ESPORTS: The traditional sports industry is a US$700bn juggernaut, when you combine the commercial tournaments, amateur competitions, media right as well as educational and other ancillary activities. It is also hooked on esports.
Professional sports and esports (as competitive video gaming is called) have much in common, thanks to their competitive elements.
And conventional sports’ extensive experience in commercial football, soccer, baseball and motor racing looks like the tonic needed to help professionalise, commercialise and monetise the still nascent business of competitive gaming.
Sports in video games
A host of popular video games have traditional sports for themes. Soccer-centric games include EA’s FIFA series (picture below) and Konami’s Pro Evolution Soccer.
NBA 2K, a series of basketball simulation games published by a subsidiary of Take-Two Interactive, influenced the formation of the groundbreaking NBA 2K League in professional esports.
EA is also behind the Madden NFL series plus the NHL, NBA, FIFA and UFC (Ultimate Fighting Championship) games franchises. Motor racing has influenced the narratives in Rockstar Games’ Grand Theft Auto, Gran Turismo from Sony Interactive Entertainment, while Psyonix’s Rocket League melds soccer and motor racing.
It isn’t difficult to see why traditional sports should appeal to thee streaks in gamers.
Not all those games, several of which are enjoyed by solitary players, will successfully translate into esports, with its head-to-head team combats in front of millions of live-venue and online spectators. But the competitive drive behind all sports participation is there.
Training and wellbeing
Esports team owners are increasingly obliged to ensure their young players have legal contracts and are remunerated for devoting their lives to travelling around the world contending for millions in cash prizes.
Players’ contracts are taking into account some kind of security for when their career comes to an end.
Looking after the players’ general wellbeing is now expected from the teams’ organisations, in the same way regulators demand the owners of traditional-sports teams to be legally and morally obliged to take care of their athletes. This includes a regular salary for day-to-day needs.
Professional esports teams are supplied bespoke live-in accommodation plus the necessary hardware and related peripherals for regular practices and training (between five to six hours a day).
Now several pro gaming teams are seeking to own or lease dedicated venues, in the same way several football, baseball and basketball teams have their own residences. A good example is the Overwatch League’s Blizzard Arena in California, and the Gfinity Arena in London.
Additionally, team owners appoint full-time coaches and trainers to look after the players’ nutrition and ensure their fitness.
Esports adopts traditional sports leagues
As Millennials and other young digital natives turn away from traditional media like TV and radio, traditional-sports owners hope esports will lure the next generation of fans into their fold.
And one way of forming a structural haven around any new competitive activity is to form a league.
The Overwatch League (OWL) is one of the biggest esports leagues today. It is part of Blizzard Entertainment, which belongs to the publicly listed (NASDAQ) Activision Blizzard, one of the world’s most established video-game publishers.
Additionally, it is emulating the structure of traditional-sports leagues (revenues from paid-for franchises, licensed merchandise, media rights ticket sales and sponsorships) to generate income from teams that want to play its Overwatch video game at a professional level (pictured below).
The first 12 OWL teams paid a reported US$20m each for their franchises. The fee is forecast to soar to between US$30m and US$60m each for future OWL franchise buyers, according ESPN. Investment bank Morgan Stanley predicts that OWL contests alone could soon generate up to US$720m annually for its stakeholders.
Streaming esports for sports brands
Thanks to a US$90m two-year deal offering the exclusive streaming rights to giant digital platform Twitch, OWL is among several esports-event organisers sharpening their understanding of how fans use streaming to interact directly with content.
Esports viewers on streaming platforms can post comments in real time while watching. Several of those comments are in response to the on-screen statistics and other data the platforms deliver in nano-seconds.
Also, fans are able to make monetary donations to their favourite players online during a competition, a practice that is turning into a significant revenue source for many amateur and professional players.
In addition to developing potential new business models, streaming’s interactivity allows esports fans to build close bonds with their idols. This is in contrast to the still perceived distance between fans and their celebrity heroes in football, tennis, baseball and other old-school sports.
Streaming technology is able to record the number of concurrent viewers an esports competition has gathered. The OWL inaugural season this year nabbed 400,000 concurrent viewers at one point. The vast majority of these viewers were Millennials, a demographic highly coveted by sponsors and other brand owners.
Furthermore, selling both the streaming and broadcast-TV rights to two different types of media outlets (Twitch and ESPN) is said to have hiked the value of each OWL city franchise.
There are still challenges.
Esports owners will need to educate traditional-sports fans about the excitement and vibe that makes competitive gaming special. The super-speed manual dexterity associated with playing cerebral-focused esports is not necessarily understood by fans who appreciate the physical agility demanded of old-sports athletes.
Some sports executives remain sceptical: FC Bayern Munich, one of Europe’s biggest soccer clubs, recently changed its mind about investing in esports because it felt the two activities are incompatible.
Esports organisers need to be on top of the rapidly changing media landscape as Riot Games learned to its cost. After signing a major deal to have events streamed on the BAMTech platform, those plans had to be scrapped after The Walt Disney Company took over BAMTech.
But the esports boom within sports continues. No wonder the International Olympic Committee is keeping a close eye on its developments.
For an up-to-date round-up of the legacy-sports businesses and organisations committed to esports, enjoy another one-of-a-kind White Paper by MediaTainment Finance for Esports BAR, the leading international B2B esports congress.
MediaTainment Finance is a content and media partner of Esports BAR, which is taking place in Miami on 24-26 September. For more information, click here