In a calmer part of London’s energetic Shoreditch district, an area known for its contemporary shopping and dining options, sat a brick building that was anything but quiet. Music blasted from the open doors and a huge, graffiti-style logo of the esports team Fnatic was painted on the wall.
This was Bunkr, the world’s first esports concept store.
“What started as a six-week pop up extended into a 13-month home of our dreams,” Fnatic stated in a Facebook post.
Bunkr was a multipurpose space with racks of esports-related apparel and gaming accessories (much of which featured Fnatic’s logo). There was a one-on-one PC gaming station designed for competitive gaming, a virtual reality corner, and an area for a music DJ. There was also a livestreaming setup (available for any streamer to use) and a drinks bar.
It also may have been a glimpse into the future of esports merchandising.
“The content we have been getting out of Bunkr has been seen in 200 countries,” Erik Londré, Head of Events and Influencers for Fnatic, said in an interview with GamesIndustry.biz. “Yes, it’s a physical space in London, but it’s also a source of worldwide exposure. What we want is to have every Fnatic fan around the world wanting to visit Bunkr – even online. It’s not just about who came to the party, it’s about who saw the pictures.”
According to Londré, the physical sales made at Bunkr were not as important as the social media exposure the store gave the brand. Everything that was available for purchase at Bunkr was also for sale on the team’s ecommerce site.
“Apparel is an essential part of running an eSports team. That side of the business has to work for the rest to work,” said Londré.
The esports industry, which has always been on the cutting edge when it comes to promotions and marketing, may be on the verge of attempting its most radical merchandising push yet – a traditional sales approach, complete with physical stores and old-school partnerships.
For example, in January, compLexity Gaming announced a collaboration with Panini America, a company that sounds like it makes delicious grilled sandwiches but actually creates a variety of sports collectibles including trading cards, stickers, books, comics, and magazines. As part of the deal, Panini and compLexity are partnering on a Twitch channel, which launched Jan. 17. The channel, managed by compLexity, features that organization’s athletes and streamers playing games with traditional sports athletes who have an existing affiliation with Panini. It will also highlight unique content that specifically promotes Panini’s NFL and NBA products and giveaways of Panini products.
This deal is a partnership in every sense of the word. It works because both organizations are able to utilize their strengths to benefit each other.
“Think of the NBA and Nike,” said Greg Skasko, Chief Operating Officer of eGency Global. “The official sponsorship covers both teams and players. Both parties are getting paid, but the relationship frees the teams and players up to focus on basketball instead of expending any kind of effort on maintaining an apparel business. If players or teams can secure sponsorship from a merchandise manufacturer, then there’s a solid possibility that the merch business could be a part of the deal.”
Which brings us to the December 2018 announcement that Fanatics, Inc., the world’s largest seller of licensed sports apparel, is teaming up with the Overwatch League, to manufacture and sell Overwatch products around the world and run online shops for the league and its teams.
“What we told Activision Blizzard was that we’d bring our entire company to the table for this deal and try everything there is to try,” Ross Tannenbaum, Head of Special Projects for Fanatics Inc., said to Bloomberg. “We think this has the potential to be as big as any of our sports long term.”
Don’t think that Fanatics entered into this relationship with the Overwatch League lightly. The brand does its homework. In 2017, Fanatics was able to generate a 40 percent increase on its NFL apparel despite overall NFL merchandise dropping from $4.2 billion in 2015 to $3.1 billion in 2017 – more than $1 billion.
Fanatics achieve this by reverse-engineering social media marketing. Instead of trying to generate a conversation through active posting, paid sponsorships, and influencer marketing, it merely monitored social media activity. For example, mid-way through the season, Pittsburgh Steelers offensive tackle Alejandro Villanueva walked onto the field during the national anthem while the team remained in the locker room. Social media exploded, and Fanatics jumped – heavily promoting a previously low-selling, low-exposure jersey.
“Many organizations ask, ‘Why should I pay 25 to 40 percent of my revenue to a partner when I can do merch myself?’ It’s a fair question, but the merch business – or, at least, the merch businesses that can scale and be sustainable – requires a lot of expertise that most players and teams just don’t have in-house. Design, procurement, manufacturing, B2B and B2C sales, customer service…these are all parts of a healthy merch business. While it might be possible that organizations can do all of these things on their own, the cost would be prohibitive for most players and teams in esports right now,” said Skasko.
To date, merchandising is just a small subset of most esports teams’ revenue. The esports industry is estimated to generate $1.1 billion in 2019, according to a recent Newzoo report. Yet, only a small percentage of that total – $1.4 million – is anticipated to come from ticket and merchandise sales.
Compare that to traditional sports, which sat at $27.63 billion in 2015 and is expected to rise to $48.17 billion by 2024. Granted, traditional sports have a considerable head start, with most having an entrenched fan base, established rivalries, etc. – all of which can motivate merchandise sales. Those are some of the reasons that The Overwatch League is organized like a traditional league, and The League of Legends Championship Series switched to a franchised format. This multi-billion-dollar expectation of traditional sports’ merch sales growth should be seen as positive for the esports industry – and as aspirational.
However, one advantage that traditional sports has over esports is oversite and regulation. For example, when Nike signs a deal with the NBA, the brand is guaranteed that only their shoes and products will be used and advertised in NBA arenas. So far, esports sponsors are not afforded these assurances.
“In the absence of pan-gaming esports governing bodies, there are players signing merch deals with some brands while teams and leagues are signing merch deals with others. If I’m a sponsor and I sign on to be the official apparel sponsor for League X, I’m not going to be happy to see a player in said league wearing one of my competitor’s logos. So, as with many things in a sport that’s so relatively new, the onus is going to fall on players, teams, and leagues to educate themselves about merch best practices so that the business can reach its full potential,” said Skasko.
Another benefit that traditional sports currently has over esports is data, decades of accumulated sales data, to help forecast apparel production and sales. Without historical merch sales data to point to, it can be difficult to decide whether to manufacture and sell your own merchandise or to sell the rights to your brand to another company.
These issues, and many others, are precisely why it is beneficial to partner with an agency like eGency Global.
“eGency Global has been a part of the esports business since its very inception,” said Skasko. “As a result, we’re one of the few businesses that has hands-on experience helping players, teams, and licensees in the successful production and sale of esports-related merch. We’re in a very unique position to put that wisdom to work for players, teams, licensees, sponsors, and leagues.”
To learn how you or your organization can tap into esports merchandising and any other esports opportunities, please visit www.egencyglobal.com or call 972-323-6354 to speak with an eGency expert.