Basketball, North America

Full Court Press: The NBA’s eSports strategy

Arguably the most digitally innovative league in the world, the NBA has always been willing to try new things. Earlier this month, they took another step in that direction, announcing the formation of the NBA 2K eLeague.

by Tom Halls
Full Court Press: The NBA’s eSports strategy

As arguably the most digitally innovative league in the world, the NBA has always been willing to try out new ways of engaging fans in an attempt to sustain the passionate fanbase so long associated with the sport. Earlier this month, they took another step in that direction, announcing to ESPN the formation of an NBA 2K eLeague, in partnership with video games developer 2K Games and their popular NBA 2K17 title.

At it’s core, the league will feature 30 NBA 2K teams, each associated with one of the real-life franchises. Each team will consist of five professional gamers, playing out a five month season that mirrors what happens on the court; right down to the playoffs and Championship matchup that has sports fans on tenterhooks throughout the month of June.

Teams will have the opportunity to pick five players from a draft, much the same as the real NBA draft, with players being salaried and training like other big-name esports competitors. The League will work with 2K to stage events, sell merchandise, and perhaps most interestingly of all – negotiate licensing rights to allow fans to watch remotely. Given the traditional esports demographic do not react well to paying for live content when it is so readily available, this will be an interesting challenge the league and 2K have to address.

Interestingly, the two organisations have decided against using real-life NBA players within the competition, instead letting gamers create their own players. Information on how statistics may vary is sketchy currently. Whilst this may seem strange initially, it’s most likely down to the complex image rights that swirl around athletes’ image rights for these type of promotions. As well as that, it allows 2K to tell a much more compelling content story around the League, with the goal to make those virtual avatars as revered as a Curry/James/Wade.

This isn’t the first time NBA teams or owners have gotten involved with esports. The Philadelphia 76ers took control of Team Dignitas last year and the Houston Rockets have already hired an esports director to investigate further opportunities in the space. Alongside that, Warriors co-owner Peter Guber has already invested, and Sacramento Kings co-owners Andy Miller and Mark Mastrov have a well publicised interest in my current employer, NRG esports. Outside the NBA there are already well established virtual leagues utilising rights owners, notably in Europe, and teams already dipping their toes in the appetising esports waters.

So, that’s the gist of the league and how it will play out. Lots of details are still to be fleshed out, but this initial announcement will certainly open it up to a ton of questions from fans, industry experts and casual onlookers. Let’s take a look at some of the key challenges and obstacles the partnership is going to have to address and some suggested solutions.

What’s the point?

So why have the NBA signed on for such a bold activation? Some would suggest that attendance and TV figures are already strong and that fans are happy with the core product. The same goes for football in Europe, with huge viewership for the sport around the world and a seemingly endless appetite for action (for context, see the fees the Chinese super league teams are paying to lure world class European players in their prime).

The answer is relatively simple when you dig scratch beneath the surface; an opportunity to get a slice of the esports revenue pie and from a philanthropic angle, the opportunity to capture the elusive and highly desirable esports demographic and turn them into pro sports fans.

With an aging fan base in many sports, pro teams and leagues are having to bend to the will of what this critical demographic want. They consume media very differently from the typical sports fan and are more tech savvy than any other demo (if reported figures of 50%+ using Ad blockers are to be believed), but also spend a huge amount of time on digital platforms. They live on Twitch, YouTube, Snapchat and Twitter (Facebook is struggling in the esports arena currently, but expect them to have some big proposals around this in the next few months). With this, it’s logical that the NBA try to cut through the noise with such an activation.

If you were to be blunt (and I realise we’ve gone too far to go back now!), it would be said that it is quite simply a marketing activation that can be monetised through additional sponsor inventory and rights to cover its costs and drive engagement.

And there’s nothing wrong with that.

Who are they targeting?

In a perfect world the league will be hoping to convert the casual and hardcore esports fans, but in reality it is more likely to convert existing NBA fans. Fans of traditional esports titles like League of Legends, Overwatch, CSGO and DOTA2 are unlikely to be swayed, no matter how compelling the league structure and format is. Todd Spangler, writing for Variety, touched upon this point in this article on why the NBA are getting involved, highlighting:

"The NBA is laying the groundwork in eSports not only because it sees a bona fide revenue stream, but because video games might become the No. 1 way fans interact with the game in the future."

It therefore makes sense that the NBA utilise the virtual league to not only try and convert casual NBA fans and NBA 2K17 fans (how much cross-over there is would be interesting), but to appeal to the hardcore basketball fans that can be pumped for more revenue.

How will teams generate revenue?

Speaking of revenue, little is known about how the virtual league will work for individual teams. For instance is there a rev share scheme on league wide sponsorships and broadcast rights, or will they be able to sell them on a per team basis? One would hope the former would be beneficial for all, but would equally limit the more progressive teams that wish to become deeper involved.

The esports sponsorship market remains a Wild West, with dollar after dollar thrown at teams and leagues without really understanding what they’re getting for their money (it’s important to note that partnerships with valuation agencies like MediaCom are becoming more common thankfully).

To put it into context, 78 per cent of the total industry’s revenue is made up of sponsorship.

That’s only sustainable for so long (the next 12 months are critical in my opinion), so the NBA have a chance to do esports a huge favour by seeing if they can price the secondary sponsorship inventory appropriately.

Merchandise will also play a role, although it would be logical for the teams to outfit their virtual players in their standard jerseys to reinforce brand equity. Whilst you’d expect an uptick in sales of 2K17, will it really drive a noticeable peak in jersey sales? I don’t believe so.

So if teams aren’t selling significant amounts of jerseys, where is the income coming from? Expenditure on salaries, travel and accommodation (assuming there are offline events as suggested, although no comment has been made on the frequency it would be great to see the virtual teams travel with their pro counterparts – a content producers dream) will not be pennies, so it’s crucial that the league shows some form of revenue stream.

I believe that the enhanced sponsorship offering each team would have could be effectively sold to both endemic and non endemic brands; not just as a potential way for brands to associate with a notoriously difficult market to crack (the pro league only just brought in jersey sponsorship) but to gain further exposure amongst the demo. Brands like Coca-Cola and Red Bull are already well versed in the space and are not afraid of backing their interest with dollars where they see value, and thus far have activated authentically, from content production with teams to hosting viewing parties for the League of Legends World Championship

How might teams/the NBA promote the league?

Few sports do fan engagement as well as the NBA; whether it’s social media, video content or the in-arena experience. Heck, I have friends who go to games just for the between-quarter entertainment!

Whilst little has been talked about how the teams and league could activate, I want to suggest a few ways that they could whilst keeping the experience authentic to the casual gamer and NBA fan.

  1. The Draft. We know there’s a draft planned, but let’s make sure it’s done properly. Tell the backstory of the top draft picks with a content piece in the weeks leading up to the draft; what player wants to go where? Who are the rivalries? The story here is as important as on the court. If you can create an authentic rivalry that matches the Warriors/Cavs storyline then it makes for compelling broadcasts.
     
  2. ‘Offline’ Events. We already know the NBA plan to tie the virtual series to the real life league, but how about making the pre-game an esports feature? You could involve celebrity fans, pro players (touchy subject when they’re focusing, but perhaps injured ones…) and whip up support for your virtual team. This assumes the virtual team travels to all home/away matches, but would allow for great content and bring the two competitions together.
     
  3. Pro Player integration. We know already that real-life player won’t be utilised in the virtual league, but how about having pro players practicing with their virtual teammates, playing as them? Imagine Steph Curry getting to grips playing as Joe Bloggs. Again, great content and leverages the big draw of the league, your talent
     
  4. Integrate traditional esports teams. A controversial suggestion, but one being explored with the Overwatch League planned for later this year. Esports teams could partner with NBA league teams (as some already have) to provide training, support and expertise in guiding their virtual team, as well as scouting for the ‘next big thing’ in the competitive scene. They bring huge exposure to the authentic esports fanbase and are able to draw huge numbers through streaming.

How important is the platform?

NBA 2K17 dropped at retail in Sept 16, to decent acclaim, racking up 7m units sold globally. The title is the most popular basketball title in the market and has a strong following with both fans and pro players. So strong that Kyrie Irving and Nike announced and revealed his latest shoe ingame.

However, it’s not been as successful as a viewing proposition. Since launching on the 20th September (140ish days), the title has averaged 263 people streaming per day. From 7 million units sold. Whilst it performed admirably in launch week with unique player streams (1.8k) and it’s most popular stream (featured stream gathering close to 41k concurrent viewers), it has since tailed off, averaging 3.9k viewers per day, but with a steady community streaming the title.


Streams of NBA 2K per day since launch – consistent community support


Viewers per day – fluctuating dependant on popular/more established streamers covering the game

So, how does this compare to other traditional sporting video games?


Figures are from Sept 20th 16 until Feb 10th 17 and taken from Twitch (other streaming sites not available)

Whilst FIFA and Madden are arguably more popular globally, more people are streaming NBA 2K17 and for longer. However, dig into the minutes/hours watched (Twitch’s core metric for a successful channel) and you can see FIFA 17 is dominating here. They drove 150k+ concurrent viewers, solid for any traditional esports title, and average a reasonable 11.8k daily viewers. It is however worth noting that both FIFA and Madden have multi-million dollar marketing campaigns alongside $1m prize pools, as highlighted by EA earlier this year. So, on the surface, NBA 2K17 does reasonable numbers against it’s sporting competitors.

It would be remiss (if a little unfair) to compare the title to the big boys of the streaming world, but here it is for context, with the same numbers for them over the same period:


NBA 2k17 vs the big boys

At the end of the day, you can cut the pie many ways with the NBA’s ambitions and the potential revenue income we could see generated from sponsorship, broadcast rights etc, but the format certainly feels like it could be authentic (team-based esports are generally more popular than solo-player games) and if the league and teams activate as well as we know they’re capable of, it should be a whirlwind of a ride. 


Tom Halls is an eSports strategist currently working as interim chief digital officer at NRG eSports. 'A true data geek at heart', he has previously held roles at Formula E and the Lawn Tennis Association during a ten-year career helping brands create technology solutions and market-first innovations. 

This article originally appeared on Tom's personal website: tomhalls.com.