Brands Are Discovering the Loyal Fanbase for Esports— but Marketers Need to Play by the Rules by E.J
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ARE YOU GAME? Brands are discovering the loyal fanbase for esports— 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 video game 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 “League of Legends” and “Call of Duty.” 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 gamers 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, Poland. 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 Twitch, 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 Astralis 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 Chicago-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 Activision Blizzard, MARKETING the maker of games including “Call of Duty” and “StarCraft,” which in 2015 acquired Major League Gaming. 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 Tencent, runs the League of Legends Championship Series.