The rapidly emerging phenomenon surrounding electronic sports (eSports) continues to steadily gather steam; as notions of sport, competition and entertainment undergo a fundamental shift. Along those lines, eSports is an ideal fit for digitally immersed consumption patterns. Yet the general quandary surrounds what the world of traditional sports has to gain from embracing competitive video games. More succinctly, is eSports worth buying, selling, holding or shorting?
A marriage of sports and video games
Juxtaposed to the growth of electronic sports are questions around the threat it represents to traditional sports. However, the reality is eSports represents the merger of the video game industry, valued at nearly $100 billion worldwide, and sports-like competition. So while the intersection of gaming and sports previously produced titles like “Madden NFL,” eSports offers an innovative wave of ownership, investment and branding opportunities for the world of sports entertainment.
The competitive play of video games (eSports) is already a bona fide form of interactive entertainment – generating a wealth of incredibly engaging content and activations – for millions across the world. The foundation is massive consumer momentum behind video games, which, according to a 2015 study by the Entertainment Software Association, totals 155 million players in the USA, alone.
“Millennials are putting video games at the center of their entertainment preferences, but it is a new kind of gaming that is more social, interactive and engaging.”
— Neil Howe, president of LifeCourse Associates and leading researcher on millennials
The line between those who play video games (participants) and those who watch them played (audiences) are being blurred. Accordingly, eSports is fast becoming a leading source of interactive experiences – both spectator and participatory – for millennial, and younger, audiences. This unique feature will soon cast debate over if video games are a sport, as irrelevant.
Trend not fad
In parallel, outdated stereotypes about who is a “gamer” are being shattered. Gordon Hayward, forward for the NBA’s Utah Jazz, recently went on record in the Player’s Tribune with his support of gaming. Hayward, a max contract player with the Jazz and elite athlete, is the complete opposite of negative characterizations of people passionate about video games. As is three-time NBA Champion Rick Fox, who paid $1 million to purchase a spot in the League Championship Series (LCS), the world’s leading eSports scene. More importantly, Hayward and Fox are but the tip of the iceberg.
Image courtesy of Newzoo Insights
A host of other household names from the sports world, have followed suit: Sacramento Kings owner Andy Miller, Alex Rodriguez, Shaquille O’Neal and Jimmy Rollins are all investors in another LCS team. With Kobe Bryant and Mark Cuban also expressing interest, this is shaping into a trend, far impactful than sports multi-millionaires looking to throw money at the ‘next big thing.’ Instead, it speaks to an opportunity to ‘buy low’ on the tremendous upside of a budding phenomenon; one estimated to reach 292 million fans by end of year, and 427 million fans by 2019.
Creating an eSports playbook
Still, for those in the sports world, to justify placing a bet on eSports requires understanding its core composition and relevant touchpoints. The good news: There’s a steadily increasing stream of data points which speaks to the undeniable value present across the eSports ecosystem (see image below). Yet, if eSports aren’t here to replace sports, how do competitive video game platforms enhance the world of sports entertainment?
The eSports ecosystem, illustrated in the above diagram, offers a variety of properties capable of serving as potential partners. The challenge is identifying the appropriate approach and prospects as part of developing an eSports playbook. Each competitive gaming platform (events, leagues, publishers, teams) is representative of a budding demand to do more than just watch, cheer and spectate – but also produce, interact with, and participate in new storylines. They also maintain a significant share of attention and affinity with highly valuable consumer audiences.
As interactive entertainment with sport-like properties, and a global scope, eSports opens the door to a digital landscape that supports different business models and possibilities. Plus, the competitive spirit and vibrant fan base across eSports’ landscape grants immediate synergy with items such as digital marketing and fan engagement programs in sports. Competitive gaming offers a new funnel for building new fan connections, extending branding into the digital domain, and expanding the footprint of sports media/technology. Current examples include:
- FC Schalke 04 – The long established German Bundesliga football club purchased a spot in the League Championship Series (LCS) and currently fields a team therein. Valued by Forbes at $572 million in 2015, Schalke is the 14th most valuable European football club in the world.
- SportRadar – The leading provider of sports data services globally, launched comprehensive data coverage for eSports. Sportradar’s now provides stats and results for all the leading game titles and tournaments, including Counter Strike Global Offensive, DoTA 2, and League of Legends.
- West Ham United – The European football club reached across the digital divide and signed Sean Allen, a top FIFA 2016 star. Becoming the first United Kingdom team to sign an official eSports player.
Moving forward
As opposed to mulling the threat that eSports poses to sports. Focus should remain on the fact that both domains benefit from increased synergy. This budding symbiotic relationship between sports and eSports is rooted in largely complementary, not contradictory, elements. For those in the sports world, placing bets on the eSports opportunity is justified by the potential spoils found in an intersection of digital and physical competition.
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