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Offers the Must-Read Industry White Paper Esports and Brands Gaming’S New Best Friends

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Offers the Must-Read Industry White Paper Esports and Brands Gaming’S New Best Friends OFFERS THE MUST-READ INDUSTRY WHITE PAPER ESPORTS AND BRANDS GAMING’S NEW BEST FRIENDS JULIANA KORANTENG Editor-in-Chief/Founder 2 MediaTainment Finance (UK) TABLE OF CONTENT 1. INTRODUCTION – Page 5 2. OVERVIEW – Page 10 3. WHY ESPORTS NEEDS BRANDS: THE SPONSORSHIP FACTOR – Page 13 4. WHAT BRANDS EXPECT FROM ESPORTS – Page 32 5. CASE STUDIES – Page 37 6. WHAT THE EXPERTS SAY – Page 45 3 Esports and Brands Gaming’s New Best Friends 4 Copyright: ESL/Helena Kristiansson Esports and Brands Gaming’s New Best Friends 1. INTRODUCTION The rapid growth of esports as a revenue-generating sector is a phenomenon that is catching the attention of brand owners and marketers globally. Esports (competitive gaming) kicked off several years ago as an insular activity played by fanatical players of online games being viewed on computers by their equally zealous friends. Today, it is also played by professionals who enter tournaments offering multi-million dollars in cash prizes. It is watched by hundreds of millions of fans at live venues or online at home. Spectators at the live events also come armed with mobile devices to interact with other fans via social media. 5 Esports and Brands Gaming’s New Best Friends Its followers are mostly young Millennial and Generation Z males, digital natives who no longer watch linear TV, if any TV at all. Moreover, traditional sports have failed to capture their imaginations, mainly because football, basketball, tennis and other mainstream sport events still rely on traditional media to reach their audiences. Esports enthusiasts even create their own amateur competitions for others to watch on dedicated platforms like Twitch, the world’s biggest esports streaming network. They have helped create what is arguably the first totally new digitally native entertainment genre, which has used tech to combine the formats of video games, competitive sports, live events, multi-device screen entertainment and original video content. As a professional activity, esports barely existed five years ago. Yet, experts predict the revenues generated from a combination of streaming TV and online video ads, sponsorships and ticket sales will reach US$1.5 billion by 2020. 6 Esports and Brands Gaming’s New Best Friends Major brands, including e-commerce behemoth Amazon, electronic goods giant ASUS and games-publishing goliath Activision Blizzard, have invested in esports as sponsors. But as endemic brands, they were already linked to the fast-rising sector: As stated above, Amazon owns the most popular esports platform Twitch; ASUS has been manufacturing games- related computers and other hardware for more than a decade; and Activision Blizzard possesses some of the most valuable gaming intellectual properties. What is totally new is the involvement of non-endemic brands, including those in the industries of food and beverages, soft drinks manufacturing, telecommunications, auto manufacturing, finance and consumer goods. Their participation has to a large extent been exploratory, but it is growing and bringing incremental income to esports. 7 Esports and Brands Gaming’s New Best Friends This Esports BAR White Paper aims to show why both endemic and non-endemic brands hold the keys to the future of esports’ growth as a professional activity and as an in-demand content provider in the media and entertainment industries. It also offers guidelines on what participants in the esports ecosystem need to understand and do to attract brands and marketers as potential sponsors of their 21st-century digitally operated kind of show business. 8 Esports and Brands Gaming’s New Best Friends 9 Copyright: ESL/Patrick Strack Esports and Brands Gaming’s New Best Friends 2. OVERVIEW Esports BAR’s White Paper features a combination of original research, interviews with experts and case studies designed to inform readers why it makes sense for brands and their marketing agencies and the growing esports business to start courting each other. It examines the role of brands, especially non-endemic ones, in propelling the once-niche activity of competitive gaming into a mainstream and professional media-and-entertainment pursuit. It analyses what brand owners, with their combined experience in sponsoring traditional professional sports, live events and media content, can bring to the table on which esports talent and entrepreneurs feed and thrive. 10 Esports and Brands Gaming’s New Best Friends It looks at what brands expect in return for their financial support. Additionally, this study presents facts and figures that illustrate why the right monetisation strategy – via sponsorship, media rights, advertising, merchandise and tickets – is essential to esports’ future growth. The paper then offers a breakdown of what esports enterprises and organisations need to do to develop long-term relationships with marketers. After reading this study, esports operators should feel well armed to kick off negotiations with major brand and sponsorship partners. 11 Esports and Brands Gaming’s New Best Friends 12 Copyright: ESL/Helena Kristiansson Esports and Brands Gaming’s New Best Friends 3. WHY ESPORTS NEEDS BRANDS THE SPONSORSHIP FACTOR Esports might be new to the world of sponsorship, advertising and marketing. But brands’ role in supporting activities and content distributed by live and recorded media is centuries old. That means marketers and their agencies and the media owners they work with can bring a substantial amount of expertise to a whole new sector like esports and help build on a new foundation that has grown mostly organically to date. For any emerging new revenue-generating industry, there is one indisputable fact: brands have plenty of money to spend. 13 Esports and Brands Gaming’s New Best Friends Sponsors’ investments According to IEG Research, brands and corporate sponsors will spend US$62.8 billion worldwide by the end of 2017, compared to US$60.1 billion in 2016. IEG Research is a reliable source of this type of data as it is a subsidiary of ESP Properties, an agency dedicated to unlocking value in next-generation intellectual properties. It is also part of the world’s biggest creative advertising and marketing conglomerate WPP Group. IEG reports that North America is the biggest sponsorship region where brands and corporations are forecast to invest US$23.2 billion this year, from US$22.3 billion in 2016. Bear in mind this includes sponsorship for a wide variety of sectors, including the arts, live events (concerts, festivals, fairs), good causes and charities. However, traditional sports alone will account for a staggering 70% (at US$16.4 billion) of the total expenditure this year, from just under US$15 billion in 2015. 14 Esports and Brands Gaming’s New Best Friends Total sponsorship spend in Europe is forecast to grow 4.5% to US$16.7 billion. Asia-Pacific is not far behind with US$15.7 billion this year. But the gap between those regions and Latin America is quite significant. Latin American brand owners are set to spend a comparatively tiny US$4.5 billion in 2017, with the rest of the world accounting for US$2.7 billion. The deficit in the emerging economies means there is room for growth that esports can capitalise on. 15 Esports and Brands Gaming’s New Best Friends Sponsors and traditional sports In the US alone, sponsorship investment in American football teams and their NFL organisation increased by 4.3% to US$1.25 billion in the 2016-2017 season, compared to US$1.2 billion in the 2015-2016 season. Just to give an idea of the variety of brands associated with NFL football, here are some of the sponsors that participated between 1983 and 2016: Anheuser-Busch (beer), Bridgestone (car tyres), Gatorade (energy drink), EA Sports (video games), FedEx (logistics), Ford Motor Company (auto), Frito-Lay (snacks), Hyundai (auto), Mars (confectionery), McDonald’s (food), Microsoft (tech), Nike (sports apparel), Procter & Gamble (consumer goods), Sirius XM (online radio), TD Ameritrade (finance), Ticketmaster (live events ticketing), Under Armour (sports apparel), Visa (finance) and Microsoft’s Xbox (video games). 16 Esports and Brands Gaming’s New Best Friends Chart 1 on pages 18 to 21 gives a snapshot of the global brands and their powerful ties to major international mainstream sports. Brands’ commitment to esports and related gaming activities is also growing. Based on research conducted by Amsterdam-based specialist Newzoo, esports worldwide will generate US$696 million in revenue by this year’s end. Of the total, US$517 million will be from brands’ expenditure on advertising, sponsorship and media rights in esports. Of that portion, sponsorship alone will represent the biggest single share of the total at 38%. Of the total US$696 million, US$179 million will come from consumer spend on tickets and merchandise. 17 Chart 1: Mainstream Sports & Sponsors Traditional Marketer's Sports Brand Brand Owner Country of Sports category Organisation/ Origin Event/Team Beko Arçelik Turkey FC Barcelona Football The Coca-Cola Multi-Discipline Coca-Cola Company US Olympic Games Event The Coca-Cola Coca-Cola Company US FIFA World Cup Football Berkshire The Great Run Duracell Hathaway US Company Road running The Wembley EE BT Group UK Cup Football Arsenal Football Europcar UK Europcar Group France Club Football Fiat Automobiles English Football Fiat S.p.A Italy League Football First Utility First Utility UK Super League Rugby League Gazprom State controlled Russia FIFA World Cup Football 18 Mainstream Sports & Sponsors Traditional Marketer's Sports Brand
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