BAR 2019 MIAMI

2-4 October 2019

Forum Wrap Up

1 CONTENT

1 – Introduction

2 – The non-endemic brands are coming

3 – Esports as entertainment

4 – Esports as media and communications By Juliana Koranteng

5 – What private investors want Founder/editor-in-chief of MediaTainment Finance and TechMutiny, news resources covering investments in the 6-Esports education media, entertainment and creative sectors and the impact of the related digital technologies

2 1 - Introduction

“6th edition of The international esports sector’s progress in going mainstream It covered everything you need to know to invest in professional, amateur and Esports BAR and attracting non-endemic brands as marketing partners was casual esports entertainment with:- at Miami during the loud and clear message at the 6th edition of Esports BAR at **case studies about endemic and non-endemic brand campaigns; 2-4 October Miami during 2-4 October 2019. **analyses of partnerships with media and game publishers; **talks about esports as mainstream and premium-TV entertainment; 2019” Taking place at the JW Marriott Turnberry in **debates about the influence of and on traditional sports; Florida with a more detailed and informative set of “the **an examination of the role of streaming media and new digital conference keynotes, sessions, panels and discussions, the Forum has technologies; Forum has more than doubled in size compared to the last more than **the findings of private investors; and Miami edition. doubled in **the exploration of esports education size ” In a year when 16-year-old Kyle ‘Bugha’ Giersdorf wins US$3m in the first-ever tournament, Esports BAR delegates were aware something significant is happening.

It now is expected that the global prize pool for esports competitions will soar to US$300m this year from US$160m last year. And there is more to come.

For those who attended and those “The who could not, this report rounds conversation up the key points made at continues next the event, the ultimate hub year at esports BAR for decision-makers in the Cannes 2020, which global esports space. The takes place from 11 conversation continues next year at Esport BAR Cannes to 13 February” 2020, which takes place from 11 to 13 February.

Kick off Conference Miami 2019

3 2 - THE NON-ENDEMIC BRANDS ARE COMING

Opening Keynote He said: “So we can assume that, at some point, we shall see professional MonteCristo, the Broadcaster who recently launched players in Louis Vuitton skins in the game. Fifteen years ago, I never thought the advisory agency Theorycraft, highlighted the key opportunities for non- we would get here.” endemic brands in esports during his Opening Keynote: Broadcasting, Successes and Records of a Business Saga. He then recommended the following broadcast-sponsorship formats: tournament naming rights; segment naming rights; awards naming rights; custom shoulder content; venue activations; and in-game content.

Like several other speakers, he emphasised that brands have to move on from the days of only slapping a logo on an esports athlete’s jersey.

He urged them to become familiar with new technologies like Augmented Reality (AR), when computer-generated animation is superimposed on physical environments on broadcast content; or the use of the use of API (application programming interface), the gathering of streamed data to create original digital content.

“There is a level of dynamism here when it comes to fantastic AR that goes Opening Keynote by MonteCristo, Broadcaster at The Overwatch League beyond what you can do feasibly in traditional sports,” he said. He pointed out how, over the years, brands like China’s Shinhan Bank, “And with API, everything that happens within the game statistically, Korean Air, US media giant Comcast, car manufacturer Honda, telecoms especially for teams and players, we can update in real time. I would love to group T-Mobile, insurance firm State Farm and beer brand Bud Light have see brands doing more of this custom content.” successfully exploited sponsorship in esports on the live stage, live- streaming platforms and broadcast TV. Brands Keynotes “So Bud Light’s adoption of esports as a sponsorship platform was Referring to in-game sponsorships, he stated: “We want to see we can analysed during the Conversation with Brands Keynote: Bud & more of this kind of content with partners, because it really assume that, at Endeavor. drives a lot of visibility to the demographics that I imagine some point, we shall most of the brands wish to connect with, which is 18-to Global brewery group Anheuser-Busch InBev owns Bud Light 34 year old cord cutters that advertising is having a very see professional players beer, a non-endemic brand that wants to do “fun things” difficult time reaching.” in Louis Vuitton skins in with esports, stated Joe Barnes, the company’s Director, the game. Fifteen years Experiential Marketing. And he referred to the recent groundbreaking agreement ago, I never thought we between international designer-label fashion firm Louis would get here” Barnes and Stuart Saw, Senior Vice President, esports at Vuitton and Riot Games’ League of Legends (LoL) World by MonteCristo, Broadcaster Hollywood talent agency Endeavor, explained how Bud Light Championship. at The Overwatch needed more than a brand-awareness campaign because League

4 2 - THE NON-ENDEMIC BRANDS ARE COMING

Anheuser-Busch commands 70%-plus of that US beer sector.

As the brand’s strategic advisor, Endeavor used its analytics division to measure the Bud Light campaign’s effectiveness among esports’ mostly Gen Z and Millennial fans, especially as “The US law forbids the sale of alcohol to anyone under 21. average esports consumer Saw admitted that analysing esports data was more is consuming well difficult compared to accessing data for traditional over 100 minutes of professional sports like American football’s NFL, content per day” basketball’s NBA and baseball’s MLB. Stuart Saw, Senior Vice One solution has been to create original content for President at Esports all age groups on the popular Bud Light channel on Endeavor the streaming platform.

“The average esports consumer is consuming well over 100 minutes of content per day,” Saw said. “If you can be additive to that Brands Keynotes by Joe Barnes, Director Experiental Marketing at Anheuser-Busch InBev and Stuart Saw, experience, something they are not getting elsewhere, they will come to you.” Senior Vice President at Esports Endeavor, moderated by Dean Takahashi, lead Writer at Venture Beat

Barnes added: “As a brand marketer, what better tool could you have than And PepsiCo would not have been able to win the esports community’s trust people coming in and wanting to consume your content.” during the test phase without Dignitas, offered Faye Stein, PepsiCo’s Marketing Director at Mountain Dew. Another way for brands to access the esports community directly is to collaborate on games-related consumer projects with team owners, as “We were able to bring Dignitas in early in the development phase to have beverage giant PepsiCo and esports organisation Dignitas explained in the focus groups meet with players; we were able to learn their wants and needs, second Conversation With Brands Keynote on the Friday. their nutritional needs and preferences and, from that, we were able to build the product.” The two joined forces to create MTN DEW AMP GAME FUEL (Mountain Dew Amp Game Fuel), an energy drink designed specifically for gamers. Brands, Publishers and Gamers In the Conversation with Publishers Keynote: Hi-Rez Studios & FanAI, the Christopher Mann, Dignitas’ Vice President of Partnerships, pointed out that discussion focused on how brands can reach the most relevant demographic such alliances require effort but can be rewarding. “It is a true partnership, among the fan base of a publisher’s portfolio of games. which takes time to develop. We bring a lot of value, especially in the R&D side, to help Pepsi create this drink.” Todd Harris, Co-Founder of games developer/publisher Hi-Rez Studios and

5 2 - THE NON-ENDEMIC BRANDS ARE COMING

“And president of Skillshot Media, an esports production for many company, disclosed that a community of 30 million brands, reaching fans play Hi-Rez titles like Smite. 10 million people may not matter if it’s “Each esports community is different,” he said. “And for many brands, reaching 10 million people not the right 10 million may not matter if it is not the right 10 million people” people.” Todd Harris, Co-founder of Hi-rez Studios and That is why the company hooked up with FanAI, President of Skillshot which uses algorithms to offer sponsors a non- Media panel based service to measure a brand’s reach more accurately.

“We take tens of millions of data, instead of a 1,000 or 2,000-person panel. And with tens of thousands of people who play the game and watch on Twitch, we can see what are the categories they are spending money on,” explained Johannes Waldstein, FanAI’s Founder/CEO. The VIP Arena at Esports BAR Miami 2019 During the Brasil Keynote on Day 3, discussions turned to brands establishing relationships with publishers, no matter which part of the world they originate Tracylocke Brazil to raise Claro’s brand awareness among gamers. from. “We had almost 14 months of work with BBL, Tracylocke and the gaming Streaming platform Claro-Gaming was launched by Claro, the country’s leading community to pin down what kind of value proposition we, as a telco, could Internet service provider, which “wanted to go beyond connectivity” as a telco bring to the community,” Alfredo Souza, Claro’s Product Director, stated. brand by embracing Brazil’s esports audience, the world’s third largest after China and the US. BBL Founder/CMO Leo de Biase noted: “That’s the thing with Claro, they really dug deep to connect with this community and used that to leverage their It turned to esports entertainment company BBL and marketing agency services and products so it has been quite a good relationship.”

6 3 - ESPORTS AS ENTERTAINMENT

Esportainment Head of Global Strategy & Partnerships at Twitch Rivals, the tournaments organised for the streaming platform.

“In 2020, you’re going to see Rivals localised. We’re going to start broadcasting in local languages from different parts of the world, and that’s an opportunity to grow those native audiences.”

In Russia, Sergey Nevodnichiy, Co-Founder/CEO at Team Empire, plans to boost audiences by offering his players animation-production facilities.

And Camila Millan, Global Activation Brand Manager, waters division at consumer-goods giant Danone, reiterated brands’ hunger for original content. “Esports entertainment is perfect for us because it opens a space we never had before and was difficult to find.”

Gaming and Sports At the Keynote & Business Insights: Sports & Esports session, EA’s Senior Fortnite Tournament onsite and streamed on Twitch platform Vice President/GM of Competitive Gaming Todd Sitrin advised esports teams to learn to nurture their value as brands in the same way traditional- Conversations centred on competitive gaming’s sports athletes do. “To create influence on the future of entertainment during personalities, the Day 2 session called Esportainment As A “What I think is missing, as we move into a mass market, is how to tell create I think a lot of it Source of New Business Opportunities. personalities in a way that does not turn off the core fans. If you spend time comes down to the with athletes in more mature industries, they’re very aware of how to build storytelling” When the speakers were asked their their brand and personalities.” Jennifer Dill, Vice President predictions for next year, Tatyana Jennifer Dill, Vice President, esports at ELEAGUE co-creator Turner Sports, Esports at ELEAGUE and Zheltomirskaya, Chief Marketing Officer at entertainment company WePlay USA, said: agreed and noted that linear TV can contribute to that development. “To Co-creator at Turner “For 2020, we plan to continue developing create personalities, I think a lot of it comes down to the storytelling and Sports engaging content and projects with big thematic we’re trying to find different ways to reach those audiences and find those elements with stories that you, the brand, can personalities that resonate.” become a part of. Then you can use it on social media to tell that story to a wider audience that your brand can connect with.” During that same session, Formula 1 champion Rubens Barichello, who is also an investor in racing-esports company Millennial Esports Corp, came to The localisation and regionalisation of competitions are going to enhance highlight the positive influence auto-racing themed esports and simulators the entertainment factor on streaming platforms, declared Ron Rheingold, are having on traditional motor racing.

7 “The 3 - ESPORTS AS ENTERTAINMENT average gaming fan is “The proximity of the virtual to the real world is great, so it is a good time to Noting that the average gaming fan (as opposed to esports 34 years old” be really involved,” he said. player) is 34 years old, she had sceptics questioning the Allie Young, CEO launch of Axis Replay. “Why would anyone leave their home of Axis Replay “Some He was accompanied by Millennial Esports President/CEO to go and play video games?” she was asked. 78% of the Darren Cox, who observed: “Some 78% of the people who are people who are now motor-racing fans have found the sport through gaming. “We ran Her answer was that traditional sports players are also now motor-racing fans have found That is why we are involved in what we’re doing. Audiences three hours of gamers. “We opened our doors in January this year the sport through for traditional racing will go down while the virtual side is content on Twitch and that traction we got, just from the support of gaming” increasing.” on a brand new channel that community, in addition to the brands, has been Darren Cox, President with zero followers. And amazing,” she said. and CEO at Millenial Esports as live entertainment we had over 227,000-plus Esports Esports BAR speakers noted that the future of live esports views; 6,900 concurrent at “We ran three hours of content on Twitch on a is going to be more than just watching teams on stage inside peak, and that’s on only brand new channel with zero followers. And we had venues. three-and-half-hours of over 227,000-plus views; 6,900 concurrent at peak, content.” and that’s on only three-and-half-hours of content.” The physical side of esports, an activity normally associated with digital by Allie Young, CEO of media, is part of the future, argued Allie Young, CEO of Axis Replay, which Axis Replay Lovell Walker, Head of Esports at MGM Resorts provides physical recreational facilities for casual gamers and enthusiasts. International, wants gamers to treat Las Vegas the She was speaking during the session called Designing the Future of Esports same way other fans see the city as a mecca for other forms of Experiences: From Live to Immersive Events. live entertainment, including concerts.

“If we can invite an esports organisation that has a big following to come into our facilities, they can take our real estate and activate however they want,” Walker explained.

“It is a blank canvas and they can engage with their fans in any sort of way because we have pools, we have hotel rooms, we have suites and they could do their streams out of there.”

On the same panel, Dustin Sweeney, Explore Designer at Sports-Architecture firm HKS, advised teams and organisations to create headquarters that are unique to their relationship with their fans. He cited the Team Vitality facility in Paris as an example.

“It is not what we think of when we speak of an esports facility,” he said. “Think of a retail storefront, about connecting that brand with the local neighbourhood, about being a resource for that community and not just be a The Magic Formula: 1-to-1 Matchmaking flashy statement that doesn’t really fit the neighbourhood.”

8 4 - ESPORTS AS MEDIA AND COMMUNICATIONS

Measuring media effectiveness Carmen Fernandez, Mediapro Group’s new Business Manager, said the The challenge of comparing the effectiveness of esports content to the company had conducted studies on new audience behaviour for esports, impact of watching traditional sports needs to be addressed to ensure advertising and entertainment. audiences are getting what they want and brands know where their money is going. “We realised we must super target the audiences and we have to “Brands customise the experience the content will deliver to those targets,” During her presentation called Implementing Standard Data must learn to she asserted. in Esports, Nielsen Esports Managing Director Nicole Pike be tactical in how advised delegates to start taking the AMA (Average Minute they use media to “Brands must learn to be tactical in how they use media to reach Audience) formula seriously. reach consumers” consumers,” offered André Fläckel, Director Esports at Lagardère André Fläckel, Director Sports. Explained as the average number of digital and linear Esports at Lagardère During his State of the Industry: Brands Strategies in Esports, broadcast viewers at any given minute, Nielsen Esports has Sports been able to demonstrate that the global AMA for the Overwatch he recommended three approaches. The first is for brands to use League Championship grew to 1.12 million this year from 861,205 in insight and know-how to figure out new uses of digital and social 2018. media. Next, they can use media platforms to collaborate with other brands. And then, they can apply clever but friendly tactics to trigger conversations “Based on the data available for live esports content today, it is the most and memes on social media. comparable metric to traditional sport TV viewing,” she said. Esports Television For her talk on New Audiences, New Platforms, New Entertainment, Maria Television’s role as the strongest catalyst for taking esports mainstream is gaining traction internationally, said the participants in Esports to Media + Media to Esports = Cross-Over Case Studies.

“Most of the people who have heard about esports for the first time heard about it while watching TV. So TV is a great way to enlarge the audience for esports,” said “On TV, it is Bernard Amar, Director at French Esports-TV network more about the ES1. “On streaming you normally find game plays player than about and tournaments. On TV, you can find magazines, the game” documentaries, reality TV. On TV, it is more about the Bernard Amar, Director player than about the game.” at ES1 TV

Esports’ presence on TV will also lure more marketers into the industry, states Jason Scorrano, Turner Sports’ Director of Keynotes: Implementing Standard Data in Esports by Nicole Pike, Managing Director at Nielsen ELEAGUE Partnerships. Esports

9 4 - ESPORTS AS MEDIA AND COMMUNICATIONS

“Over the years, we’ve made a consistent effort to be on TV and that’s because we have a very strong audience watching it and it’s very important for advertisers.”

Even though there is a consensus that those who watch esports on TV are totally different from the viewers watching on streaming platform, Spain’s UBEAT platform is serving both audiences.

Marta Ruiz de Gauna, Manager at UBEAT explained: “We were originally going to focus on digital only, but our customers at traditional TV asked us to create an esports channel for them too. This gave them an opportunity to enlarge their audience and to create content for the esports community that also demanded content on linear TV.” Esports BAR Conference: A 360° Entertainment Experience by Rebekah Valentine, Staff Writer GamesIndustry.biz at Gamer Network & Anna Lockwood, Head of Global Sales, Telstra Broadcast Service & Chris Overholt, President and CEO at OverActive Media Group & MonteCristo, And Charles Conroy, Vice President gaming at The Switch, Broadcaster at The Overwatch League the international platform that distributes professional- “Streaming “You will see standard linear-TV, on-demand and streaming videos, someone living in a is what really foresees the rise of premium user-generation MonteCristo stated: “Streaming is what really brought the brought the remote place without the content that he describes as “self-production”. industry up like a rocket. Before then, there were companies ability to audition for high- industry up like a level productions. And they that specialised in streaming but there was no way for fans rocket” will become celebrities out of As home-streaming has created multi-millionaire to enjoy events as they were unfolding as they did when MonteCristo, Broadcaster their rooms because of the esports superstars like Tyler ‘Ninja’ Blevin among watching live sports.” at The Overwatch tech on their home PC” gamers, Conroy expects to see the emergence of League by Charles Conroy, Vice even more digital-media celebrities thanks to next- The tech facilities at Australia-based Telstra Broadcast President at The Switch generation TV platforms. Services have taken the transmission of live professional gaming events to a new level, said the company’s Head of Global Sales Anna “That meteoric rise to stardom is a trend that I think we shall Lockwood. Ultra-fast 5G networks, cloud computing and immersive media like continue to see,” he noted. “You will see someone living in a Virtual and Augmented Realities are among the technologies on offer there. remote place without the ability to audition for high-level productions. And they will become celebrities out of their rooms because of the tech on their home PC.” “There are all these different touch points that tech can add to the broadcast experiences and that is what we’re exploring at the moment,” she added. Esports as Multimedia Competitive gaming at the professional and casual levels have contributed to the The impact on standard sports TV will also be immense, said Chris Overholt, total disruption of the global media market. Speakers at the session on Esports: President/CEO of Canada-based esports organisation Overactive Media: “We A 360o Entertainment Experience underlined how digital media tech is raising the shall also see esports have an impact on how traditional sports is consumed bar for the way esports fans interact with content. and watched and covered.”

10 5 - WHAT PRIVATE INVESTORS WANT

It seems the honeymoon days of when esports ventures automatically attracted big money is over as expectations for the maturing market become more realistic.

On the panel called Focus on Investors: What Do They Look For?, Han Park, CEO of Esports MX LATAM Fund, cautioned enterprises approaching financiers to be flexible in their requests.

“The market will force them to evolve,” he declared. “Initially, it started with investing into a professional team that wins a lot of money and has a big fan base. But they quickly learned that for the amount of money that they raised, it is hard to hit their financial projections because their burn rates are so big. Salaries are increasing and prize money isn’t always guaranteed, while sponsorship and endorsement is now spread across other professionally organised teams that have raised a lot of money.”

With that in mind, he wants to finance platforms and technologies that actually drive the business side of the industry. “A good example is payment rails (digital payment networks) for prize money distribution. It is not the Focus on Investors moderated by Han Park, CEO at ESP-MX-LATAM FUND with Arvin Ashrafi, sexiest thing out there in terms of a hyper esports opportunity. But it’s Investment Manager at MTG, Chris Chaney, Founder of Evolution Interactive and Josh Chapman Co- Founder and Managing Partner at Konvey Ventures something that needs to exist to help stabilise what esports is about.” Josh Chapman is wagering that esports betting could be the next big thing The days of team organisations automatically earning high for investors: “It is a huge market that is going to be worth US$10bn in valuations are gone, argued investor Chris Chaney, Founder of the next 24 months.” Evolution Interactive. “A lot of investments to date have flown “Long term into esports team organisations because investors can, at a is something Esports should not be embraced as a short-term prospect, very high level, make sense of what an esports organisation is everyone should warned Arvin Ashrafi, Investment Manager at MTG, arguably because they liken it to a traditional sports team.” one of the world’s biggest esports investors and among the first cherish” to see the entertainment potential in the sector. Instead, he has his eye on ventures that know how to monetise Arvin Ashrafi, Investment the fan base: “That is what everyone is chasing at the moment. Manager at MTG “Long term is something everyone should cherish. If some The audience is there but there is a lot of pressure to figure investors or brand sponsors get burnt in the short term, that’s out how to monetise that audience because you have to generate a huge flaw and hopefully not something that will happen. But revenues to build that long-term sustainable model.” everyone is in this for the long term.”

11 5 - WHAT PRIVATE INVESTORS WANT

The Latam Panel exemplified how investors can spot gaps in the market to explore, exploit and then fully engage with. Compared to North America and Europe, Latin America’s comparatively sparse Internet connectivity and gaming business is underdeveloped.

But that has not stopped Brazilian media conglomerate Globo and Spain-headquartered events organiser LVP (Liga de Videojuegos Profesional) from investing in the region. The gap that needs to be targeted currently is the market for amateur and casual gamers.

“To invest for the first time, you have to be fully aware of the full scene, talk to publishers, reach out to private initiatives,” LVP CEO “To invest for the Jordi Soler advised. first time, you have to be fully aware of the full “Without the amateur community, scene, talk to publishers, the pro league is not possible. reach out to private Latin America is not as mature as initiatives” Europe, Asia or the US, so there Jordi Soler, CEO at LVP is much opportunity to build this professionalism from the amateur to the pro levels.”

It is a strategy also adopted by Globo, said LATAM Panel with Jordi Soler, CEO at LVP & Jonathan de Vargas, Business Development Sports at Globo Group & Jonathan de Vargas, who is responsible for sports & business Rebekah Valentine, Staff Writer GamesIndustry.biz at Gamer Network development in the media and content division.

“The objective is to focus on the casual and amateur scenes like the collegiate in Brazil, the high-school leagues, university leagues and there are already 10,000 students engaged. It’s a good base for accessing athletes and pro stars. And we’re working with LVP to bring its gaming platform to Brazil.”

12 6 - ESPORTS EDUCATION

“I think Esports studies can add substance to the education has development of professional gaming’s long- a huge role to play term infrastructure, claimed the speakers because there all these on the panel called Focus on Education & young professional esports Collegiate Esports. stars out there that they “I think education has a huge role to may be successful into their play because there are all these young twenties, but after their professional esports stars out there that esports careers ends, what may be successful into their twenties, else do they do?” but after their esports career ends, what Mark Deppe, Director at UCI and else do they do?” asked Mark Deppe, Esports Commissioner at Director at UCI (University of California, NASEF Irvine) and esports commissioner at NASEF (North American Scholastic Esports Federation).

“There is a buzz term in the industry, ‘the path to pro’ And I really don’t like it Focus on Education & Collegiate people with Susie Kim, Esports Veteran, Consultant, Advocate for the newest generation of gamers & Mark Deppe, Director at UCI and Esports Commissioner at NASEF & because it makes it sound like that once you become a professional esports Mark ‘Garvey’ Candella, Director of Strategic Partnerships at Twitch & Samantha Anton, COO at NASEF athlete you’re set.”

The goal of esports education is to encourage young students to use their Being fanatical about esports should never be seen as a waste of time, innate gaming talents not only for a potential future professional career but declared Mark ‘Garvey’ Candella, the Director of Strategic Partnerships also for acquiring skills that will be useful in other professions. at Twitch who advises academic institutions adding esports to their curriculum. Samantha Anton, NASEF’s COO, stated why young people, especially those in high and middle schools, need to manage their expectations after hearing “So we’re talking about incorporating brand safety, digital citizenship in parts about the millions to be earned in professional esports. of these curriculums because the students already know how to stream,” Candella said. “The reality is that a majority of those high-school students will not get the opportunity to go pro right off the bat,” she said. “So how do we encourage them “Now, they will understand they are young professionals and future leaders to use their interest in esports and turn that into a career in accounting or in of this industry. This is what is going on at UCI and some of the universities event management while still staying true to what they are passionate about?” around the world.”

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