Over 3 years have passed since ESPN launched a new vertical to cover eSports, but many of us are still left scratching our heads at competitive gaming.
If you think tuning in to watch other people play a video game sounds boring at best, there are at least 15 million people who disagree with you. That’s the number of daily active users on Twitch, the most popular video game streaming platform (it also happens to be owned by Amazon).
“eSports was once an under-the-radar activity for enthusiasts of multiplayer online games,” says eMarketer principal analyst Paul Verna. “Just a few years later, it’s a multimillion-dollar business in the US, with implications for game developers, players, leagues, teams, live venues, streaming platforms, TV networks, audiences and marketers.”
Unlike YouTube back in the day or popular streaming platforms today, video game stream doesn’t necessarily disrupt the media industry — it simply adds new content.
Twitch’s daily active users collectively watch 726 million hours of streaming video every month — just over 20 percent of which is eSports, which makes organized teams and leagues out of the most popular video games.
In other words, this is a rapidly growing opportunity for digital advertisers looking for new, younger audiences.
eSports is Growing — So What?
At the beginning of 2019, Jurre Pannekeet at Newzoo reported that the global eSports economy will top $1 billion for the first time this year. The new milestone will come after a nearly 27 percent YoY growth between last year and this year.
Most of the revenue comes from media licensing, as video game brands and platforms license out streaming to other major players. “Both digital broadcasters and TV media companies have already started to compete for esports content and the extent to which these deals will generate a direct return on investment will impact the pace of media rights growth,” writes Pannekeet.
In turn, these media companies are sure to launch advertising packages around the eSports market. Which is why the rapid growth of eSports’ popularity will likely be tied to increased advertising investments in the niche.
Referring to the research from Newzoo, Reuters reported competitive video game advertising revenues within the US will likely hit above $200 million by 2020. This represents a 25 percent YoY growth rate, matching almost exactly the growth of the eSports market as a whole.
“From beer brewers and computer companies to mortgage lenders and sports apparel makers, brands across the spectrum are trying to figure out how best to market to esports fans,” the report says. The audience tends “to be young, tech savvy and affluent, as the professional video gaming industry is expected to balloon in coming years.”
But what does advertising within the eSports space actually look like?
The Shape of eSports Advertising
Collectively, advertising and sponsorships made up the majority of eSports revenue streams in 2018.
While your typical consumer-facing major players (like Coca-Cola and McDonald’s) have been eager to jump on the eSports bandwagon, the lion’s share of video game streaming advertising goes to gaming-related brands. This is primarily due to the preferences of eSports fans — Digiday reports that 70 percent of fans preferred promotions from gaming brands.
Jiving with this natural fit approach, a large portion of eSports advertising is in sponsorships. According to PMG, eSports saw over 600 sponsorship deals between 2016 and 2017. In 2018, eSports revenue totaled $906 million — with 40 percent of that revenue originating from sponsorships. Platforms and networks like HelloGamers were even founded with eSports sponsorships in mind.
Another 19 percent of 2018 eSports revenue originated from advertising in other forms — still a relatively new way to spend nearly $175 million on advertising. And that number will most likely continue to rise.