Out-Law Analysis | 23 Feb 2021 | 11:49 am | 2 min. read
A booming gaming market, coronavirus-related restrictions on major sporting events, and growing media interest has driven increased interest in e-sports sponsorship.
The diverse e-sports market provides opportunities for brands to raise their profile and reach new audiences at a time when disruption to live sport is likely to continue for many months to come.
The worldwide popularity of video gaming has never been in question. However, external interest in the sector has been growing. This reflects the fact that development budgets and gross profits for best-selling games often dwarf those of most Hollywood blockbusters – Rockstar's 'Grand Theft Auto V' grossed an eye-watering $6 billion from a budget of $265 million.
More people play video games today than ever before, with technology behind both improvements in gameplay and increased accessibility. The sub-culture to gaming has grown too. As each new hotly-anticipated title is released, a plethora of official, and unofficial, YouTube and Twitch live streams, play-alongs and compilations follow, with countless forums, discussion boards and online hang-outs also opened. This active and engaged gaming community is a ripe market for e-sports developers.
E-sports, is essentially a form of professional sporting competition through the medium of gaming. Competitions can take place anywhere in the world, both online and offline, with the most popular events being held in large arenas with packed crowds. Depending on the game in question, players can compete individually or as part of teams and win substantial cash.
With e-sports continuing to adapt and thrive under the pandemic and receiving unprecedented mainstream media attention, an opportunity opens for sponsors to share the limelight
When the coronavirus pandemic first hit, e-sports was not entirely immune. The prestigious 'Dota 2: The International' tournament which was due to take place in August 2020, in Stockholm, Sweden was cancelled. The popular tournament was last held in Shanghai at the Mercedes-Benz Arena, in front of an 18,000 capacity crowd and with a prize pool of $35m. However, other major e-sports competitions, such as Activision's 'Call of Duty League Championship 2020' took place online. Despite lost ticket sales, gamers at that event were able to play for a total prize pot of $4.6m. Similarly, Blizzard's '2020 Overwatch League' continued online, retained its $5m prize pool and was picked up by mainstream broadcasters and aired on ESPN, Disney and ABC. Other smaller, regional organisations and competitions were able to thrive too.
During the crisis, other sports have been able to embrace e-sports, either for the first time or with an increased emphasis than before, with event organisers arranging alternative e-sports events for real-life sports matches or races that had otherwise to be cancelled or played without crowds in stadia.
The Premier League hosted an online 'ePremier League: Invitational' tournament where current Premier League players, including Liverpool's Trent Alexander Arnold and Manchester City's Raheem Sterling, played 'FIFA 20', competing against one another with matches streamed on YouTube. Similarly, Formula 1also shifted online with drivers such as Jenson Button, George Russell, Lando Norris and Charles Leclerc taking part in a virtual grand prix using the 'F1 2019' game. Both competitions were viewed by millions online. The Premier League's own 'ePremier League' tournament is due to go ahead this year, where professional gamers will initially compete online in the hope of reaching the finals broadcast live on Sky Sports, YouTube and Twitch later in the year.
With e-sports continuing to adapt and thrive under the pandemic and receiving unprecedented mainstream media attention, an opportunity opens for sponsors to share the limelight.
E-sports offers unrivalled flexibility and choice for sponsors. Interested commercial partners can select the endorsements that are the best fit for their own brand objectives. Would-be sponsors can also choose whether to partner with organisations, tournaments, teams or individual players. They can target different regions and select the limits on their endorsements – from single events, to multi-year partnerships. Initial sponsors for e-sports were synonymous with the industry itself, but there is now an emergence of mainstream brands entering the market.
For example, Mercedes-Benz recently announced a partnership with leading esports company, ESL, which includes Mercedes-Benz sponsoring ESL's flagship events taking place across several global markets. McDonald's has also tied in with various organisations, most recently with global organisation Gen.G and Czech organisation Entropiq, in relation to their respective events. Other household names which have also now entered the market recently include Coca-Cola, Pizza Hut, Gillette and DHL.
The e-sports market has been predicted to grow to be worth more than $1.5bn by 2023. With coronavirus restrictions still in place in many countries, there remains uncertainty in the traditional sports sponsorship market. Sponsors should explore whether the diversity in selection that e-sports is able to offer can help them achieve their brand objectives in an ever-changing landscape.
Co-written by Aumair Qayum of Pinsent Masons.
20 Oct 2020