It is one of the greatest misnomers in business; to strike when the iron is hot when, truthfully, you do not quite know what your target is.
To see an opportunity is one thing, but to make a major company decision based on the direction others are taking, could be considered reckless.
Within the world of esports, the traditionalist is still getting to grips with what it all means – including the alternative routes available to them – and requires a more tactful approach.
To evaluate its options, World Rugby recently tendered a feasibility study that will contemplate what an esports strategy encompasses, and will help form a strategic decision before running into one head first.
This does not necessarily mean the governing body is ready to launch its own gaming series. If it did, it would certainly stir sentiment among fans of the 1997 PlayStation hit which, as one of the sport’s greats, the late Jonah Lomu lent his name to more than 20 years ago.
On the contrary, a move into esports needs careful thought and consideration around the organisation’s wider digital strategy, and, more importantly, how gaming would support the growth of the sport, globally.
World Rugby wants to reach new audiences in Asia when the Rugby World Cup lands in Japan in September
To assist, Malph Minns, managing director of the UK consultancy firm Strive Sponsorship – which is also helping England cricket (ECB) evaluate the potential esports presents – has been brought on board to guide the process.
“There is a lot of pressure on people within sports organisations to find answers to difficult questions,” Minns told SportsPro. “I am hearing a lot of people ask themselves: ‘While esports is the answer, what is the question?’
“I think that is a really dangerous approach for sports entities to take, which is why World Rugby, and also the ECB, have taken a much more considered approach to better understand what esports may or may not offer them, rather than diving into the gold rush.
“There is also a real risk from an esports industry standpoint that, while it’s receiving a lot of attention and outside investment, if partners don’t see a return on investment, whether that is audience growth or commercial, they are going to quickly start retrenching.
“That’s my worry because, when someone decides to go into esports and it doesn’t work out, it might actually be the case that they have gone into it for the wrong reasons. There are many opportunities to be had, but only in a measured and strategic way.”
Minns says there is a misconception that esports means following in the footsteps of the National Basketball Association (NBA) or soccer’s world governing body Fifa, which have both created their own competitive esports series.
In fact, Minns points to multiple avenues sports entities are taking as virtual and real-world entertainment continues to overlap (see slideshow); whether that is creating an esports team that represents a particular club in a non-sporting title such as League of Legends, or by entering into a strategic partnership that leverages expertise from a bona fide esports developer.
In 2017, the UK-based esports organisation Fnatic teamed up with Serie A soccer club AS Roma to create a competitive Fifa team, which went on to become back-to-back champions of the Gfinity Elite Series.
“There’s a lot of anticipated value in esports,” said Fnatic chief executive Wouter Sleijffers during the recent SportsPro Live at the O2 Arena in London. “The question now is whether that [anticipation] is justified. I would say ‘yes, it is’, but you need to look at it in the right way.
“When you see some of the meaningful partnerships that have been announced, they are not only multi-million in contracted value, but they are also multi-year. That is of course important in terms of the confidence that is there, but also the return on investment that brands are seeing come out of it.”
According to the Newzoo Global Esports Market Report 2019, revenues from esports are expected to surpass US$1 billion for the first time this year, with the global audience exceeding 450 million. In the meantime, the global average revenue per user is also expected to rise by almost nine per cent to US$5.45.
To put this into context, the partnership the NBA shares with Take-Two Interactive continues to benefit from growing engagement around its 2K League, which saw the game’s revenue per user and the number of unique multiplayers both climb into double digits since the series’ launch in May 2018.
During the same year, NBA 2K18, which has sold more than nine million units, saw recurrent consumer spending grow by 34 per cent, compared to the game’s debut in 2017.
Gaming can perhaps act as the first step into territories where a sport may not have a huge presence, and one that provides an opportunity for a governing body like World Rugby to grow in emerging markets
Malph Minns, managing director of Strive Sponsorship
Another avenue includes investing or buying into a piece of existing gaming property, just as the NBA’s Philadelphia 76ers did when it became the first North American professional sports franchise to own an esports team through the acquisition of Dignitas in September 2016.
“They didn’t buy it because they had an NBA 2K team, which now they happen to have under the Philadelphia 76ers label,” said Michael Prindiville, the company’s chief executive. “The first move wasn’t to directly move into a game that represents their sport.
“I think it’s about a traditional sports entity really needing to pivot and diversify, and that shouldn’t be focused on the game and how close it’s to the sport your team is playing. But closer to the community, viewership and business that you think you can build on a digital level, and how that content can be creative for your traditional sports business.”
Similarly, World Rugby wants to leverage new fans off the back of this year’s landmark Rugby World Cup in Japan, which it hopes will grow the sport's presence in the Asian markets.
Alan Gilpin, World Rugby’s chief operating officer, was also on hand at SportsPro Live to discuss how it is positioning the sport, digitally, ahead of its world gathering.
“For us, the important starting point is how the World Cup fits back into our global strategy for World Rugby and for the sport,” he said. “What we see in the big events – including the men’s and women’s world cups and certainly now the Olympic Games for rugby sevens – is that they are one chance every four years to drive growth in the sport.
“The World Cup does that for us in two ways. Unashamedly, it creates a lot of revenue and that is important because that’s the revenue being invested in the intervening four years in growing and developing the game all around the world. Equally important, and arguably more importantly, it’s about reaching an audience.
“We know, certainly from world cups past and also the Rio Olympics in 2016, it’s the big events that find the fans that don’t follow your sport all the time. So our approach, certainly in the area of digitalisation, is to see how we can reach the non-traditional rugby audience and then keep them involved and interested afterwards.”
Likewise, in relation to esports, Minns says World Rugby is considering how it can help the governing body to reach new audiences in territories that do not traditionally watch or play rugby union.
“World Rugby, like lots of other governing bodies, is constantly looking at different formats and ways to deliver the product,” Minns continued. “Rugby sevens, from what I understand, has certainly been successful, while it has also been adopted into the Olympics.
“If you look at some of its key elements, it is in ways a simpler game to understand [than the traditional 15-a-side format] and runs over a shorter time frame for viewers. If you then look at some of the drivers behind gaming, you can already see that there are some similarities about engaging audiences, not only by its competitiveness but also by being entertaining and making it globally reachable.
“One of the good things about esports is that it has no boundaries, which makes it easier to create cross-territory competitions, and also allows people of all ages and abilities, whether they have mental health issues or physical impairments, to compete.
“From an emerging market standpoint, whether that is in India or somewhere that doesn’t have a huge rugby following, gaming does allow the opportunity to be a discovery platform for the sport to reach parts of some countries that may be difficult to do so physically, and perhaps can offer a different way to start people’s journeys into the wider game, because it is more readily accessible to them.
“Therefore, gaming can perhaps act as the first step into territories where they may not have a huge presence, and one that provides an opportunity for a governing body like World Rugby to grow the sport in emerging markets.”
Premier League soccer player Christian Fuchs is to open New York's first esports arena
Above all, the challenge is to educate the traditional sports party about what’s available to them, and to help them better understand that esports can act, not only as an add-on to an existing business model, but an intrinsic part of promoting the brand.
Also speaking at SportsPro Live, Austrian international soccer player Christian Fuchs, who plays for Premier League outfit Leicester City, said it was the same curiosity that led him to invest in his own esports brand, #NoFuchsGiven.
“I get a lot of feedback and questions because a lot of people don’t know what to do with it, esports itself,” Fuchs said. “Every athlete is playing Fifa or Fortnite, so they do know the space and know that there is a big audience out there. There’s no exception.
“However, it is a very uncertain area for a lot of players as well as teams. I even spoke to Leicester about it – how having an esports team associated with your club can help you in many ways. You can attract new fans and create great content. it can be very profitable.
“I grew up playing Fifa myself, but with all the kids who are playing esports and are also football fans, there’s a mutual interest that I think both esports and the physical football space can nurture from each other.”