Sponsorship in the Digital Age: The Rise of Esports

What are eSports?

Esports involve video game competitions or tournaments which usually take the form of organized, multiplayer events between professional gamers. Spectators can observe these tournaments via online live streams or by physically attending the events.

Esports became popular around 20 years ago in 1998 when Blizzard Entertainment launched a strategic game, Starcraft. It became popular in South Korea once broadband was introduced there, particularly among Seoul’s teenagers. This encouraged the country’s Ministry of Culture, Sport, and Tourism to create KeSPA, an official esport association.

Esports is a constantly growing and evolving industry; so much so that in 2014, Amazon bought Twitch (considered to be the YouTube of video games) for $970 million. That year, spectators watched 192 billion minutes of gaming and in 2016, that number increased to 292 billion. Today, Twitch hosts more than 2 million unique streamers per month.

The Season 3 World Championship of 2013 is the most-watched eSports event in history, raking in 32 million fans. Mainstream sports officials should be taking into consideration the impact eSports has made and will continue to make on the sporting industry. The reason why eSports should be included in the same league as traditional sports is due to the popularity of their live events and tournaments. Tens of thousands of fans gather at arenas to watch these gamers compete and many millions more watch the competitions online.

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Sponsorship in eSports today

According to Newzoo, the Global Esports Economy is projected to reach $905.6 million in 2018 as brand investments increase by 4%, a year-on-year growth of +38.2%. 77% of this will be generated directly (sponsorships and advertising) and indirectly (media rights and content licenses) through investments made by endemic (categories that sell products directly related to video game playing) and non-endemic brands that will spend $694 million, a 48% increase since last year.

Newzoo also released these three key findings relating to eSports as well as projections for the coming years:

• In 2017, there were 588 major eSports events that generated an estimated $59 million in ticket revenues, compared to $32 million in 2016.
• Brands will invest $694 million in the eSports industry, 77% of the total market. By 2021, this number will grow to $1.4 billion, representing 84% of the total market.
• Sponsorship is the highest-grossing eSports revenue stream worldwide, contributing $359.4 million in 2018. In 2017, this number was $234.6 million.

These stats show just how valuable eSports sponsorships can be for brands. But because this is a relatively new revenue stream, not just for sponsors, but also for gamers, brands may be reluctant to get involved in sponsoring eSports teams and events. The reason for this is because of their possible preconceived notions surrounding its target demographic. Esports usually attract young male viewers and it’s clear that younger demographics traditionally dislike constant advertisements on T.V. and sponsorship deals online.

However, research from Nielsen’s Esports Playbook indicates that the majority of eSports fans in the U.S., U.K., France, and Germany actually welcome brand involvement in tournaments, streams, and events. Additionally, less than 10% have a negative attitude about brand activity in eSports. And 25 non-endemic brand deals have already been announced in 2018 for eSports. This is great news for brands, as they don’t have to worry about their possible misconceptions surrounding sponsorship in eSports.

Smaller brands and eSports

For smaller brands, it might be a bit more difficult to secure sponsorship deals, particularly within the world of eSports. However, the newness of eSports can be used to any brand’s advantage. Thanks to live events and sponsorships, brands are winning over brand-wary gamers as they are helping to elevate eSports and in doing so, showcase that aspirational quality that makes eSports so unique to other sports sponsorship opportunities.

Smaller brands may also be worried that they need to be endemic to gaming culture in some way. But that’s actually not the case. According to Adage, a league’s health and its accessibility to outsiders is measured by how many sponsors it has that are non-endemic. This is great news for smaller (and larger) brands whose products aren’t directly related to gaming. Nielsen reported that the top 10 brands tracked in eSports last year included energy drinks, fast food, headsets, PC tech, PC hardware, gaming PCs, gaming software, eSports news, and gaming chairs. While a lot of these brands are endemic to gaming, food and drink is still a safe bet when it comes to sponsorships.

The future of eSports

We will hopefully see more eSports sponsorships emerge in the coming months as Twitch is becoming more and more popular. There has been ongoing discussions surrounding YouTube and how the platform’s algorithm is neglecting both its viewers’ and creators’ needs. It was once the only popular outlet for gamers to upload their gaming videos and streams, and now that Twitch is increasing in popularity, YouTube needs to realize that their massive gaming community could be moving rapidly from their platform to Twitch.

We should also see an increase in the amount of respect and recognition for eSports and gaming in general. Many people who are accustomed to watching traditional sports and attending traditional sporting events have expressed their scepticism about the concept of eSports. José Luis de la Serna, the Movistar Rider’s medical director said:

“Sport consists of organization, competition, expectation, and skills. These sportsmen use their brains, which is the best muscle of all, but there is also a lot of action in the game that requires quick reflexes and strategy. Of course, they don’t sweat but neither do those competing in Olympic archery.”

So we could even be seeing eSports in the Olympics sometime in the future. Even the IMG Academy, mainly focused on athletes in traditional sports recently added an eSports training program.

Measuring the ROI of Esports Sponsorships

Sponsorship Monitoring is a massively important part of sponsorship activation. Without it, it becomes very difficult for sponsors to calculate their ROI. A visual solution allows brands to find where their logo appears and for how long. In other words, logo detection for Sponsorship Monitoring provides sponsorship platforms with a basis for proving moments of consumption during an eSports event.