According to market research company Newzoo, advertising investment in esports is expected to surpass US$1 billion by 2020, while a Nielsen study suggests almost two-thirds of all esports fans are aged between 13 and 34 years old. That appealing mix of revenue growth and demographics has inevitably led major broadcasters, new media players, brands and marketing agencies to see untapped potential in the competitive gaming sector.
To date, platforms native to esports such as Google’s YouTube Gaming and Amazon-owned Twitch have been the go-to streaming partners for the vast majority of event promoters, particularly those in the west. The pair continue to dominate the market, yet mainstream TV networks and the giants of social media have begun to muscle in, acquiring rights and carving out their own share of a worldwide gaming audience that is estimated to total more than 200 million enthusiasts.
In 2015, US network Turner Broadcasting teamed up with IMG to launch the ELeague, a joint venture competition that is perhaps the best-known example of an agency-broadcaster partnership specifically targeting esports. Turner has since been joined by other legacy media players like ESPN, which has taken to covering esports in more depth having broadcast competitive gaming events for some time. Last year the Disney-owned network staged and broadcast the Rocket League Invitational, a one-off tournament built around Psyonix’ soccer-meets-demolition derby multiplayer game, during its X Games action sports event in Minneapolis.
Similar investment from traditional broadcasters in media rights and content creation has been seen in Europe, Asia and elsewhere. Last summer, for example, the UK’s BBC and BT Sport and multi-territory network Eleven Sports all secured rights deals with esports promoter Gfinity to show live coverage of its inaugural Elite Series. BT Sport, in particular, had already made its interest in esports known, having previously agreed its first major deal for the live rights to a gaming event when it partnered with EA to show the Fifa Ultimate Team Championship Series in the UK and Ireland.
Alongside the arrival of mainstream networks, new media players and streaming companies have also sought to capitalise on esports’ growing popularity. In early 2017 Twitter struck its first major partnerships in the space, announcing that it would live stream more than 1,500 hours of esports programming under new deals with ESL, the leading esports content and tournament producer, and promoter DreamHack. Facebook has also pocketed streaming rights to various ESL-promoted properties, part of its broader plan to use video content and original programming to fill both its new Watch feature and its users’ news feeds, and to generate bigger advertising deals.
Erik Lonnquist and Christopher Mykles present the Overwatch League's coverage
Like other esports pioneers that have made it their business to satiate mainstream appetites for video content, ESL continues to generate new revenue streams and reach a broader audience by stoking competition outside the realm of gaming.
As well as Twitter and Facebook, it recently brought in Hulu, the Netflix rival backed by a consortium of major US networks, to create four original series looking at the various facets of the sector. And in another intriguing move that perhaps illustrates the general direction of travel, the company has teamed up with David Hill, the renowned sports broadcasting veteran who pioneered the conception of Fox Sports, to launch ‘Esports by Hill’, a new production service that works with publishers and sponsors to develop what it calls ‘premium events and viewing experiences’.
Further inward investment has come from other quarters of the streaming industry. While Blizzard will benefit from the unrivalled reach of Twitch for its Overwatch broadcasts – the platform has stumped up a reported US$90 million for the exclusive global rights to the league’s first two seasons – Riot Games has forged a partnership with live streaming technology specialist BAMTech for the development and distribution of its new League of Legends digital platform. BAMTech is understood to be paying at least US$300 million for the exclusive rights to distribute content featuring the battle arena game until 2023, while it is also entitled to sell sponsorship and advertising.
On the agency side, certain companies have taken what might be called a traditional route into gaming by offering up their core sales and consultancy expertise. Last year French firm Lagardère Sports partnered with Splyce, a US-based esports team who compete in the LCS. The agency now manages the team’s marketing activities and sponsorship sales, while it also handled media rights sales for last year’s Counter-Strike BLAST Pro Series competition in Copenhagen.
IMG has done something similar, although its activities in esports have been typical of a major international agency with a burgeoning content business, an established sales network, and a long history of conceiving new sports and entertainment properties. In addition to helping Turner create the ELeague, the company has advised investors and brands looking to break into the space – it facilitated Harris and Blitzer’s purchase of Team Dignitas, for example – while last year it helped launch Boomeo, an esports training platform.
IMG’s entry into esports came with its acquisition in 2015 of Global Esports Management, a consultancy co-founded by Tobias Sherman, who spearheaded IMG’s efforts in gaming before departing along with the rest of his team last July. That acquisition-led approach has since been mirrored by Engine Shop, the Bruin Sports Capital-owned marketing agency that acquired The Gamer Agency (TGA), a leading strategy and event production company in the gaming sector, towards the end of last year.
A two-way street
For all that those in the sports industry are gravitating towards gaming, either by their own volition or hand-in-hand with an established developer, there is an equally active movement intent on getting esports competitions into major sporting events.
Last year the International Olympic Committee (IOC) formally set out its expectations of esports if it is to be considered for inclusion in future editions of the Olympic Games. Following reports that the Paris 2024 bid team were keen to discuss the potential introduction of esports to the Olympic programme, the IOC agreed that esports is ‘showing strong growth, especially within the youth demographic across different countries’, but said that it would require ‘the existence of an organisation guaranteeing compliance with the rules and regulations of the Olympic movement’ in relation to anti-doping, betting, manipulation and other related issues.
While the IOC holds out on adding gaming to the Olympic programme, at least for now, it has already been confirmed that future Games will feature an esports component. Intel Corporation, a newly minted Olympic TOP partner and a founding partner of the Overwatch League, staged two distinct esports experiences, including a tournament that served as an extension of the company’s popular Intel Extreme Masters (IEM) series, at the ongoing Winter Games in PyeongChang, South Korea.
Esports will also feature as an official medal event at the 2022 Asian Games in Hangzhou, China – a move that forms part of new ‘strategic partnership’ between the Olympic Council of Asia (OCA) and Alisports, the sports-focused division of Chinese e-commerce giant Alibaba Group. Alisports plans to invest US$150 million in esports over the coming years, and will work with the OCA to market esports events in the run up to 2022, as well as maintaining its partnership with the International Esports Federation (IeSF) and hosting the World Electronic Sports Games (WESC), one of the richest events in esports.
What’s more, the growth of esports has also attracted the attention of companies in other sections of the industry. Architecture and design firm Populous, for example, has begun to explore ways of developing purpose-built esports arenas or reimagining existing venues to meet the specific demands of gaming, while the Qatar-funded International Centre for Sport Security (ICSS) has teamed up with the Esports Integrity Coalition (ESIC) to introduce firmer safeguards to the sector. The two bodies plan to work together across a range of projects and initiatives that will advocate for good governance, integrity and transparency, as well addressing and preventing the manipulation of competitions and results.
The arrival of each of these new entities is helping to legitimise an esports space that is maturing all the time, bringing greater revenues and the prospect of more regulations as part of a snowballing trend that has been both welcomed and lamented within the hardcore gaming community. Only time will tell what the long-term cumulative impact of their investments will be, but what is already clear is that the complexion of the esports industry is growing increasingly familiar, and increasingly formidable.
Scarlett's victory over sOs in the Intel Extreme Masters Grand Finals showcased the future of esports ahead of PyeongChang Games (Picture: Twitter/Intel)