Gaming + Sports = eSports
Quick Review of the Industry
The rise of video games as a form of entertainment, far surpassing industries like cinema has made a statement about its importance to our world.
The pandemic accelerated game sales and the lack of traditional sports in the media was the perfect environment to let eSports become a juicy scenario for investment too. From brand sponsorship to influencer marketing, the whole ecosystem has already established some guidelines for success and the future. It is time to review four of the main drivers of this newly born industry.
Team Organization
Like in any traditional sport, managing a team has been the first option for getting on the train. The difference between conventional organizations and eSports teams is about the “sport”, or game in this case, as their popularity can vanish as quickly as it comes, raising a necessity for agility and flexibility.
Three games have been around for longer, League of Legends, Dota 2, and Counter-Strike, having a well-built tournament structure are a less risky proposition, but the requirements for new investors are higher due to big capitals leading to a hoarding from top brands.
If a team decides to focus only on one game is possible to be left without support fast, but if a newcomer decides to diversify through many games it will require tons of money and logistic infrastructure, plus the risk of falling isn’t that different from one game to another.
This is both, good and bad, as it gains more trust for the industry having consolidated brands, but could also hinder the diversification and innovation from smaller participants. Traditional sports are known for being subject to strict global influences, which has stagnated the outlook for quite some time, institutions like FIFA are heavily bureaucratized and gambling also decides lots of matches, that style isn’t convenient for gaming.
Third-Party Event Coordinators
There isn’t a lack of renowned brands like ESL and DreamHack, which have been present since the time eSports haven’t professionalized yet, however, they were events mostly done by and for fans. Tough, thanks to the backup from Riot Games and other Game Developers, a big chunk of coordinators have gotten in agreement with traditional actors from the media sector that was looking to venture into gaming and streaming, forcing the gamer’s side to become more professional and structured.
COVID stopped local events, nevertheless, it was a good chance to test how resilient the newly formed scene was, and considering their digital nature it wasn’t that difficult to move from physical to full remote, and many investors have had great profits from it.
As time goes on, the majority of these fan-made organizations have turned profitable and the business models are becoming clearer, take a look at Televisa in Mexico or Movistar in Spain supporting League of Legends leagues, both sides had increased audience reach and explored new content types. These types of associations might provide traction to further expanding the sector, it’s just a matter of time.
Media Platforms & Advertisement
Esports has an estimated global fan base of 380 million and this is largely comprised of millennials between the ages of 21 and 35, the best sector to search for new consumers due to the prospect of increased spending power.
Advertisement is already the main driver of investment, accounting for more than half of revenue in the industry, and isn’t necessarily done through traditional means, such as KFC Corporation’s partnership with notable Twitch streamers of the game PLAYERUNKNOWN’S BATTLEGROUNDS, like DrLupo, where if the streamer won game viewers could post a KFC emoji into the stream’s chat for a chance to win a $5 KFC gift card.
It’s time to expose outside brands to gaming segments, like Honda or Audi, many creatives and brands are exploring gamification and new ways to reach these customers that were unthinkable through old marketing, that’s why is not going to be weird to see new partnerships that are currently unthinkable in the sports ecosystem.
Consumer Products
Here we have two kinds of business, the first one is to directly sell “gaming products” like PC Hardware and stuff similar to Razer, Logitech, and else. The second and weird one is to gamingficate your products, adding some RGB here and also more RGB there, some brands are looking to appeal to this fashion.
Coca-Cola is a great example to follow with their special League of Legends designs in South Korea; and for bad examples, well, just google “insert product type+ gaming”
It may seem that is easier to do for tech-related businesses, but searching for partners is also an option, manufacturing some plush and teddies is easier than selling graphic cards, and these indirect strategies reduce the burden and risk for newcomers, giving them the chance to familiarize with the market.
People are playing more, and the potential customers are going to grow bigger and bigger. Accounting for YouTube, Twitch, and phenoms like Fortnite capable of attracting diverse and loyal fans, the ability to explore and reach segments that weren’t so easy to access before possesses a nice chance for old companies to re-brand themselves as modern and fresh in the eyes of youngsters.
Like in any other market for investors willing to put some money to play, my suggestion is to understand well the product/service aka game/tournament, study and reach the influencers and superstars aka streamers and pro players, and lastly be ready to adapt as fast as a meme become and left being viral
