sign in sign up
<<
Home , Apex (tournament), Call of Duty, Dignitas (esports), ELeague, FaZe Clan, OpTic Gaming

ARE YOU GAME? Brands are discovering the loyal fanbase for — but marketers need to play by the rules BY E.J. SCHULTZ

12 • APRIL 3, 2017

P012-P019_AA_20170403.indd 12 3/31/17 12:34 PM an Porter did something that unnerved his parents: He dropped out of college to play video games for a living. “They were obviously giving me crap about it and telling me, ‘When are you going back to school?’” His retort, half-joking, was, “I want to make more money than you guys next year.”

Pretty soon, no one was for esports and global gaming. Newzoo estimates the global laughing. Mr. Porter, 23, a esports audience at 385 million people, including 191 million onetime honors student enthusiasts and 194 million occasional viewers. at the University of Wash- Sponsorship revenue is expected to reach $266 million ington, hauled in nearly in 2017, while ad spending on esports will hit $155 million, I$200,000 over a 12-month according to Newzoo. That still pales in comparison to tradi- period in 2014 playing in tional sports behemoths like the NFL, which hauled in $1.25 tournaments. billion in sponsorship revenue last season, according to Three years later, the sponsorship consultancy IEG. But esports, while still a niche, money continues to roll is gaining ground and is poised to enter the mainstream. in for Mr. Porter and other Newzoo forecasts that sponsorship spending will reach $655 players like him who are million by 2020, while ad spending in the esports industry (Top) Esports stars climbing the ranks of the nearly $700 million global competi- will climb to $224 million. Austin Pamajewon tive video-game-playing industry known as esports. The prize Even Will Ferrell is and Ian Porter fl ank pools are rising because there is a large, ravenous segment getting involved. Ac- team owner Hector of fans who watch online or pack stadiums like Los Angeles’ cording to media re- Rodriguez at the Staples Center to cheer on their favorite players competing in ports, the actor, who Optic Gaming games like “” and “.” has already starred in House. (Below) Michael Chaves The explosive growth has started catching the eye of lms revolving around tests his VR skills big-spending marketers including Arby’s, Audi, Coca-Cola, competitive basketball, with a game at the PepsiCo, Gillette and Bud Light. They are among the brands ice skating and car rac- Optic House. putting money into esports in hopes of reaching the sport’s ing, has signed on to demographic sweet spot: males between the ages of 21 to 35 star in a movie about who are increasingly hard to reach via traditional advertising. esports, which will fur- For marketers able to navigate the nascent esports land- ther cement its place in scape, which one analyst group compared to the Wild popular culture. Some The IEM Counterstrike West, the paybacks can be huge because have universities have even Global Offensive champi- shown loyalty to brands that do it right. begun o ering esports onship draws big crowds “If you are a CMO and you are not in esports scholarships. That in Katowice, . in 2017, you are going to risk getting red,” includes University said Tobias Sherman, global head of esports of California, Irvine, at talent agency powerhouse WMEIMG. which last year opened The agency runs an esports league in a 3,500-square-foot “esports arena” that includes 80 custom partnership with Turner Broadcasting gaming PCs and a webcasting studio capable of broadcasting called ELeague that launched in 2016 matches to millions of viewers. and includes games shown on TV To outsiders, it might sound crazy: Why would people on TBS as well as online on popular want to watch other people play video games? Insiders point esports site , which recently to similarities with traditional sports. Just like basketball or drew more than 1 million viewers for football, esports has teams, leagues, championships, stars a single event. and passionate fans—plenty of them. Esports players even The global esports economy—which train like traditional athletes, logging countless hours of includes media rights, advertising, practice time. sponsorships, merchandising and Still picturing out-of-shape kids playing video games in ticket sales—will grow by 41% in 2017 their mother’s darkened basement? Then consider this: The to $696 million and reach $1.49 bil- renown IMG Academy—an elite boarding school and training lion by 2020, according to Newzoo, program in Florida geared for athletes in basketball, foot- which provides market intelligence ball, tennis and other traditional sports—recently added an THIS PAGE, IEM COUNTERSTRIKE ARENA: IEM COUNTERSTRIKE ARENA: THIS PAGE, ESL/HELENA KRISTIANSSON. OPPOSITE COURTESY STRACK ESL/PATRICK COURTESY PAGE:

ADVERTISING AGE Optic Gaming photography by Saverio Truglia for Ad Age APRIL 3, 2017 • 13

P012-P019_AA_20170403.indd 13 3/30/17 7:44 PM SPORTS MARKETING

(Clockwise) esports training program that includes physical, mental and platform and community for gamers that Amazon bought for $970 Pamajewon at nutritional aspects. million in 2014. The site allows anyone to livestream themselves play- his workspace in At IMG, members of an esports team called Faze Clan last year ing video games. Today the site boasts more than 2 million unique the Optic House; went through a three-day boot camp in advance of a big Call of Duty streamers per month, drawing 9.7 million active daily viewers with Chaves and Marcus tournament. The regimen included an engagement rate of 106 minutes Blanks chow down weightlifting, stretching, nutritional watched per person per day, accord- at the Optic House; ing to its website. “For individual play- Team education and vision training meant TOTAL REVENUE celebrate their to improve reaction time, according ers, the pathway to esports success is victory during the to a video posted on the “Call of Duty” ESPORTS REVENUE +35.6% now clear: Build a following on Twitch, website. “Esports has a physical com- get noticed by teams and sponsors IEM Counterstrike CAGR Global Offensive ponent to it. The athletes are playing alike, get big,” according to an esports championship; for many hours at a time: You have to 2015-2020 report issued late last year by Leaders, Optic Gaming team have eye-to-hand coordination, you GROWTH $1488M which publishes market intelligence (from l.) Damon have to be able to have good posture, GLOBAL 2015, 2016, 2017, 2020 for sports industry leaders. Barlow, Rodriguez, good exibility,” David Hesse, IMG’s Twitch also streams most of the big- Nick Kershner director of athletic and personal de- $1220M gest esports competitions across the and Blanks record globe, drawing huge audiences. The sponsor-friendly velopment, says in the video. content at the “You can have an argument all site is free, but Twitch’s secret sauce is Optic House. day long about what sport is. But I TOTAL REVENUE its ad revenue model. The top 17,000 think esports is going to be and is streamers, which include professional perceived as a sport amongst the esports players, can participate in an community. That is all that really +41.3% ad-revenue-sharing program. But the matters,” said Dan Ciccone, who TOTAL REVENUE YoY players, not Twitch, decide in real leads RevXP, which is the esports time when the ads run during their arm of -based sports mar- $696M streaming sessions. So a top esports keting agency Revolution. +51.7% player might hop on Twitch to prac- YoY One of RevXP’s clients is Optic $517M tice playing, draw thousands of view- Gaming, a suburban Chicago-based ers, and then take a quick break and esports franchise that has revolu- $493M ask viewers to watch an ad, noting tionized the industry by putting as that it will help support their career. much emphasis on content creation $350M “It creates a much more honest and and entertainment as it does on win- $325M genuine relationship between the ad- ning tournaments. (See story, page $493M vertising and the content creators be- 19.) Mr. Porter, whose esports mon- cause there is a direct link there,” said iker is “Crimsix,” plays for Optic’s $230M Nathan Lindberg, director of global “Call of Duty” team. esports sponsorships at Twitch. For brands and fans, esports of- Players don’t just stream their fers something that most traditional 2015 2016 2017 2020 games on Twitch, they interact di- sports cannot—nearly unprece- rectly with fans via a live chat that dented access to star players. This runs beside the video. “When was TOTAL REVENUE mostly occurs online, where players the last time you heard LeBron James (MEDIA RIGHTS, ADVERTISING, SPONSORSHIP, routinely interact with fans via social tweet, ‘Hey I’m going to be at the Y MERCHANDISE & TICKETS, GAME PUBLISHER FEES) media or with YouTube videos. this weekend practicing and shoot- One of the biggest digital players is BRAND INVESTMENT REVENUE ing hoops; come on down and shoot

Twitch, the six-year-old social video (MEDIA RIGHTS, ADVERTISING, SPONSORSHIP) hoops with me.’ That doesn’t happen SOURCE: NEWZOO ESL/HELENA KRISTIANSSON. CHART IEM COUNTERSTRIKE ARENA: COURTESY

14 • APRIL 3, 2017 ADVERTISING AGE

P012-P019_AA_20170403.indd 14 3/30/17 8:01 PM are and how they  t into a wider narrative.” SPORTS Big players include Blizzard, MARKETING the maker of games including “Call of Duty” and “StarCraft,” which in 2015 acquired . MLG operates MLG.tv, an on- line broadcast network for professional gaming, and the MLG Pro Circuit, the longest-running esports league in North America. Another behemoth is Riot Games, maker of esports hit “League of Legends.” Riot, which is owned by Chinese internet giant , runs the League of Legends Championship Series. Globally, the most established player is German-based Electronic Sports League, or ESL, which was founded in 2000 and hosts major events across the globe. Esports had humble beginnings. The Leaders report traced the sport’s roots to informal competitions held at video game arcades in the 1970s. One of the  rst breakthroughs came in 1980, when Atari’s National Championship drew 10,000 par- ticipants across the U.S., the report noted. Esports as a spectator sport  rst took o in , where cable networks began broadcasting tournaments of the “StarCraft” game in the early Porter made good in traditional sports, but it happens all the time” in esports, Mr. . By 2004, Korean StarCraft events were drawing 100,000 on his promise to Ciccone said. his parents to be people to stadium, Leaders noted. If accessibility is the greatest strength of esports, it’s biggest a big earner. Here Intel gave the sport a push in 2006 when it teamed with ESL weakness might be its disorganization. The sport looks like a scat- he is with his Turtle to create the , whose most recent season tered mess compared with traditional sports, which are neatly Wax-branded ride. included stops in Shanghai, Oakland, Calif., South Korea and organized by central leagues such as the National Basketball Poland and a total prize pool of more than $1 million. The most Association and National Football League that oversee a reliable recent event in Katowice, Poland, drew 173,000 people during schedule of regular season games followed by playo s and a cham- the last weekend in February and  rst weekend in March, plus an pionship game. additional 46 million unique online viewers, according to orga- Esports events, on the other hand, are run by myriad organiza- nizers. Intel uses the events to showcase high-powered personal tions including game publishers and media companies. Esports computer processors, including some that are tailored to the gam- is the Wild West with a “fractured landscape and lack of cohe- ing community, like its Core i7 “extreme edition” processor. “We sive calendar,” the Leaders report stated. “For the outsider, it is bring things like that to the gaming community and they sell out almost impenetrable to decipher what and when the biggest events instantly,” said Intel Global Marketing VP Julie Coppernoll.

FEED THE PASSION industry, criticized Bud Light’s mind,” rather than treating it as Coke’s approach slate of All-Star nominees, say- a straight media buy, said Jeff HOW-TO GUIDE FOR ESPORTS 1 has been to tap fan ing the players were not good Baker, the fast-feeder’s VP- passion. That includes some enough: “It’s a brand ambas- brand advertising and content. old-school techniques, like sador search poorly disguised At the ELeague nal at ’s BRANDING handing out “cheer boards” as a campaign to nd the best Fox Theater, fans actually at events that allow fans to of the best.” But Bud Light chanted “Arby’s,” according to scribble sayings on them. For pressed forward and is happy multiple accounts given to Ad So you want to people who can’t make it to the enough with the results that it Age, including from Mr. Baker. get your brand big events, Coke hosts viewing plans to continue the program involved in parties at cinemas, like its in 2017. Once the brew started GIVE UP CONTROL esports? The high-de nition satellite stream creating content featuring the PepsiCo’s Brisk brand good news is of the League of Legends World All Stars, “a lot of that cynicism 4 last year teamed up that there are Championship at L.A.’s Staples really disappeared,” said Jesse with popular esports franchise plenty of oppor- Center last October to more Wofford, who runs the brand’s Optic Gaming to plug its Mate tunities in the than 200 movie screens across esports platform. line of energizing tea with a fast-rising sport. the U.S. weekly content series pro- But be careful, SPEAK THE duced by Optic called “Smooth because if you BE WILLING TO LANGUAGE Competition.” But Brisk did not stumble, the TAKE SOME HITS 3 Arby’s got involved hover over the process, leaving savvy gaming 2 Gamers tend to be with a bang—literally. To sup- the content in the hands of the community skeptical of outsiders, especial- port its sponsorship last year esports stars who know their might not let you ly big brands. Marketers need of the ELeague, the company audience best. “Brisk gave us forget about it. to be resilient. Bud Light got created videos showing its a ton of freedom,” said Optic Here are some involved last May by creating a sandwiches being blown up CEO Hector Rodriguez. The tips from brands group of “Bud Light All-Stars” along with references to the result was 46 pieces of custom that are already comprising esports competi- esports game “Counter-Strike: video content that accumulated in the game. tors. The nal selections were Global Offensive.” The spots more than 7.6 million views, chosen by fans from a group were shown during ELeague according to PepsiCo. of players nominated by the broadcasts on Twitch and on brand. But just a few weeks TV on TBS. “People appreciat- later, Dotesports.com, which ed that we got the game and provides daily coverage of the created stuff with the game in

16 • APRIL 3, 2017 ADVERTISING AGE

P012-P019_AA_20170403.indd 16 3/30/17 8:41 PM WHAT GAMERS CARE ABOUT IS ALTRUISM, AND THEY WANT TO SEE BRANDS DOING SOME- THING THAT BENEFITS THE SPACE, NOT JUST THE BRAND.” Nathan Lindberg, Twitch

is, you get unbelievable loyalty and praise. And if it’s not, you can get some pretty serious toxic backlash.” Brands also should be prepared to focus on digi- tal, because esports on TV has yet to break through in a major way. The ELeague’s five-week season two, which included Friday night telecasts on TBS, drew 316,000 total viewers, of which 145,000 were ages 18 to 49, according to Nielsen. The Jan. 29 finals of the Counter-Strike: Global Offensive tournament, known as the ELeague Major, drew 228,000 total In the U.S., a wa- viewers. That puts it roughly on par with Major League Soccer, tershed moment for which over the course of the 2016 regular season averaged 277,000 esports came in 2013 viewers on ESPN, Fox Sports and Univision.

when a reported 13,000 But online, esports is a significant force. The Jan. 29th ELea- people packed the Sta- gue final drew more than 1 million concurrent viewers on Twitch, ples Center to watch a breaking a record. While esports is a digital-first sport, getting TV team from South Korea attention is critical to making it mainstream, according to some defeat a Chinese team industry experts. “We are not trying to necessarily migrate es- at the world champion- ports to television. The broadcasts for us provides a portal for us ship final of League of to be able to present esports to a broader audience or potentially Legends. The Los Ange- a more casual fan,” said Craig Barry, exec VP-chief content officer les Times covered it just for . “I hear words like ‘mainstream’ around esports, like a regular sport, not- and although it’s getting there, it is still very much niche,” he said. ing that “fans, with the But “it’s a huge niche and an extremely engaged community.” (Clockwise) help of inflatable noise-making sticks, cheered every time some- Yet spending by esports falls short of traditional sports. Enthusi- Esports enthusiasts one killed an opponent. Many were rooting for the underdogs and asts will spend an average of $3.64 per person following the sport in wait in line outside hoping the bloodshed would continue late into the night.” 2017, according to Newzoo. Compare that to basketball, on which the Spodek “It was so visible, and that changed the whole thing,” Newzoo fans spend an average of $15 each. The reason for the discrepancy arena, home of CEO Peter Warman told Ad Age in a recent interview. “A couple is that esports content is “largely available for free and the money the Katowice months later, Madison Square Garden filled up—and that was it,” he spent on merchandise remains relatively small,” Newzoo stated. Counterstrike tournament; added, because mainstream media outlets like Turner and ESPN But spending is rising and expected to reach $5.20 per fan by 2020. Kershner zooms in; “decided not to mock esports but to embrace it.” One development that could nudge esports into the mainstream Team Optic shows The rising fan and media interest meant U.S. brands could no is new involvement by key backers of traditional sports. This in- off just a few of longer ignore esports, and plenty have gotten involved lately. cludes the NBA, which in February announced a partnership with their trophies back While the audience is attractive—especially for brands seeking Take-Two Interactive Software to launch a professional gaming at their house. millennial males—there are risks, notably that gamers are a savvy league for the popular “NBA 2K” video game. Teams will be oper- group. (See story, page 16.) ated by NBA franchises and begin play in 2018. The sport is new enough that fans will reward brands that help In a separate move, the NBA’s in September it grow by backing teams and tournaments. But gamers will punish acquired two esports franchises—Team and Team — brands who are seen as exploitive and only in it for a short-term and rebranded them under the Team Dignitas banner for which gain, according to industry experts. “What gamers care about is teams will compete in multiple games. “We intend to build a fan- altruism, and they want to see the brands doing something that first team that aspires for excellence in all aspects of the business benefits the space, not just the brand,” Mr. Lindberg said. Brands from attracting premier playing talent to building out merchandis- that get it wrong “do a logo slap,” he said. “They are in and out very ing, sponsorships and broadcast rights,” Greg Richardson, chair- quickly, they don’t stay.” man of Team Dignitas, said in a statement. One brand that has showed esports staying power is Coca-Cola. As the industry grows, more agencies are getting involved. The soda giant first got involved four years ago when it began This includes Los Angeles-based digital creative shop Modop, partnering with “League of Legends” maker Riot Games to spon- which in February announced a partnership with The Agency for sor tournaments. Matt Wolf, who oversees esports for Coke as its Professional Esports, a talent agency for pro esports players to help VP-entertainment ventures and gaming, said the key to reaching link esports stars to brands. The agency’s president is Jason Moore, esports fans is to “really understand them and, in a way, be one of best known for previously representing Paris Hilton.

them” so that marketing “is organic and natural.” He added: “If it Mr. Moore envisions a day when esports stars are so popular STRACK; ESL/PATRICK WILL WIERZBA: COURTESY ESL/MACIEJ KOLEK. OPPOSITE PAGE: IEM COUNTERSTRIKE ARENA: COURTESY THIS PAGE: EXCLUDE REVENUES REVENUE FIGURES ALWAYS SOURCE: NEWZOO. NEWZOO’S ESPORTS MLG/LANCE SKUNDRICH; CHART COURTESY IAN PORTER: WITHIN GAMES. CONCEPTS, AS WELL REVENUES GENERATED LEAGUES, AND SIMILAR CASH-PAYOUT FROM BETTING, FANTASY

18 • April 3, 2017 ADVERTISING AGE

P012-P019_AA_20170403.indd 18 3/30/17 7:45 PM THIS PAGE: IEM COUNTERSTRIKE ARENA: COURTESY ESL/MACIEJ KOLEK. OPPOSITE PAGE: WILL WIERZBA: COURTESY ESL/PATRICK STRACK; IAN PORTER: COURTESY MLG/LANCE SKUNDRICH; CHART SOURCE: NEWZOO. NEWZOO’S ESPORTS REVENUE FIGURES ALWAYS EXCLUDE REVENUES FROM BETTING, FANTASY LEAGUES, AND SIMILAR CASH-PAYOUT CONCEPTS, AS WELL AS REVENUES GENERATED WITHIN GAMES. P012-P019_AA_20170403.indd 19 GAME PUBLISHER $115.8M ADVERTISING AGE were like, ‘We can’t tell him anything anymore.’” the money rolled in,“they were to thepointwhere surprised they a video game for a living, “I can’t it work.” call to as late a 3 a.m., he said. “It’s a grind,” he said. But when you play history.Duty” Onanaverage day, from hepractices theafternoon as the status winningestthing Maintaining his else: player in “Call of $63.7M MERCHANDISE & TICKETS +17.9% +42.4% As for his parents? forAs his They “obviously support me now,” he said. As Back in Chicago, pro esports Mr. Porter has an appetite for some- FEES

Optic Gaming’s Will‘Rush’

Wierzba playstowin. 17% 9% REVENUES PERSTREAM $95.2M MEDIA RIGHTS +81.5% 14% $696M GLOBAL 2017 YEAR ON 2017 TOTAL +41.3% 38% he said. sure—mark my words,” get that Carl’s Jr. ad for burger ad. “I’m going to professional in a new goal to puta is ad in 2005? Mr. Moore’s in a provocative Carl’s Jr. starred barely clothed Hilton famouslyParis ads. Remember when and of in buses TV sides on billboards, on the that they are lling ads 22% up attheOptic House garage.

Chaves revs $155.3M ADVERTISING $266.3M +21.0% SPONSORSHIP +57.7% I players’ livesthatoftenhavenothingto ad dollars.Opticalsoprovides looksat edited videosthatdraweyeballsand selves playinggames,creating slickly lence. Team membersrecord them- creation asmuchcompetitiveexcel- But thefranchiseemphasizescontent Offensive,” “”and“GearsofWar.” “Call ofDuty,” “Counter-Strike: Global into socialmediastars. itsmembers business modelbyturning has helpedrevolutionize theesports home playsakeyrole forOptic,which of twenty-somethinggamers.Butthe a corporateexecutivethanbunch seems more suitableforthefamilyof in awealthysuburbnorthofChicago Gaming. Thesprawlingseven-bedroom by popularesportsfranchiseOptic and promote wellintothenight. down thestreet for“Counter-Strike” one AdAgevisitedandanother one ping-pong tableinthebasement. Brisk inthekitchenandaBrisk-branded the house,Optickeepsacabinetfullof million views,according to PepsiCo.At content accumulatedmore than7.6 Forty-six piecesofcustomvideo in go-kartracing,bowlingandmore. gaming, showingmembersengaging focused onOpticmembersoutsideof Optic called“SmoothCompetition.”It weekly contentseriesproduced by its Matelineofenergizing teawitha Porsche withthehelpofbrand. Mr. Porterupgradinganddetailinghis Optic-produced videocontentincluding Optic foraprogram thatwillinclude just signedupforasecondyearwith and Turtle Wax. Thecar-care brand lure sponsorssuchasPepsiCo’s Brisk celebrity statusinthegamingworldto RevXP hasleveragedthefranchise’s 37, whoalongwithesportsagency child ofOpticCEOHectorRodriguez, summer drew more than80,000views. Ian “Crimsix”Portertakingahikelast Tube videoofstar“CallDuty”player do withgaming.Oneexample:AYou- By E.J. Schultz OPTIC GAMING THE DYNAMICSOF Optic runsteamsforgamesincluding Ad Agetoured ahousecontrolled Optic actuallyrents twohouses: The Brisk lastyearusedtheteamtoplug The always-onapproach isthebrain- quarters, allowingthemtopractice players oftenshare thesameliving interacting withbrands.Esports and lmed videosofthemselves lived togetherinthesamehouse riors didn’t justplaytogether, but magine iftheGoldenStateWar- speci c brand,andthere youhaveit.” video, uploadsomethingtodo with that out ofourlivingroom. We justmakea can dothatonaTuesday just morning eyeballs onyourbrand,”hesaid.“We win championshipstogetXamountof winning too.” relate to.”WhenOpticwins, fans“are you becomesomethingthattheycan your dreams, yourgoals—that iswhen about, yourdarksecrets, your wants, get toknowyou,yourlife,whatyouare screen,” hesaid.“Thesecond[fans] so theyaren’t just“somebodyona members viaconstantcontentcreation analyst forinsurancegiantAIG. 2010 afterquittinghisjobasanaccount competitors. Hetookovertheteamin then aloosefederationofvideogame He latercameacross Optic, whichwas videos ofhimselfplaying“CallDuty.” video gamebizatage24byposting hood inMexico,begandabblingthe million, Mr. Rodriguezestimated. arewhose yearlyearnings about$1.5 of Duty”playerSeth“”Abner, is“Call in thehouses.Thetopearner money andfree rent forthosewholive event inDallas. competes at MLG Ian Porter Age visited. happy 21stbirthdayonthedaythatAd thousands ofwhomwere wishinghima more than1millionTwitter followers— 2.9 millionYouTube subscribersand of hislifebefore. Nowhe’s astarwith a fanboyofthisorganization,” hesaid of theOptichousesinChicago.“Iwas who in2015movedfrom Canadatoone including Austin“Pamaj”Pamajewon, whose solejobiscontentcreation, competitive gamersand10people players. Theorganization includes22 For sponsors,“wedon’t need to His approach istohumanize Optic’s Mr. Rodriguez,whospenthischild- asalary,Optic membersearn prize APRIL 3, 2017•

SPORTS

MARKETING 19 3/30/17 7:48 PM