eSports: 3 things that must happen for brands and publishers to monetize (Part 2)
In the first of my series on eSports monetization, I looked at the broader context of the industry, and different categories through which eSports monetizes. In this edition, I’ll dive a little deeper into what needs to happen for brands and mobile apps publishers to convert eSports’ massive market potential into meaningful ROI.
To begin, let’s return to the idea that eSports will develop in a similar fashion as other pro sports, albeit on a quicker timeline. In the same way that the NFL, NBA, NHL, MLB and FIFA took time to grow, develop their unique brands, and engage billions of global fans, eSports (and its market opportunity for brands and publishers) will evolve based on the sports’ ability to achieve certain milestones.
1. LeBron must emerge
LeBron James is the face of basketball. Ronaldo is an international bellcow for soccer. A-Rod’s dating J-Lo, and Gretzky put Edmonton the map. To make the next market leap, eSports needs its top athletes to become famous to the point of achieving global recognition of their personal brand. That’s hard to do when the typical pro eSports athlete enjoys a career of less than 3 years — a shorter career span than athletes in any of the 5 major pro sports leagues (NFL: 3.5 years, NBA: 4.8, NHL 5.5, MLB 5.6, FIFA: 8.0). Why are eSports athletic careers so short?
Imagine every few years, the NBA changed the size of the ball, or the height of the net; a lot of great players probably couldn’t make the adjustment. Because eSports is so new, the technology and competition formats are constantly evolving, making it tough for many athletes to remain elite. To get to the next level of market opportunity, eSports needs one of its athletes to have enough staying power and charisma to make a whole generation of kids remember them, and want to be just like them.
2. Coverage and content must become more pervasive
Occasionally, traditional TV networks report on eSports scores, but it’s not happening in the same breath (or even the same show) as the scores and highlights for football, basketball, baseball, hockey and soccer. eSports isn’t even in the second tier of coverage (skiing, figure skating, track and field, darts, billiards, etc.) Because of this, eSports audiences are smallish and very limited in scope (typically young people with lower buying power, though one can never discount the ripple effect via moms who control household spending). At the present, the only advertisers putting money into eSports tend to be direct players in the ecosystem (e.g. a gaming headset manufacturer sponsoring tournaments, or putting their logo on a player’s sweatshirt). Fortunately, there are other dynamics at play that portend a promising future for eSports content and ad opportunities.
Viewership in traditional sports leagues, such as the NFL, is waning. The main issue is that traditional coverage is just too slow for a generation raised on YouTube, fantasy sports and video games — eSports stands to pick up a number of these 18-34 year-old consumers. To this end, new TV and digital networks are forming that are dedicated to eSports, and they will eventually find an audience en masse (if you doubt it, see the section on poker, below). Once that happens, and McDonalds or someone can come in and start reaching target audiences at a scale that makes sense, we’ll see the advertiser money come pouring in. We’ll also soon see a number of apps equivalent to DraftKings, or FanDuel, that both gamify and monetize the eSports experience on smartphones, creating a fertile entry point for brands looking to connect with engaged, mobile-first consumers.
3. Publishers must discover their unfair marketing advantage
For app publishers, monetization begins with getting your game discovered. What if yours was the one mobile game that managed to break through and get covered on ESPN in primetime? That’d be an unfair marketing advantage. What if a Kardashian mentioned to TMZ how they were addicted to your game? Again, unfair marketing advantage. Don’t have the celebrity connections or a massive PR budget? No biggie. Just rent yourself an empty movie theater, put on a tournament, invite the media and announce the winners — drive the ecosystem to give yourself that unfair advantage, don’t wait for it. Look for the low-hanging fruit that can get you market reach at-scale and in a hurry. If you’re not one for marketing hacks, think in terms nearer to home, such as audience data.
Sportradar currently offers almost 700 different data feeds for traditional pro sports leagues all around the world that anyone can tap into to create cool experiences. How many eSports leagues are supported? Three. If you could become #4 today, you have a 25% chance of being featured on the earliest eSports fantasy and micro-betting apps — there’s a nice little unfair advantage. Think sharing data would be too hard? Think again — the democratization of audience data is well-underway and everyone can play. There’s a brand out there looking to partner with someone who has an audience just like yours. Find them, and claim your advantage.
The poker example
Fifteen years ago, nobody could foresee poker’s emergence as a global entertainment phenomenon. Today, it’s everywhere. The evolution went something like this: first you played online, then that play became interactive and went mobile. Then more poker tournaments started popping up on traditional TV networks and top players became celebrities. Then whole networks and programming genres evolved, apps got slicker, and suddenly there are hundreds of millions of people playing poker and watching others play (did you know that Twitch broadcasts of poker games get more views than any other pro sport, per broadcast?)
Remember, this is a card game. Bridge and Go-Fish did not evolve in a similar fashion. So why has poker exploded the way it has? The simple answer is that people get into watching poker because they are learning something.
When your kid watches 6 hours worth of videos of another kid playing Minecraft, it’s because they’re learning something. When people watch eSports — on TV, on the web, on mobile, at events — it’s because they want to learn to play the game. And unlike the NBA, or NFL, which are leagues most will never get to play in, you can start off on Level 1 of a game, get better, learn more, go to Level 2, and keep improving.
This is crucial to understand: by interacting with eSports content, anyone, anywhere can both be entertained and get better at the game themselves. App publishers, or advertisers, that want to succeed in eSports need to keep this motivation at the core of their strategy.
The journey may be complex but the roadmap exists
One of the more complex barriers currently preventing eSports from climbing into the top tier of pro sports leagues is its inherently fragmented state. First, eSports isn’t a sport per se; it’s more like an Olympics: a collection of several competitions. Second, there is an enormous variety of leagues and organizations that split the market’s attention along the lines of geography, console and title. When you look at the history of other pro sports leagues, merger and amalgamation has always been critical to growth. The NFL wasn’t much until it merged with the AFL. The NBA took off after getting control of the ABA. Ditto for the NHL/AHL. The question that’s begged is: who will the ‘winning’ eSports leagues be?
Will big game publishers rush in to amalgamate and organize eSports? Will Activision try to acquire King to go cross-platform, or Nintendo buy in to League of Legends as a vehicle for promoting new releases and building a loyal audience base? Once the structure of the eSports business starts to take shape, will the major publishers play the role of franchisers, offering up the rights to own and control teams? Poker and other ‘fringe’ sports have found a way to use mobile and digital to go big globally. It’s not crazy to imagine a league of billion dollar eSports franchises in the next 10 years as a real possibility.
Brands and publishers that learn from the lessons of other pros sports leagues, while keeping the unique motivations and behaviors of eSports fans at the center, will be well-positioned to succeed.