UKSA Spotlight On…Gaming

To mark the launch of its new Gaming Sponsorship Award, the UKSA team is this week investigating the dynamic world of gaming, in particular the explosion of interest in esports.

There’s no question traditional sport continues to be the major attraction for sponsors. But in the last few years a growing number of blue-chip brands have also turned their attention to the fast-growing world of competitive computer gaming, generally referred to as esports. Among non-endemic brands to have taken a deep dive into esports are Visa, Acer, Coca-Cola, Domino’s, Gillette, Dr Pepper, Nissan, Red Bull and Snickers.

You only have to look at the headline numbers to see why esports has become so popular with sponsors. A new report from Newzoo, a leading provider of market intelligence about gaming, esports and mobile, pegs the number of global esports enthusiasts at 191 million – up from 120 million in 2015. With Newzoo predicting that this active audience will rise to 286 million by 2020, it anticipates a rise in esports revenues from $696m this year to at least $1.5bn over the same time period. 

The $1.5bn figure assumes a modest increase in ‘average revenue per enthusiast’ to $5.2. But if the industry is able to drive that figure more rapidly the 2020 revenue figure could be nearer $3bn. And keep in mind that this figure doesn't include anything from betting, fantasy leagues and in-game revenues.

As Newzoo CEO Peter Warman points out, it’s not just the size of the audience that appeals to sponsors – but its profile. With half of all esports enthusiasts aged between 21-35, “early movers are increasing their investment by several factors year on year,” he says. “Ultimately, esports provides brands an entry point into the favourite pastime of digital natives: gaming.”

When you break down the $696m revenue figure above, it becomes clear just how seriously brands are taking esports. According to Newzoo’s analysis, a remarkable $266.3 million (38%) of that total is from sponsorship – up 57.7% year on year. With more and more non-endemic brands entering the esports ecosystem, Newzoo expects that figure to hit $655m by 2020.

For anyone unfamiliar with esports, an obvious question is – what are brands sponsoring? Well the answer is that the sector offers a similar array of opportunities to traditional sports. There are, for example, leagues sponsorships such as Coca-Cola’s 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 addition to all this, there are reports that sportswear giants Nike, Adidas and Under Armour are poised to trigger a jersey sponsorship bidding war. 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.

As interest in the sector grows, it seems certain that other opportunities will crystallise. For example, gaming publisher Activision Blizzard recently acquired Major League Gaming for $46m and has expressed its ambition to turn it into the “ESPN of esports.” Amazon, meanwhile, owns video streaming site Twitch, which has around 100 million monthly visitors. Newzoo is expecting esports media rights to grow from $95m now to $340m by 2020. This suggests a formalisation of the esports business that will provide structures for brands to lock onto.

Also worth noting, says Newzoo, is that traditional sports teams and leagues are trying to muscle in on the esports boom. It cites the examples of Schalke 04 and Paris Saint-Germain, as well as moves by French, Spanish and Dutch soccer leagues to form esports leagues. As the report says: “The involvement of sports clubs and personalities, leagues, and agencies will significantly accelerate the development of the global esports industry and help local esports scenes to grow. Traditional sports clubs and leagues bring with them an established local fan base, along with a well-known and respected brand. Leveraging this, they can ensure their esports initiatives are instantly perceived as top-level competitions. Agencies bring their vast experience in sports marketing to the space, telling stories around the teams and players that suit their client base of sponsor brands. Further, the inclusion of well-known sports teams gives a boost to the awareness and acceptance of esports as a legitimate form of mainstream entertainment.”

Within the UK, English Premier League club Manchester City has also shown its hand by forming a partnership with leading esports player Kez Brown. Explaining the rationale, 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.”

Of course, there are challenges with esports – just as there are with any area of sponsorship. As in any fast-growing and rapidly-shifting sector, sponsors need to be careful they are backing the right horse. So the length of contractual terms is something they need 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).

In an interview with Esports Insider, Malph Minns, managing director of Strive Sponsorship, gave a useful insight into the difference between traditional sports and esports from a sponsor perspective: “The biggest difference is the structure, ecosystem and instability of esports. It’s currently extremely fragmented and cluttered, making it difficult to comprehend for those within the industry, let alone those looking to invest from outside. In addition player movement and teams being founded and folding is far more fluid. There is more order in traditional sport, and independent bodies that control things, a result of being more mature as a commercial entity.”

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.

Nevertheless, the dynamism of esports makes it a hot topic for brands – which is why the UK Sponsorship Awards has this year introduced a new Gaming Sponsorship category. The new category is open to any esports sponsorship, as well as any other form of sponsorship that has placed gaming at its heart.

The reason for opening up the category to all forms of gaming sponsorship - not just esports - is to ensure that every angle within this dynamic sector is covered. There are, for example, brands that have built effective communications strategies in and around console games and casual mobile games. There are also examples of brands that have built games from scratch as a way of leveraging their overarching sponsorship programmes. 

Keeping the category as broad as possible means that UKSA doesn’t miss out on innovations. For example, Coca-Cola recently unveiled a first-of-its kind content integration with EA SPORTS’ FIFA 18, which follows the career of a virtual footballer called Alex Hunter. In “The Journey: Hunter Returns” story mode of the game, Hunter signs an endorsement deal as a brand ambassador for the new Coca-Cola Zero Sugar and films a commercial inspired by one Coca-Cola’s most iconic ads.

“When you reach the top level of the sport, it’s no longer just about kicking the ball,” said Matthew Prior, creative director, EA Sports. “With ‘The Journey’, we’re giving fans an authentic look at all sides of the game – from the arena, to the world of agents, sponsorship deals and more. And with Coca-Cola playing such a key role in the world of football, led by its FIFA World Cup sponsorship, this brand partnership made sense.”

Nielsen on Esports

New research from Nielsen states that more than 600 esports sponsorship agreements have been signed since the start of 2016. Broken down by category, 360+ IT/computer sponsorships have been secured, followed by retail with 100+ deals, online services (60+), non-alcoholic drinks (50+) and online media (40+). Looking more broadly, Nielsen cites deals from brands in sectors such as automotive, food/beverage, personal care and finance. Interestingly for would be sponsors, fans don’t seem to be especially negative about brands. 50-60% of respondents to a Nielsen fan survey responded favourably to brand involvement in esports events and streams, with less than 10% signalling a negative response to brand activity. That said, there is evidence in Nielsen’s survey that non-endemic brands have to work harder to prove their credibility. The non-endemic categories most likely to be welcomed by the esports fanbase are technology, energy drinks and snack foods.

One other point from the Nielsen data that will interest brands is the discovery that esports fans do watch non-internet television and do engage with traditional sports such American Football, Soccer, Baseball, Basketball, Tennis, Boxing, and Rugby. In other words, there is scope – perhaps - for sponsors to integrate esports activity into more orthodox activity.

The UK Sponsorship Awards is the leading awards event for the UK sponsorship industry. For companies interested in entering the 2018 Gaming Category, click here for details. 

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