Forming partnerships with brands remains a most effective way for esports organisations to monetise their content and intellectual properties, said speakers at two monetisation-themed sessions at the exclusive Esports BAR+ Americas event.
The two related debates were called “Growth Through a Diversity of Revenue Sources” and “Activating Brands In Latin America”.
Both explored the different methods for esports content, from live mega tournaments at big venues to amateur players on live streaming platforms, to continue expanding revenues. This is a crucial debate at a time when the pandemic lockdown is also said to have significantly grown the number of potentially monetisable fans in 2020, after the global audience size was estimated to be almost 500 million in 2019.
“Covid has driven a lot of activity on the audience side and that should be exciting for brands and sponsorship that have money coming in,” said Deloitte’s Stephen Bradley on the “Growth Through a Diversity of Revenue Sources” panel. “Sponsorship has held strong.”
Bradley, the Consulting Managing Director at global consultancy group Deloitte, unveiled figures from an exclusive Deloitte report for Esports BAR that examined the different revenue sources in 2020.
Despite the downturn in 2020 revenues caused by the Covid quarantines forcing several live esports tournament to cancel, Bradley asserted that the esports sector’s ability to pivot online helped retain opportunities to form partnerships with marketers, including sponsors and advertisers. That, plus audience growth, he said, will go a long way to revive and accelerate revenue expansion via sponsorships post-Covid.
Deloitte data on esports revenue
Bradley broke down the global esports revenue generated from different income streams. He said:
“Revenue was something shy of a billion dollars in 2019; 45% of that was sponsorship; 23% was media rights; 17% advertising. China is the biggest market. It accounted for about 35%; North America with 23%; Western Europe 18%.”
By September last year, sponsorship’s share had jumped to about 60% of the total international revenue. “With media rights, both are growing in absolute dollars,” he added.
Although accounting for smaller shares globally, revenue from digital content and streaming services also increased, 60.9% and 44.9% respectively, according to the report. Only income from game publishers’ fees and, understandably due to Covid quarantines, merchandise and ticket sales.
Bradley predicted an upturn for all revenue streams as the number of eyeballs on competitive-gaming entertainment expanded in 2020. “From an audience perspective last year, we were something shy of half a billion people. And in 2020, we expect to see a big jump in that,” he stated.
Deloitte data on esports investments
Bradley also commented on the amount of investment money that went into esports last year. Although investment rates had initially slowed down because of the economic uncertainty amid the pandemic, he argued audience growth will spur an increase in funding.
“In 2020, deal volumes have been down year-over-year. But May itself saw a big jump. Where those investment dollars are going is in infrastructure: ad tech was about 31% of the total; business service was about 15%; and betting-related investments about 14%.”
Understanding esports audience and users
“To use their money effectively in the esports space, marketers and investors need to analyse and understand how audiences watch esports and gamers participate”, stated Tatiana Tacca, Director of Esports at Momentum Worldwide, the global experiential-advertising agency.
As lockdowns took hold internationally, she said: “Twitter shared that there was an 89% increase in conversations around gaming; 50% of that being new user participants. We’ve seen increase numbers ranging from 45% to 70% of Twitch and YouTube viewership,” she declared. “There was a 75% increase in people playing. Every quarter of digital-games sales has essentially broken its previous record.”
And looking at content alone, the options to monetise are many, Tacca pointed out, based on Momentum’s work for brand owners like the pharmaceutical giant Merck & Co, and the multinational confectionary maker Mondelez International.
In one esports organisation alone, a sponsor’s options for creating brand partnerships include working with the talent, such as individual players with a massive number of social media followers.
Showcasing brands in esports
Other options for brands & esports collaborations include linking up with teams, leagues, events, streamed content and organisations’ other intellectual properties. These will create platforms for brands to showcase their products and/or services to digital-first esports audiences and players.
Tatiana said: “Teams are amazing for your first entrance into esports, if you want to pursue a creative concept with talent. And influencers have such a strong entertainment value. They have amazing scale, phenomenal personalities and really lean in on the way to present brands to their audience.”
She continued: “During the Covid period, when live events stopped being a thing, it didn’t mean experiential and engagement and interaction had to be removed from the conversation. There are chats, there are overlays, there is a constant element of interactivity.”
Concurring with Tacca on the same panel was Johnny Ward, CEO/Co-Founder of Damage – The Esports Agency, who offered advice to non-endemic brands seeking a place in esports:
ADVERTISING – “You need to delineate your specific audience because the gaming/esports consumer demographic is wildly diverse, based on different game titles and different platforms.”
PARTNERSHIPS – “It is crucial for your brands to choose entities that are on brand. Understanding gaming and esports and vigilantly following the trends in real time is the only way to ensure you’re making the best decision on who and what is the best fit for your brand.”
PROMOTIONAL MARKETING – “Ultimately, a brand needs to drive sales. We do know it is important to intercept the consumer at this buying stage, where they are comparing your product to your competitor’s.”
Activating esports income in Latin America
The potential to monetise esports users and fans in Latin America is as huge as the region’s 652 million population, panellists said. This comprises the 212.5 million people in Portuguese-speaking Brazil, plus the remaining Spanish-speaking countries that contain the 128.9 million people in Mexico alone.
In terms of revenues, Latin America is considered one of the fastest growth regions, offered Jordi Soler, CEO of LVP (Liga de Videojuegos Profesional), the international esports organisation targeting Spanish-speaking markets.
During the “Activating Brands In Latin America” panel, he explained the advantages of taking esports to markets speaking the same Spanish language, just as the esports sector in North America has successfully exploited that region’s common English language.
“With many countries speaking the same language, this gives us tremendous opportunity for brands. This gives us a huge advantage, despite the cultural differences in those countries,” he said.
Jumping gaming monetisation hurdles
In terms of making money, Soler and Leo De Biase, Co-founder/Chief Relationship Officer at Brazil-based esports entertainment and tournaments organisation BBL, agreed that esports is having a hard time against the traditional-sports shows on broadcast TV, which are chasing the same brands.
De Biase acknowledged that live esports competitions could be difficult to cover on broadcast TV. “The matches are long, and there are games that could last even longer; an ESL tournament is about eight hours of broadcast per day. This is something that will require a lot of work to be put on TV,” he exclaimed.
Meanwhile, marketers still believe esports lags behind traditional sports, when it comes to the ability to activate marketing campaigns. “We’re talking about some big international esports events, where we can get sponsorship valued at about €2m to €4m. But when you have soccer on TV, you get about €100m. I don’t know the exact pricing, but people are not ready to spend that amount on an esports production.”
Additionally, Soler noted that Latin America’s infrastructure for digital connection remains underdeveloped: “Internet access is one of the challenges, as are payment systems, and the economy is struggling in some of those countries. There are problems that need to be managed.”
Making esports TV-friendly
But there are solutions. A major one is adapting the already online-friendly esports content for broadcast TV, still the world’s single largest media platform by revenue and physical-audience reach.
“We have to adapt,” De Biase declared. “We have to make broadcasters and brands understand that our content is the same as when you are watching soccer or basketball. We need to translate that in a better way for brands to feel comfortable.”
For De Biase, BBL’s recent deal with a non-endemic brand like Brazil’s iconic soccer stadium Estadio do Pacaembu, proved monetising competitive-gaming content is worth overcoming.
“It is as if digital platforms like Twitch and Facebook are getting the money from what was mostly going to TV and radio before. It is the same money we are fighting for. Now, we are showing brands we can really engage with the esports audience they lost on the traditional media. It is quite challenging, but we’re getting there.”