Not all sports suffered devastating losses during the pandemic. Esports, which was already a growing industry pre-COVID, was able to (almost) seamlessly pivot their in-person events to entirely virtual experiences. Even now, as we return to IRL activities, these video game competitions have ample opportunity to retain and capture more engaged audiences through eSports sponsorships, advertisements, and brand alignment opportunities.
In the beginning, sponsors were mostly video games, computers, or other tech companies. Then, as eSports competitions filled arenas and aired on major TV networks, the once niche interest grew. According to Newzoo’s Global Esports and Live Streaming Market Report, in 2019, the eSports industry generated $1.1B. Of that amount, $456M came from sponsorship deals, a 34.3% increase from the previous year. The main sources of revenue for the industry are:
- Sponsorship (42%)
- Media rights (23%)
- Advertising (17%)
- Merchandise and tickets (9%)
- Game publisher fees (9%)
Today, major sponsors include Coca-Cola, Gillette, Redbull, BMW, Nike, and… wait for it… Louis Vuitton.
One of the newest and most exciting brands to eSports sponsorships is ByteDance. In April, TikTok’s parent company announced a partnership with Enthusiast Gaming, the largest gaming media platform in North America and the United Kingdom. As part of their deal, partnership activations will be rolled out across their platforms and will also include video teasers and custom promo content for Twitch, social media, and Enthusiast Gaming media properties.
However, when such a giant, global company swoops in with sky-high budgets and a built-in audience, seemingly “normal” brands may struggle to find impact. Luckily, there are still a few untapped opportunities in the eSports space, too. Below are three ways brands can align with the industry in 2021:
1) Alternative revenue streams
While tournaments draw in millions of viewers, both online and in-person, live eSports events are extremely expensive to produce (stadium rental fees, construction, six-figure player salaries, and buy-in from games like League of Legends or Call of Duty, too). Video content, written guides, and even whole eSports schools are opening all around the world. Betting sites have also started venturing into eSports with MyBookie becoming the first-ever sportsbook to offer wagers on simulated sports.
Today, eSports organizations, game publishers, and sponsors are slowly reallocating attention and resources from competitive tournaments to video game streamers. Many tournament sponsors are signing deals with content creators. Instead of competing in a major event like Apex Legends or Counter-Strike: Global Offensive, these gaming influencers stream on Twitch or YouTube, often just chatting with fans. Plus, as part of their partnership agreements, teams help manage gamers’ businesses, facilitate sponsorship deals, and even provide salaries.
Sponsors’ embrace of content creators may open up the industry to new kinds of gamers. Players from underrepresented backgrounds don’t always feel supported in traditional esports leagues, even as they try to diversify. Some of them have found more success, and felt more comfortable, in streaming because they can control their image.
In their report, Newzoo also predicts eSports’ global live-streaming audience will hit 728.8 million by the end of 2021, marking a 10 percent increase over the 662.6 million who watched in 2020. This prediction comes after the industry experienced an influx from streaming platforms because of the pandemic. Interestingly, Newzoo anticipates the live-streaming audience total will reach 920.3 million by 2024.