The concept of gaming as a competitive sport has been around for nearly a quarter of a century, but the industry as a legitimate opportunity for professional gamers, content creators and advertisers is still just scratching the surface of its potential. And with millions of people worldwide now homebound from Coronavirus and screentime increasing exponentially, for those publishers and advertisers that are willing to gamble on an industry that’s comparatively wet behind the ears, odds are it’s a winning hand.
“There is a fundamental thesis that virtual worlds are taking up increased space in our minds and we’re seeing that at unprecedented levels now,” says Jens Hilgers, Founding General Partner, BITKRAFT Esports Ventures and founding CEO of Electronic Sports League. “The time has come where truly native advertising needs to be integrated into that space.”
Despite the global pandemic currently upon us, this is one industry that appears relatively unaffected.
In fact, Twitch reports an increased usage of both gaming and non-gaming content in recent weeks. “We’re working with organizations across music, sports, esports, and more as people look for ways to connect with their fans and communities during this time,” says a spokesperson from the live streaming platform.
“Tournaments will be canceled, but esports doesn’t rely on arenas for their games,” says Itamar Benedy, Co-Founder & CEO at Anzu.io, a programmatic in-game ad platform offering creative solutions that bring together the online and offline world. “People are spending more time at home and more time playing and watching games… so brands will get much more attention.”
Even Thomas Fellger, Founder of Veritas Entertainment, whose esports arena, LVL, was set for its grand opening at the end of March is unphased. “We are building experiences,” he says, “We have the perfect set up for right now. In this facility, we have state-of-the-art TV studios where we need only one or two people at the controls to create content from anywhere in the world.”
Ask anyone in the industry and they’ll tell you that the impression of the gamer as the creepy guy living in his mother’s basement is long gone.
The space has now opened up to a much larger audience of fans that largely range in age from 18-to-34 and whose backgrounds are equally broad. No less important is the under-18 crowd who have grown up in a time of online gaming, YouTube, social media and streaming platforms and are helping to shape the future of the industry.
Younger audiences who have been raised in the gaming ecosystem know what they want and understand the value of the give-and-take of information to provide a better experience. “What we are seeing is that these younger generations are very strict about their user experience,” says Benedy. “For them, the trade-off is that a lot of users are not willing to pay for a game, but they are willing to share their data in exchange for better products from game developers. But they won’t accept anything annoying or intrusive.”
And that responsibility lies with the companies providing content and advertising to its users.
A Winning Combination: Gaming and Advertising
According to Newzoo’s 2020 Global esports Market Report, “Total esports revenues will reach $1.1 billion in 2020, an increase of almost $150 million compared to 2019…The highest-grossing esports revenue stream worldwide is sponsorship, which will generate $636.9 million in 2020, up from $543.5 million in 2019.”
While the industry has suffered losses due to live event cancellations, the exponential increase in viewers and continued support from celebrity players—like professional NBA athlete Kevin Durant, current Formula 1 racer Lando Norris, and Migos rapper Offset—who all compete in tournaments, bringing with them a whole new audience base that is spurring interest from lifestyle and luxury brands that want to be fully integrated into the events.
“We’re trying to create an environment where the gaming and advertising ecosystems can coexist while adding value for the gamers,” says Benedy, who refers to advertising in this environment as more of an intuitive content enhancement than traditional advertising.
“If brands are looking for a positive way to interact with a passionate audience, esports is a great avenue for that,” says Brad Silber, Vice President and head of Ogilvy’s Sports Network. “Over half of esports fans and viewers have a positive attitude about brand involvement within their games. The main reason for that is that esports fans are at the infancy of the landscape. They understand how brands can help grow esports, bring people out and create amazing experiences.”
Advertising in the esports and gaming space covers everything from virtual billboards, signage and sponsored characters in the games themselves to sponsored experiences through Platforms like Twitch and Mixer, to influencer marketing of products from content creators and streamers.
“Brands are pushing publishers and publishers are wisely saying they’re open for business and want to see what else they can do from a publisher’s perspective,” Silber says.
Turner Sports, Overtime and Cheddar have all brought esports shows to Twitch that focus on the culture around gaming, including deep dives into leagues, behind-the-scenes peeks into gaming companies, as well as influential player’s lives. And with traditional sports on hiatus, ESPN is ramping up their esports content offerings.
The brands that will ultimately win in this space are the ones that are willing to listen to the audience and understand who they are and what they need. “It’s a two-way conversation. That’s the magic of multiplayer entertainment. It is the phenomenon that you’re not just dumping content on the audience, they’re participating with you,” explains Nathan Lindberg, Regional VP of East Coast Sponsorship Sales at Twitch.
Following the (Privacy) Rules
But for the ecosystem to work, all parties involved–the platforms, game developers, publishers and the advertisers–must understand and adhere to privacy laws enacted to protect the end user.
“Being an Amazon subsidiary, personal data is very important. All safeguards are in place,” says Lindberg, “You have to be 13 or older. We don’t collect a lot of data on the user. The registration process is optional and we’re not forcing people into giving a lot of private information. Our audience is a very savvy internet user, so we need to make sure we’re mindful of that and working with that. Users won’t go somewhere they don’t trust.”
Benedy adds, “When it comes to privacy laws and GDPR, the world is becoming more attuned to the need for privacy regulations due to how bad companies took advantage of user data in the past. Compared to other industries where privacy was treated like the wild, wild west, game developers understand the need to protect their users. As a philosophy, we will never be able to recognize a specific person because we don’t store their data —and we can still enjoy targeting and personalization without storing user data and violating regulations.”
Adherence to data collection and privacy laws, however, does not mean that advertising in the esports and gaming industry isn’t measurable. In fact, it’s both measurable and easily executable.
Programmatic companies like Anzu, for example, offer the ability for marketers to run their campaigns from Google and just about every DSP out there allowing advertisers to use the same creative they’re using elsewhere, change content dynamically, measure their campaigns and maximize success.
Twitch uses companies like Nielsen, Comscore and MVPIndex among other tools to measure their results. “We also have our own built-in Research Power Group (RPG) of 60,000 opt-in Twitch users. This allows us to give third-party feedback and quick first-party measurement to show brands what success looks like,” says Lindberg.
Major Players in the Industry Game
Still, many brands are reluctant to lean into esports advertising. “For a while, esports was looked at as not valuable for a brand and only a few of the endemic brands were getting involved. But for brands looking for a way to put a sponsorship into one of the top sports leagues but find it’s too much, esports is a great entry point,” says Silber. “Brands are now starting to realize the potential, though, and are putting money into esports to help raise the profile.”
While the early brands to adopt advertising in esports and gaming were the ones most engaged and closest to the industry (like Intel and Nvidia), brands like Red Bull, Coke, Subway and Monster Energy are testing out new ways to get involved and engage with the esports fans.
Twitch’s Lindberg echoes those sentiments. “The structure of the industry and a lot of the attention it’s getting comes from the investments of sports entertainment properties. You’re seeing this decision from the outside world saying, ‘Wow look at the opportunity!’ We see a lot of mainstream investment coming in and then justifying that this is a valid space and a huge opportunity which leads to the fact that people are coming to the understanding that gaming is mainstream.”
Honda’s recent sponsorship of gaming team, Team Liquid, and Twitch, for example, offered an exclusive 6-part video series called Level Up in which gamers could get exclusive behind-the-scenes footage of the personal and professional lives of players, coaches and staff–all as part of a larger sponsorship that gets the automotive giant’s name in front of the esports audience without overselling the brand.
The opportunities for advertisers, publishers and content creators to be creative in the way they tell their brand stories are only limited by the imagination–no idea is too crazy. All ideas are embraced. And the structure is in place to support and measure new ideas. “The space is not yet written,” says Lindberg, “There are so many opportunities ahead of us to disrupt, innovate and create new ways to engage.”