The rise of eSports, particularly over the last five years, has been incredible.
The eSports industry is now predicted to be worth over $1 billion in 2019, with a growth in revenue of 38% over 2018. If those numbers aren’t enough to catch your attention, you might need to check your pulse!
What once may have been dismissed as a fringe hobby - watching others play video games - is now a mainstream source of entertainment, and is growing rapidly. In fact, the audience for the League of Legends gaming tournament now exceeds that of the NBA finals.
This huge audience has drawn leading global brands like Intel, Red Bull, and Tencent to invest heavily in eSports, helping to drive even more growth. With projected growth in 2019 expected to outpace 2018, it seems there’s no end in sight for eSports.
Recently, we did a trend analysis around eSports and what this can tell us about the eSports industry.
In this article, we’ll take a look at some of the investments from major brands in the eSports market, and how celebrities are getting in on the action too.
Let’s start with a brief look at where eSports has come from.
Where has the eSports industry come from?
As we saw in our previous post, eSports has been around for a while - over 45 years, in fact.
The first eSports tournament was held in October 1972 at Stamford University, with students playing the early video game Spacewar. This was followed by the first Space Invaders tournament held in New York City in 1980.
Space Invaders Tournament in New York City. Source: Ausretrogamer
Without a doubt, though, everything changed with the rise of social media and streaming platforms like YouTube and Twitch. These sites created the opportunity for eSports brands and influencers to connect with legions of fans.
These fans have given rise to a lucrative market for professional gamers, whose earnings can sometimes even rival those of major league sports players. In 2017, $110.6 million in prize money was handed out to the winners of 3,765 global eSports tournaments.
Just like with wider YouTube, there’s a huge variety of eSports for fans, whether they’re playing or just watching. There are military cooperation games like Call of Duty and Counter-Strike, worldbuilding games like Minecraft, and real-time strategy games like StarCraft.
All this variety has helped attract a massive 454 million eSports fans around the world, and has encouraged thousands of tournament players to try their hand at being an eSports professional.
Let’s take a closer look at what exactly makes eSports fans such a coveted market.
eSports fans are a highly coveted market
In large part, the eSports market is valuable because of who its fans are. ESports fans tend to be young, technologically savvy, and with comparatively high amounts of disposable income.
What’s more, eSports fans are dedicated, spending 100 minutes on average for a single game spectating session on Twitch or YouTube. This has helped drive some truly crazy viewership numbers.
Twitch fans in action. Source: CNBC
For example, in the first quarter of 2018 alone, eSports fans around the world watched over 260 million hours of streaming gaming on YouTube and Twitch. That’s almost 11 million days!
Even more encouraging is the fact that 62% of US eSports viewers are aged between 18-34, and most have a positive attitude towards brand involvement in eSports. This represents a valuable demographic for advertisers and investors of all kinds.
That’s why educational institutions are starting to offer scholarships for top players of games like Fortnite. This is a great way to stay relevant and boost their visibility amongst their core demographic of young people.
So, how else are brands getting involved with this growing market?
How are brands investing in eSports?
The eSports market isn’t just about Twitch streamers - there’s a massive range of potential investments for brands:
- Advertising products to fans and players - for example, Coke, Red Bull, Gillette, and Mercedes-Benz
- Sponsoring tournaments and gaming syndicates - for example, Intel and Acer
Licensing games and products for tournaments and online play - for example, eSports TV channel Ginx
Intel’s sponsored eSports event. Source: Intel eSports page
What may have sounded like a ridiculous idea in 2010 is now a viable investment opportunity. For example, in 2016, more people watched the final of the League of Legends tournament (43 million viewers) than the NBA finals (31 million viewers).
However, investing in eSports isn’t as simple as picking a game or tournament at random. Each game has its own distinct culture, and brands have to consider the fan demographics of each game in weighing up the best fit.
For example, most eSports games have a fanbase that is vastly overrepresented by males, but games like Overwatch have a dedicated female fan base.
These dynamics make it crucial for brands to understand the fanbase of each game, tournament, and eSports syndicate, and to make sure their investment is a good match.
Let’s take a look at a few high-profile examples of major brand investments in eSports:
- In 2014, Amazon purchased eSports streaming platform Twitch for $970 million U.S., pushing Twitch further into the mainstream
- Nokia continues to sponsor the Telia eSports series, creating huge exposure for the company
- Recently, Intel signed a $100 million deal to support eSports competitions, representing an expansion of its previous investments
- Acer continues to sponsor the much-loved LOL eSports series
- Chinese media giant Tencent entered a joint venture with Riot Games in China, focusing on League of Legends and other hugely popular games
- Finally, Red Bull has sponsored eSports players since as early as 2006, and has helped drive the ongoing popularity and expansion of LAN eSports tournaments
These major brand investments in eSports are growing by the day, demonstrating the expansion of the eSports market. And it isn’t just big brands getting in on the eSports action - celebrities are starting to take notice too.
Celebrities are investing big in eSports
As eSports has moved further into the mainstream, more celebrities and public figures are investing in the industry. Whether it’s Fortnite or League of Legends, it turns out there’s no game too niche for celebrity investment.
Here are a few key examples of celebrities investing big in the eSports scene:
- The Weeknd investing with OverActive Media to be a global ambassador
- Michael Jordan investing $26 million in aXiomatic Gaming
- Drake becoming a co-owner of Fortnite gaming syndicate 100 Thieves
- Steph Curry investing in TSM, an eSports gaming company
- Shaquille O’Neal investing in NRG eSports
- Ashton Kutcher and Mark Cuban investing in eSports betting platform Unikrn
We’re also seeing more crossovers from “traditional” sports into eSports, with football clubs like Sporting Lisbon, Manchester City, West Ham, and others sponsoring their own eSports players. This shows the growing community of eSports fans out there.
eSports is a growing community
As with “traditional” sports, eSports fans are bound by their common interests and love of particular games.
This is what makes the eSports trend more than a flash in the pan. Fans are forming tight and durable communities, especially on Twitch, which combines game streaming with social media functionality like chatting and connecting with other fans.
Belonging to a particular eSports group means a lot to people, and fans are willing to shell out to support their favorite games, players, and brands.
This sense of community is what powers the growth of the eSports market. So long as these communities remain, there will be major advertising and product marketing opportunities for brands.
What’s more, eSport influencing has become a whole niche on its own. There’s even a top 20 list, with the leading eSports influencers earning over $250,000 U.S. per year, all from gaming and interacting with their fans.
The eSports community continues to evolve, too, with fans and players adopting new technologies. For example, in recent years we’ve seen the rise in VR gaming championships, including those sponsored by Oculus, ESL, and Intel.
Conclusion: eSports is just getting started
All signs suggest that the eSports market will continue to grow, particularly in China, Korea, and south-east Asia.
Some estimates even suggest the eSports market may be worth as much as $2.4 billion by 2020. Investments by major brands and celebrities will help drive this growth.
Fortunately, there are still plenty of opportunities for tech outfits, media companies, and sole investors to get behind this growing market.
Brands should keep a close eye on developments with this exciting industry, and should consider how they can back the eSports market.