You might not think that online gaming has much in common with your local footy club.
One plays games indoors on a computer and the other outdoors on a field. As it happens though, eSports, or online multiplayer video game competitions, share quite a few similarities with traditional sports.
Rival codes and clubs, celebrities, referees, drug scandals, strategy and championships exist in both worlds. Increasingly, the other thing they have in common? Money.
The PwC Australian Entertainment and Media Outlook 2017-2021 forecasts interactive games market revenue to grow 4.8% by 2021, rising from its current AU$2,444 million to AU$3,094 million. Game revenue – from consoles, online, mobile and PC – will account for 11.3% of all Australian consumer spending on media and entertainment, and advertising revenue associated with those games is set to nearly double.
When it comes to the professional versions of these games, global eSports revenue (including consumer spending on events, advertising and sponsorship, but not including merchandise) is set to reach US$874 million. Growing from just US$42 million in 2012, that’s a huge increase in a relatively short amount of time. There’s no question that eSports is garnering big interest by advertisers, brands and media companies. Strangely though, until relatively recently, few people outside of its players and audience were even aware of its existence.
A breakdown of revenue in the Australian interactive games market, which will make up 11.3% of total Australian consumer spend on entertainment and media by 2021. Source: PwC Australian Entertainment and Media Outlook 2017 – 2021.
eSports, also called competitive gaming or pro gaming, is a professional form of exactly what most of us think of when it comes to console or PC gaming. Unlike the stereotypical image of the lone gamer in their bedroom or basement, these games are played by teams of multiple professional players in tournaments that often offer lucrative prize money.
Pro-players can be salaried, play in official teams, become celebrities and are considered to be internationally recognised athletes¹.
Games being played are variations of those that were popular from the ‘80s onwards. Fighting games, strategy games, first-person shooters and multiplayer online battle arena (MOBA) games are all alive and well in competitive gaming.
League of Legends and Dota 2 are two of the of the most popular MOBA titles. Other well-followed games include Counter Strike: Global Offensive, Call of Duty: Black Ops III and Halo in the first-person shooter category, and the strategy-focused Hearthstone and StarCraft II². World of Warcraft, a massively multiplayer online role-playing game (MMORPG), takes the place as the most played in the fantasy/quest genre.
Every sport needs an audience, and eSports has viewers in droves. Thirty-two million people ‘game’ non-professionally on a regular basis³ but the audience for eSports is even larger than just those who play themselves and who are presumably predisposed to enjoy watching others do the same. Watched online via streaming platforms such as Twitch.tv and YouTube, eSports boasts over 120 million fans. Individual games can be watched by tens of millions of people, rivalling audiences for broadcasts of traditional sports4.
eSports aren’t just watched online. Tournaments are also played and televised live from stadiums around the globe. The recent Intel Extreme Masters (IEM) World Championship held in Poland hosted 173,000 fans5 – in person. A further 46 million people consumed the event online. Those are significant numbers and they’re rising dramatically year on year. In Australia too, popularity is growing, with eSports fans filling Qudos stadium for this year’s Intel Extreme Masters Sydney in May.
Despite women accounting for half of the gaming population6, eSports is currently dominated by a young male viewership7. When it comes to professional female players, the numbers are worse8. Regardless, the audience represents a sizeable chunk of Generation Z.
Unsurprisingly, with the growth in attention to eSports and recognition of its audiences’ high disposable income, brands are starting to pay attention. Due to the nature of eSports, with its online and offline presence, there are multiple avenues for advertising.
Most obviously, brands can sponsor the game tournaments, celebrity gamers, or the teams. In Australia, McDonald’s has become the first commercial partner of the StarCraft II World Championship eSports Series, for which it will receive naming rights, on-ground activations, content integration and general branding9.
Gaming houses, where professional teams live and train, can be sponsored. And of course, merchandise needs to be provided.
Brands can also put money behind streaming rights (US based BAMtech recently purchased the streaming rights to League of Legends until 2023 for US$300 million10) or launch their own streaming platforms such as Channel Seven’s newly announced multichannel platform ScreenPlay11.
Of course, there is also always the advertising that’s seeded into those streams.
Providing prize money (individual purses vary but have reached as high as US$20.4 million) and sponsoring teams has the added benefit of appealing to Generation Z who have a low tolerance for inauthentic advertising. What better way to show your brand’s authenticity than by literally supporting the passion of its fans?
As the Australian Entertainment & Media Outlook says, “the next five years will see marketers, broadcasters and sports leagues taking more of an interest in gamers and gaming as they seek ways to be relevant to Generation Z”. One of those ways will be to engage with the influencers – commentators, ex-players, social media celebrities – that Generation Z trust. An advertisement or endorsement by ‘one of their own’ will likely go a long way with this media-savvy audience.
An example of the value chain for an eSports title. League of Legends’ global audience was 43 million in 2016. Graphic source: PwC Australian Entertainment and Media Outlook 2017 – 2021.
Gaming in general also has a history of in-game and affiliated microtransaction revenue: that is, small transactions purchased via micropayments. For example, in-game purchases can be made of skins, particularly in role-playing games (RPGs), to personalise or upgrade characters and weapons.
While these are yet to be fully embedded within eSports, they do exist on the periphery, for instance, a fan might send a ‘cheer’ to their favourite player or purchase the download and rights to use a personalised emoji from a celebrity gamer. Where the revenue lands from such microtransactions is varied, with money potentially going directly to a player or to an associated party.
When launching the 2017 Entertainment and Media Outlook at the Mumbrella conference in 2017, PwC Partner Megan Brownlow said that, “for Generation Z, eSport is sport.” But what does that mean for the landscape of traditional sports?
While no one is suggesting that physical sports are going anywhere, there’s no denying the audiences and revenue being attracted to eSports.
In 2016 the global audience of the League of Legends World Championships was 43 million, up a massive 424% in just 4 years. In the same amount of time, the Olympics Opening Ceremony audience in the US dropped from 40.7 million to 26.5 million.
Graphic source: PwC Australian Entertainment and Media Outlook 2017 – 2021.
Traditional sports are taking notice of these numbers.
In the US, Major League Baseball’s owners founded MLB Advanced Media in 2000 to look after the online presence of their teams. It’s spin-off company BAMTech, recently invested in by Disney to the tune of US$1 billion, focuses on streaming, and currently owns the rights to League of Legends tournaments. BAMTech also owns the streaming rights for the National Hockey League (NHL), wrestling entertainment company WWE and PGA Golf Tour.
Closer to home, the AFL’s Adelaide Crows football club bought professional eSports team Legacy which competes in the League of Legends Oceanic Pro League12. Globally they aren’t alone, with clubs from many different sports codes investing in their own eSports teams.
Opportunities abound for brands across the entire eSports value chain.
As Generation Z (and their spending power) becomes a focus for marketers, the ability to interact with a demographic that distrusts traditional advertising becomes more imperative. eSports represents a growing avenue to reach them as well as a phenomenon that even in its infancy is threatening the numbers (and dollars) of traditional sports.
Australia? Batter up.
PwC released its Australian Entertainment & Media Outlook 2017-2021 in June. Click here to subscribe for access to all the report’s insights.
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