United States: For Brands eSports May Be The Next Big Thing

eSports has become the newest means for Brands looking to connect with the growing number of individuals that shun traditional media. For the uninitiated, eSports is a general term used to describe playing video games in professionally organized tournaments. For the past 15 years eSports tournaments have been held all over the globe by entities like ESL, Major League Gaming and the Korean eSports Association. The tournaments and individual players have fostered the creation of a vibrant, energized and rampant community following. So much so, that many of the top-ranked players are treated like superheroes or rock stars in their home countries. While this has been common in places like South Korea for years, the phenomenon is still new (but quickly growing) in the US and in Europe. Several US colleges have varsity eSports teams and some, like Robert Morris University, are even granting scholarships for eSports athletes.

While experts differ on whether the size of the current Global eSports audience is 134 million or more than 200 million, they all agree it is growing every year. More than 12 million people attended US and European eSports events in 2014. Tickets for the October 2014 League of Legends World Championship Final event at the Staples Center in Los Angeles sold out in an hour. Dedicated eSports arenas have been constructed in South Korea, China, England, the US and elsewhere. Additionally, approximately 13% of all live-stream viewers are watching eSports. This has led to the creation and growth of gameplay streaming platforms like Twitch (purchased by Amazon in 2014 for nearly $1 billion), YouTube and Azubu.

The 2015 Worldwide market valuation for eSports is over $600 million, which is primarily dominated by China and South Korea. However, of that amount approximately $140 million is generated in North America. In 2015 it is estimated that $111 million will be spent in North America on eSports sponsorship. Brands like Nissan, Volkswagen, Coca-Cola, Red Bull, Intel, NVIDIA, Samsung, HTC, Logitech and others want their products and/or names associated with eSports tournaments for games published by companies such as Riot (League of Legends), Wargaming (World of Tanks), Valve (DOTA 2) and Activision Blizzard (Starcraft). Interestingly enough, the game publishers have admitted that they currently lose money on the cost of the eSports tournaments, the leagues and player salaries, but the money brought in from sponsors and tickets sales alleviates some of this loss. Certain eSports teams like Fnatic and Cloud9 have demonstrated their staying power with fans, and brands alike, making them more enticing to potential sponsors. Much like any other sport, some fans follow the teams regardless of their current roster while other fans are more connected to the individual players. Top eSports competitors have massive fan bases which sponsors are seeking to capitalize on. In fact, a former professional player, Wei "CaoMei" Han-Dong, recently retired from professional tournament play but now earns over $800K a year just by streaming his gameplay due to a contract with ZhanQi TV.

As eSports tournaments are being streamed live, and now broadcast on TV networks such as ESPN, to tens of millions of potential consumers, Brands have even more reason to capitalize on this trend. The traditional game-related hardware or software company sponsorships have been joined by other Brands unrelated to the eSports industry. Various Brands across many product or service spheres are entering into sponsorship agreements with the players, teams and leagues, individually or collectively. This is much the same model that Brands have traditionally used for other sports. In fact, the top players and teams are working with entertainment agencies like WME to better capitalize on these sponsorship opportunities. These sponsorship deals may involve the creation of a Brand-specific tournament, logo or name placement in connection with an existing event (or on the team's or player's uniform), or may require that the party to the sponsorship only use the Brand's products at a tournament. Where things can get a little different from traditional sports sponsorship deals, is when a Brand enters into an agreement with the game publisher which impacts or gives the Brand some control over the nature or elements of the game (like in-game branded content or special branded rewards). All that said, the real value to Brands is the ability to reach the elusive young adult male, and to a lesser extent female, millennial markets who have monetary resources to spend on products and are highly invested in their favorite player, team, league or game. Moreover, due to the live-streaming aspects and somewhat nascent TV coverage of these events, Brands can reach audiences similar in size to a World Cup match for a small percentage of what they are paying for a commercial advertisement. As the eSports marketplace continues to grow and become part of everyday life for people around the world, the opportunities for Brand interaction will only increase in scope and complexity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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