In 2018, the North American League of Legends Championship Series radically changed its structure by shifting from a promotion and relegation system (where teams bounce between different divisions based on their performance the previous season) to a franchised league (where teams purchase a slot for a guaranteed amount of time). In 2019, the European League of Legends Championship Series is making the same change.
Both of these organizations made this shift for one main reason: stability.
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For too many years, esports was seen as the “wild west,” a place where there was no consistency between competitions, sometimes even for the same game. Lately, there has been a new approach – or, rather, a more conservative approach – to the industry. Leagues like the NBA 2K League and the Overwatch League have shown how successful a franchise approach can be. The numbers are good now, but they can be spectacular.
“Ultimately, to really be a force — to create the types of monetization that you’d like to have on a local basis, the team has to be in-market more regularly,” Jonathan Kraft, President of the Kraft Group, which owns the OWL’s Boston Uprising franchise and also the New England Patriots, said to The Washington Post, in reference to plans to move all Overwatch franchise teams to their home cities (currently they all play in a Burbank, California studio).
“I think to start to attract and educate casual fans and bring the geographic connection in — I think of people who don’t love hockey but say, ‘The Bruins are my team because they live in Boston.’ I think you have to be in-market to fully take advantage of that.”
“Over the past year, in the industry in general, there’s been a move towards more professionalism and more stability. We’re kind of coming out of the Wild West, and into a little bit of stability in general with other esports leagues,” Todd Harris, Co-Founder and Chief Operating Officer of Hi-Rez Studios, said at a roundtable discussion held at HRX 2018.
Still, despite the increasingly stable esports industry, where owners of major professional esports teams (like the Kraft Group) are also owners of esports organizations, some brands remain hesitant to jump on the esports bandwagon. They may see numbers like the $2 billion in disclosed investment funding that flowed into esports related companies in Q1 or read that SuperData estimates that viewership of esports will grow 12 percent each year, but it’s hard to shake some preconceived notions about the industry.
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“One of the big things that’s a bit of a challenge right now is we do not have a uniform data set right now,” Rishi Chadha, Head of Gaming Content Partnerships at Twitter, said to SportsBusiness Journal. “Right now, everyone’s using different pieces of data that are complementary to the story they’re trying to tell.”
Two companies are trying to make understanding and codifying the esports industry easier for sponsors, especially non-endemics.
The first is Nielsen, a company that’s better known for gathering demographics of TV viewers. Nielsen put together an esports division after repeated client requests for information about the industry. Last year Nielsen released its first report that measured the habits and demographics of esports fans in France, Germany, the United Kingdom, and the United States. It was followed by a second release earlier this year focusing on Asia, specifically China, Japan, and North Korea.
“It was just under-developed,” Nicole Pike, Managing Director of Nielsen Esports, said in the same SportsBusiness Journal piece. “The industry happened so quickly, and grew and grew, and there was no time for standards to be created.”
Nielsen is attempting to adapt its success with television and replicate it in the esports world by collecting data from the streaming services Twitch, Facebook, and YouTube and other metrics specific to brands. One major esports league is already on board. With assistance from Nielsen, Activision Blizzard is an average-minute audience metric to the Overwatch League. The goal is to help sponsors analyze the Overwatch League in a way that is similar to traditional sports.
The other company hoping to remove the haze of confusion for sponsors is visual search firm GumGum. GumGum has a history of tracking media placements in sporting events by utilizing its computer vision technology to monitor live programming, taped studio shows and social media channels.
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“They like to see the connection, the fact that you work with not only esports clients but also stick and ball,” Jeff Katz, general manager of GumGum Sports, said to Adweek. “They like that for consistency so that they can look at their sponsorship portfolio holistically.”
GumGum is also trying to translate esports viewing into the language of television; in this case, it’s commercials. Using its technology, GumGum is able to analyze streams, broadcasts, and social media videos to spot every time a logo or brand name appears and its location. The software then uses an algorithm that considers the size of the logo, the clarity of the image and how prominent the brand is within the frame and compares that time on screen to a paid commercial.
GumGum has partnered with audience tracking company FanAI and esports organizations Optic Gaming, Cloud9, and Team SoloMid. In fact, Team SoloMid has plans to provide the system to all of its brand partners.
“A lot of [brands] are going after the standard sports categories but really, it’s a little bit like movies—movies touch everybody; games are starting to be like movies,” Johannes Waldstein, FanAI Founder and CEO, said to Adweek. “And if you think about the brands and the product placement and the experiences that go into movies, I think that video games are even more compelling because you can both play in that game and watch professionals play that game.”
Both companies are trying to create a standardized system for measuring the benefit of an esports sponsorship – something that has been difficult to quantify. The fact that these methodologies are developing is another example of the stabilizing of the esports industry.
“Gaming and esports publishers need to develop meaningful partnership/sponsorship programs that media agencies and big brands can easily understand and measure,” Matt Wolf, former Director of Esports at Coca-Cola, said to SportsBusiness Journal. “When these things finally happen, the money will flow. No one disputes the value of the audience, it’s more about how best to reach them and how to measure the results.”
If you’re looking to break into the esports world and would like some ideas for evaluating your return on investment, give eGency Global a call at 972-323-6354. Our years of experience can help guide you through the occasionally imposing, yet increasingly lucrative, esports landscape.