We need to talk about esports.

In 2017 the esports industry brought in US$906 million in revenue, and is on course to hit US$1.4billion by 2022. Not only that, but it's now the most watched sport by millennial men aged 18-25 who watch more hours of esports a week than they do traditional sports. This is no surprise, considering streaming platform Twitch boasts 15 million daily active users who watch 23 billion minutes of video per month. No, that wasn’t a typo.

The stats are huge, but at present, while rights holders and properties are starting to see the potential of esports, most chief marketing officers (CMOs) aren't taking the discipline seriously enough as a sponsorship opportunity yet. This has to change.

Esports should be considered as a mainstream sport sponsorship opportunity, and if brands are willing to take the leap now they can still take full advantage of a trend on the cusp of something huge, before the floodgates open and the value is eroded.  

Esports are maturing

One of the biggest challenges, but also opportunities, for prospective brand partners is the fact that there is no centralised regulation or rights-holder for esports. The industry is dominated by a number of different games, formats and leagues. Therefore the traditional sponsorship and property formats aren’t in place yet, which can put off big, traditional non-endemic brands from activating a sponsorship in this space.

However the industry is developing at a fast pace. Take the launch of Activision Blizzard’s Overwatch League at the beginning of the year. This is the best example of a tournament being set-up in the form of a traditional sports league. Each team taking part is attached to a specific city or region in order to build local fan bases, and the teams have attracted financial backing from diverse backers such as New England Patriots owner Robert Kraft in Boston, AEG in LA and Chinese internet company NetEase in Shanghai. This approach is already paying dividends, with non-endemic brands such as T-Mobile, Sour Patch Kids and Toyota joining a list of endemic brands such as HP and Intel as sponsors. It’ll be interesting to see the outcomes after its first official year - but with strong financial backing, a growing list of brand partners and a highly dedicated fanbase, it looks very promising.

For brands this looks like an easier concept to grasp, and I expect more CMOs to look at Overwatch as an enticing prospect. But Overwatch is also just one title in a wider universe of esports games, leagues and tournaments. While there will never be a Fifa equivalent governing body due to the nature of how esports has grown from the ground-up, this shouldn’t put off brand sponsorship or involvement with other franchises. In fact, right-holders and publishers in this space are actively seeking brands to invest and collaborate with to drive growth and be catalysts for change, as long as it enhances the user experience.   

The sponsorship opportunity

If you look at the current state of play, sports teams as varied as Celtic, Manchester City and West Ham are investing in players and teams with soccer’s digital counterpart Fifa, while in the USA, properties such as the National Basketball Association (NBA) are investing in their own digital versions too. For them, it’s a chance to grow and develop fan bases, while also creating new and appealing assets to sell to current and future corporate partners.

But for the market to really be considered 'mainstream', the various publishers and leagues under the esports umbrella need more brand partnership opportunities. While non-endemic brands are slowly joining in – Coca-Cola, Buffalo Wild Wings, Bud Light and Gillette have struck some deals in this space – esports still represents one of the few unsaturated marketing frontiers for brand activation.  

Why the slow uptake? Clearly the numbers speak for themselves, but there is relatively little in-depth knowledge of the industry amongst senior stakeholders and hardly any data on the effectiveness of eGaming sponsorship, as the commercial side of the industry is so young and the engaged brands aren’t sharing their secrets. The big brands don’t want eyeballs – which esports can provide in spades - they want engagement.

We know the digital platform easily allows for mass reach, but the industry also commands an eager base of young people who are willing to spend hour after hour at venues as well as online, providing plenty of opportunities for brands to engage one-to-one in a live environment. Once online and experiential engagement data becomes more readily available, this could tip the balance for a lot of brands.

However, the rights-holders themselves are getting more sophisticated at proving their value, as illustrated by Gfinity, the UK’s largest eGaming company. It hired Mark Brittain, former Syco executive, as chief compliance officer to develop a stronger commercial platform for advertisers and sponsors. Brittain believes esports has the potential to rival the financial success of X Factor, which will certainly pique the interest of CMOs around the globe.

Paris Saint-Germain team gamer Lucas Cuillerier, gamertag 'DaXe' competes in the final of the video game 'FIFA 18' at the Esports World Convention - Paris 2017

How to activate properly

Publishers and rights-holders are open to breaking new ground, which provides brands with an opportunity to do something different and be very creative with how they engage fans and develop campaigns. However, this sector does need to be approached carefully. The fan base is made up of young millennial males who are even more fickle and savvy to marketing than most. They’re also very protective about their sport and vocal in their opinions, so brands need to add genuine value to their enjoyment of the sport or risk negativity spreading quickly through their highly connected network. Like all sponsorships, partners need to analyse the landscape, drill down into the surprisingly diverse audience segmentation and find the right entry point, before investing.  

The first impression matters and if you mess it up, you won’t get another chance. But for those brands and marketers willing to invest in this new area, there are huge opportunities to build new fan bases. There are hundreds of tournaments and leagues currently being played and shared online through platforms like Twitch, and assets such as naming rights, player sponsorship, branded content, experiential activation, tech integration, jersey branding and so forth are available for brands willing to invest in this space. As the market develops, further opportunities in co-branded merchandise will grow, as too will direct selling to fans while viewing livestreams of games.

Clearly, if you’re a brand looking at sports sponsorship opportunities, then you need to consider esports. Not only are sponsorship packages extremely favourable when compared to sports with similar viewing figures, but you can take advantage of the start-up mentality and be creative with what assets you buy and how you activate those rights effectively. Move quickly, and you can take advantage of the platform, and its impressive stats, to reach a highly engaged youth audience - all it takes are CMOs willing to take that leap.

Simon Tracey is head of client services at Wasserman's experience division.