Feb 19, 2018

Esports And Brand Licensing: The Shared Future

I have spent multiple hours watching different eSports, especially Counter-Strike tournaments. I always found myself in awe of how well-paced and entertaining the events are to watch. Over the past few years, the popularity of eSports has seen an insane growth. Indeed, I must admit the numbers are rather staggering. By 2019, eSports revenues are expected to rise over 1.1 billion US dollars. And if we only take 2016, over 43 million users have watched the League of Legends Worlds Championship final series. Online playing has extended the lifespan of video games, which now allows gaming communities to grow and become more organized. Consequently, this opens more possibilities for licensors. The question is - what are the unique opportunities that for eSports licensing?

An important thing to understand about eSports is that there are multiple IPs in play, which means that there are multiple opportunities for brand owners to gain. One of the most known elements of eSports is live events, making up a great opportunity for a branded merchandise expansion. As for technology companies, this trend unveils new sponsorship possibilities, such as providing group and individual players with components, gaming accessories, and equipment. Teams, solo players, games, leagues and even the brands behind the equipment and accessories used in play create unique IPs that can be licensed and thus used outside the core eSports activities.

Furthermore, the perception of the brands that resonate with fans as a part of their teams might differ from that of the brands that work with advertising and sponsorships. Thus, it becomes all about finding the right angle and right resonation with the fans and driving  and promote the opportunities for eSports licensing.

Broadcasting deals are great for eSports brands seeking to secure a foothold in the industry. The trend has increased over the years, fueled by the intensifying competition between the different broadcasting deals of different leagues. New players are trying to get exclusive rights to broadcast. Even VOD services have started to seek interaction with eSports. One area that isn't active yet in many games and leagues is in-game advertising. Of course, advertising itself is popular within eSports, but especially in-game advertising for companies holds excellent potential for the future.

Such advertising strategy, however, has to be implemented accurately to keep players happy. Further, the companies engaged in the in-game advertising should always prioritize the game mechanics instead of their brand’s visibility. The sponsorships still comprise the largest revenue source from eSports with around 38% of the revenue, whereas advertising brings home circa 22%. Media rights are the fastest growing segment, and their full potential is yet to unleash.

There is also a possibility that casual games and puzzles could have their own eSports events in the future. This is still an untapped opportunity due to statistics: e.g., less than 50% of the players of video games are women, yet the amount watching eSports events makes only a fifth of that. Could the existing entertainment brands also enter eSports with games developed around their IP? This might be a way to make eSports more of family-oriented entertainment and find new target segments for licensing. Entertainment brands are already represented in different game platforms. Nonetheless, there isn’t a fully functioning eSports material from entertainment brands outside the gaming industry available yet.

Currently, the median age of US viewers of eSports is 28 years old.  That creates a big question for companies publishing and developing  video games, which is:

Should gaming companies develop license-able characters in the games and promote their eSports licensing side hustle?

Game studios and publishers are increasing their control over their IP’s by vertically expanding to different platforms and mediums. In contrast, teams and players are trying to increase sponsorships and gain more awareness. This hectic competition and need for strategic planning may also cause disappointment for players along the way. This is promised to increase the quality of eSports games, leagues and audiences, making live events even more entertaining.

Now, what are your thoughts on eSports licensing?

Photo source: Flickr

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