The idea of a bunch of people sitting in front computers competing against one another in games such as Call of Duty may not be too gripping to the average dyed-in-the-wool football, rugby or cricket fan.
But eSports is on a trajectory to become bigger than the US National Football League (NFL) or the National Basketball Association (NBA), or indeed, any so called “true sport”. At least, that’s what the owner of the Washington Wizards basketball team Ted Leonsis thinks.
“Very quickly, eSports will be the largest participatory sport with the most active participants and the most dollars compared to any sport,” Mr Leonsis told the audience at the Monumental Sports & Entertainment (MSE) Global Summit earlier this month. “It will dwarf the NFL, it will dwarf the NBA, because first and foremost, it is a global phenomenon.”
A step change will come in 2018, when eSports will be a demonstration event at the 2018 Asian Games in Indonesia, and then a medal event four years later in China. But the industry is already booming, both in terms of players and on a commercial level.
“Ninety per cent of the worldwide population is on the internet and half are playing games,” says Alex Lim, the South Korean secretary general of the International eSports Federation (IeSF), which has 53 member nations.
Traditional multi-sports clubs with a higher profile in other sports, such as Schalke 04 in Germany, Paris Saint-Germain in France and FC Copenhagen in Denmark, all now have eSports teams.
“Something becomes an eSport because people want to watch other people playing a video game,” says Ian Smith, the integrity commissioner at the eSports Integrity Coalition (Esic). The organisation says its aim is to “take responsibility for disruption, prevention, investigation and prosecution of all forms of cheating, including, but not limited to, match manipulation and doping”.
This is seen as a primary necessity to attract big-name sponsors.
The surge in interest is transforming eSports on a commercial level. In 2016, global revenue from eSports soared 41 per cent to US$696 million with $266m coming from sponsorship, according to the eSports research consultancy Newzoo.
The acceptance of eSports into the 2022 Asian Games earlier this year should further boost commercial expansion. But Nicole Pike, the global research and product lead for eSports at the sports research consultancy Nielsen, suspects sponsors will hold back a while yet.
“Like most announcements of this size, there will likely be a ‘wait and see’ dynamic with brands that are intrigued by the notion of eSports being a medal event, but want to see how that proves out in terms of reception before using it as a reason to jump in,” Ms Pike says. “But really, 2022 is aeons away in terms of the eSports growth trajectory, so my guess is that there will be a lot of other events and announcements having an impact on sponsorship in eSports before the Asian Games impact is seen.
“eSports [offers] an engaged, young audience who is hungry for original content outside of just official, live events; the opportunity [exists] to build awareness or strengthen favourability among a desirable target with strong spending power; [it’s] a chance to reach a demographic who is increasingly moving away from linear TV consumption, a way to realign or reinforce brand associations and emotional perceptions, and a unique way to move outside the box and be seen as a forward-thinking player in the sponsorship space.”
As part of its recent eSports Playbook report, Nielsen worked with the marketing and media rights agency RFRSH to analyse a sponsorship between Audi and the Counter-Strike: Global Offensive eSports team Astralis.
The Astralis team competed in the finals of the ELeague in January and DreamHack Masters Las Vegas in February. According to the research, Audi received media exposure valued at more than 10 times its sponsorship investment, driven primarily by live broadcasts and mentions on digital and social media. The Eleague accounted for 82 per cent of the value delivered by the broadcast due to higher viewership and Astralis’ run to the grand finals, where the team won the championship.
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Nielsen’s research shows that sponsorship is strongest from endemic brands directly linked to the gaming and eSports experience, notably manufacturers of equipment such as headsets, monitors, consoles and gaming chairs.
“Most often, these brands will sponsor within eSports by providing actual physical equipment or services that can been seen while players are using them during their gaming sessions, though some will also engage in other activation types,” says Ms Pike.
Nielsen’s research categorises insurance, financial services and alcoholic beverages as the least appropriate sponsors for eSports.
“The data in our report is specifically played back by consumers, so eSports fans currently ... don’t see these categories as being as appropriate as the others we’ve asked about,” says Ms Pike.
“That being said, these are actually some of the fastest-moving categories investing in eSports right now. So, there is a bit of a chicken and the egg dynamic happening, whereby as eSports fans become more familiar with these types of brands participating in their environment, they will in turn be seen as more appropriate.”
Nielsen’s research covers the growth of eSports in the United States, United Kingdom, France and Germany and finds that Germany has a more established market in terms of fans.
Grand Theft Auto is the most popular game franchise in Germany and the UK, while the Call of Duty series is more popular among gamers in France and the US.
In other sports, such as football, the game itself is not owned by anyone. But eSports is dominated by commercial companies such as ESL, which control the intellectual property of eGames. This upside-down structure means that eSports is dominated by commercial interests, and that poses problems, says Anna Baumann, an independent lawyer specialising in eSports from Germany.
“You have a vertical structure and a monopoly and it’s sometimes hard to access the market,” said Ms Baumann, speaking at the Play the Game conference on sports governance in Eindhoven on November 29. This structure puts game publishers at the top, above tournament organisers, clubs and then players, with regulators at the bottom.
eSports also has two governing bodies, the IeSF, and the rival World eSports Association.
“The conversation around a single governing body needs to consider what is possible, as much as what is needed,” says Ms Pike. “And realistically, I don’t see a single eSports governing body being a viable solution given the variety of IP/rights holders involved.
“eSports is not one cohesive sport. It is an intricate system of various titles and sub-segments that are extremely different when you go beyond the surface.
“I do think the idea of a single source outside of sport governance can improve the industry’s legitimacy and sponsorship opportunities, though; specifically, a single, reliable source for audience measurement/ratings, which is why Nielsen created our advisory board and is making this a priority for our vertical moving forward,” she says.
Although the IeSF is emulating the governance of other sports in areas such as registering with the World Anti-Doping Authority in 2013, concerns remain. Esic identifies cheating using software hacks as the biggest problem.
Some manufacturers take cheating seriously, with Mr Smith citing Valve’s Anti-Cheat system as a good example. “If you are caught, you will be banned for life. Of course, you can open another account an hour later, but [cheating] is taken seriously.”
Mr Smith told the Play the Game conference that annual betting turnover on eSports is expected to exceed $150m by 2019, which also poses an integrity issue.
eSports is also booming in Asia, but this region is also where illegal markets flourish and match-fixing in other sports such as football is a major problem. There are more than 160 legal gambling websites that offer odds on eSports, but that is the tip of the iceberg, says Mr Smith.
“The illegal market is 10 to 15 times the size of the visible market,” he says. “The epicentre for interest in eSport betting is also the epicentre for illegal gambling.”
The game Starcraft II was hit by a match-fixing scandal in South Korea in 2015. Mr Smith is worried more may follow; Esic started an online education programme in October 2017 to try to tackle the issue by raising awareness.
The IeSF is also trying to promote research into eSports and held a global summit in Busan, South Korea, last month and also works with other sports.
“We are trying to partner with different sports like table tennis, which we are trying to promote,” says Mr Lim. “Fiba [the Federation of International Basketball Associations] wants to promote three-on-three basketball and we are trying to organise an event together.”
Widening the player base and improving governance will all help legitimise eSports and increase interest from sponsors.
The next logical step would be for acceptance by the Olympic movement. But Ivo van Hilvoorde, a lecturer at Vrije Universiteit Amsterdam in the Netherlands specialising in eSports, is not sure this is possible. “What countries can play? This is important for an Olympic sport so all countries should be able to play but they cannot. Only 20 to 30 per cent can compete,” he said at Play the Game.
That will slowly begin to change as the playing base and commercial expansion continues. By 2020, Newzoo expects global revenue from eSports to reach $1.5 billion as investment by brands, which totalled $517m in 2016, doubles. As gamers scramble for their consoles, brands look likely to be doing the same for eSports sponsorship.
