United States, Canada, and Europe for the League of Legends World Championship by simulcasting the event to more than 200 movie theaters.
Photo Credit: League of Legends
It certainly could be argued that, just through its very existence, Twitch has done more for esports than most other brands. In addition to being the go-to site for livestreamed esports events, Twitch also sponsors competitions
Twitch also has a very interesting revenue model. The top 17,000 streamers, and this does include professional esports players, have the ability to take part in an ad-revenue-sharing program where the players themselves – not Twitch – make the decision, in real time, when to run an ad. This gives players the opportunity to connect with viewers and request that they stick around through the ad while they take a quick break.
In 2017, Mercedes-Benz announced a worldwide sponsorship of ESL, the world’s largest and oldest esports company. At the ESL One Hamburg tournament, for example, Mercedes-Benz had full logo rights in and around the arena, its cars were featured in introductory spots, and teams were shuttled around in Mercedes.
However, (and indicative of the issues non-endemic sponsors can face) online chatter immediately questioned the authenticity of the brand’s involvement. Mercedes took a light-hearted approach to the accusation by leaning into it. Not only were fans won over by Mercedes’ playful social media response, but ESL One Hamburg alone was attended by 10,000 fans and millions watched the tournament on TV and live stream.
Together with ESL, Mountain Dew sponsors the Mountain Dew League (MDL), an amateur competition that gives players a shot to play in the Pro League, the world’s top CS:GO competition. In addition, the 2017 MDL featured the “Next Big Caster” competition, where amateur shoutcasters called matches throughout the season and fans selected their favorite, and an All-Star Match was held, showcasing players from every MDL season.
Mountain Dew is also the sponsor of several esports teams, including Splyce, Team Dignitas, and Team SK Gaming.
Photo Credit: LowYat.Net
Being a dominate force on YouTube (and the internet, in general), it’s not really a surprise that the brand entered into esports sponsorships. Beginning with sponsoring tournaments for Blizzard’s StarCraft 2 the company expanded into supporting Defense of the Ancients 2 (DotA 2) matches. The company also backs teams like Tempo Storm.
The cable and internet provider sponsors ESL and the esports team Evil Geniuses. While Comcast Xfinity branding appears at tournaments and events, the company also supplies Evil Geniuses’ training facilities with internet and video services.
In addition, Comcast Xfinity also owns the Overwatch League’s Philadelphia Fusion (in addition to several sports teams in the Philadelphia area).
In October 2017, Airbus announced that it is sponsoring a new League of Legends team named Out of the Blue that is comprised of five female streamers. The team’s leader, Ayunie, has stated that her goal is “to inspire other women to get into professional gaming.”
These brands exemplify some of the many opportunities available esports sponsorships. To learn more about your potential prospects, give our esports specialists a call at 972-323.6354.