Saturday 21 July 2018

Esports explosion offers brands a new frontier

John McGee

You may not have noticed it but in some towns and cities around the country over the past week or so, teams like Shamrock Rovers, Bray Wanderers, Cork City and Limerick have been pitted against each other as they try to progress to a big showdown final to be held in Dublin's 3Arena in early May.

But it's not soccer they are playing.

There won't be any balls involved and the only athleticism on display is likely to be confined to the several thousand animated and noisy fans who will show up on the day to support their heroes. Instead, the teams represent the cream of Ireland's video gaming community as they battle it out for a prize of €20,000 and a trip to Las Vegas if they win the Three Ireland EStars tournament.

The first large-scale event of its kind to be held in Ireland, the tournament kicked off last week as a giant articulated truck called Big Betty - the world's first mobile esports arena - rolled into the grounds of football clubs around the country for the league stages of the tournament. Once these are out of the way, the play-offs and grand final will then be held in the 3Arena.

Welcome to the world of esports, the fastest growing participator sport in the world.

While it's easy to conjure up stereotypes of nerdy, bleary-eyed, pizza-munching teenagers holed up in their bedrooms for hours at a time playing video games, esports has whipped them from their darkened rooms and cast them into the limelight on massive stages in even bigger arenas around the world.

In some of the larger competitions, particularly in the USA, it is not unusual to have prize funds running into several million dollars a tournament. In the same way that social media platforms like YouTube have spawned hundreds of vloggers and influencers who can command big fees from advertisers and sponsors, the growth of esports has also given birth to a legion of professional players who can earn millions a year.

According to the US esports research agency, Newzoo, the global audience for esports is estimated to be in the order of 385 million people - and this is set to grow to 589 million by 2020.

It also estimates that the rapidly-growing industry - including media rights, advertising, sponsorships, merchandising and ticket sales - will be worth around $1.5bn by 2020.

While this still pales into insignificance with many field sports like soccer or baseball, the numbers are still compelling enough to turn heads in media, advertising and venture capital circles. Global sponsorship revenues in 2017, for example, amounted to around $266m (€216m) while advertising was estimated to be in the order of $155m (€125m), according to Newzoo.

But as it continues to win over the hearts, minds and hands of millennials the world over - particularly in Europe and Asia, where annual growth rates are in the double digits - sponsorship spending will reach $655m by 2020 while advertising may hit the $224m mark.

Not surprisingly, sponsors and advertisers are falling over themselves to get in on the action. Many leading international brands like Adidas, Intel, Coca-Cola, Audi, Carlsberg, Puma, Toshiba, McDonald's, Visa and Telefonica, to name but a few, have all jumped on the bandwagon. For its part, the organisers of the forthcoming EStars tournament in Dublin, have bagged brands like Three Mobile, Lucozade, Four Star Pizza and the sports apparel brand Peak as key sponsors.

As they seek to engage with younger audiences, media companies have also been lining up to forge broadcast deals with the many tournament and franchises that exist around the world.

While MLG.tv, the free-to-watch video streaming platform, remains the go-to destination for gaming enthusiasts, the big networks and entertainment companies in the USA are scrambling to buy up media rights for the many regional and national franchises and tournaments.

One of the biggest digital players is Twitch, the six-year-old social video platform that Amazon bought for $970m in 2014.

Twitch allows anyone to livestream themselves playing video games and boasts nearly 10 million active daily viewers. Twitch also streams most of the biggest esports competitions around the world and it allows its top 17,000 streamers to take a cut of advertising revenues.

Irish viewers of BT Sport, meanwhile, will know that it partnered with the FIFA 17 Ultimate Team Championship Series by broadcasting it live, with further events lined up for 2018.

Such is the growth in esports that even the news agency Reuters has launched a dedicated news wire which features global coverage of the industry.

While it's still early days for esports and it might seem like the Wild West of sponsorship, most analysts agree that the paybacks can be substantial if brands get it right.

If they get it wrong, however, then expect them to be swiftly dispensed with like a baddie in a Call of Duty game.

Sunday Indo Business

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