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It's game on for e-sports

Industry builds an obsessive fan base that spans the globe. Are marketers ready to play?

We’re talking to a veteran league marketer, who’s got decades of experience at two of the biggest sports properties in the U.S. We tell him about some of the more impressive stats across the e-sports world. How live gaming site Twitch, e-sports’ ESPN, attracts 100 million uniques a month and was bought by Amazon for nearly $1 billion last year, just weeks before Microsoft bought the manufacturer of the popular “Minecraft” video game for $2.5 billion.

We tell our sports league marketing friend how the International Dota 2 Championships played to a sold-out KeyArena in Seattle this year and offered an $18 million prize pool: more than the Masters golf tournament or the Super Bowl. How online audiences for some of the biggest e-sports tournaments, like the League of Legends World Championship Final in Berlin, meet or exceed every traditional sports championship except for the Super Bowl. Or how top pro gamer Felix “PewDiePie” Kjellberg earned $7.4 million last year from his gaming videos alone and how his YouTube channel has 40 million subscribers — more than Katy Perry and Taylor Swift combined.

This year’s International Dota 2 Championships, held in Seattle, offered an $18 million prize pool.
Photo by: Anthony Bolante / Puget Sound Business Journal
“Wait,” our stick-and-ball marketing friend says, pushing aside fuzzy memories of playing Pong on an equally fuzzy 24-inch RCA Victor color TV console. “People really watch other people play video games?”

Yes, they do, live and online.

Among most sports marketers, e-sports are almost unknown. However, among that young male demo sports properties have long relied upon, e-sports are stealing fan loyalty and share of mind. Now even the big boys are beginning to notice.

“Our first reaction was the same as a lot of people: ‘C’mon … really?’” said Tom Brady, vice president of content for the NFL Media Group, “but it’s a legitimate and compelling opportunity. In e-sports and traditional sports, the parallels are shockingly similar; competition is intense and because of improved technology, what’s on the screen is really appealing visually.”

NFL Network recently launched a weekly hourlong show around EA’s popular “Madden” video game that’s airing on the network, NFL.com and Twitch. “We saw arenas like the Staples Center and Madison Square Garden selling out for ‘League of Legends’ tournaments,” Brady said. “That’s very compelling to us.”

Former NFL Network and ESPN CEO Steve Bornstein is a pioneer, bridging the gap between traditional and e-sports. Bornstein was recently named chairman of a new e-sports division at Activision Blizzard, publisher of the wildly popular “Starcraft” and “Call of Duty” titles.

“When I started at ESPN in 1980, I was hoping we’d be successful,” said Bornstein. “Eventually, I knew we’d be successful, but I never imagined the incredible success ESPN had. With e-sports, I know now that we’ll be successful and I think the opportunity is ultimately as big as ESPN has become.”

Demanding attention

“You almost can’t ignore it,” said Matt Kauffman, head of global brand experience, events and sponsorship at Intel, which has titled the global Intel Extreme Masters e-sports competitions since 2006. “The most compelling reasons for any marketer to be involved is that it’s truly global, culturally important to a consumer that’s difficult to target, and it has a growth rate larger than anything else in sports or entertainment.”

For all the incredulity from those within traditional sports, there’s more than one suggestion that your opinion on e-sports depends upon your vantage point.

“It goes both ways,” said the former EA Sports vice president of brand marketing, Chris Erb, now managing partner

E-sports have become a global phenomenon, demonstrated by this enthusiastic crowd at a “League of Legends” event last year in Paris.
Photo by: Getty Images
at Tripleclix, a Burbank, Calif., marketing agency specializing in gaming. “I love baseball, but there are kids that say to me: ‘You’re watching baseball — really?’”

Added e-sports pioneer Jason Lake, CEO of e-sports team compLexity Gaming: “Back when baseball was played on dirt fields and a few guys started to get paid to play, I’m sure my great grandfather’s generation thought that was ludicrous. That’s where we’re at now in e-sports. My parents say to me, ‘You have a law degree and you’re paying kids to play video games?’”

Peter Levin, president of interactive ventures and games for the film studio Lionsgate, has owned teams in the Arena Football League, minor league baseball and the mixed martial arts Strike Force circuit before it was sold to the UFC. Levin recently bought Team 8, an e-sports team, as part of a syndicate that includes Memphis Grizzlies co-owner Steve Kaplan.

“E-sports has all the dynamics everyone considers essential to any sport, including intense competition and venues filled with rabid, screaming fans,” Levin said. “And at a time everyone wants something that reaches around the world, no one can question that e-sports are global.”

No one is suggesting that Intel’s Extreme Masters will surpass the Super Bowl in popularity soon. Still, the money going into e-sports, along with the level of avidity and engagement, are something any mainstream sports marketer would love to have.

What traditional sports want to be

For years, traditional sports have been attempting to layer in social, digital and media extensions with mixed success. In e-sports, that’s taken for granted. Similarly, traditional American sports have been trying for decades to establish beachheads outside of North America. E-sports are already huge in Europe and Asia and are just starting to explode in the U.S. Every broadcast sports rights holder in America is worrying about cord cutting. E-gamers will eliminate ESPN for more bandwidth any time, if they haven’t done so already.

“In a lot of ways, e-sports are what traditional sports want to be,” said Craig Levine, executive vice president, North America, for ESL, which works with more than 60 game titles to produce tournaments and content. “One of the intriguing things about e-sports is how aspirational it is. You don’t have to be 6-3 and 220. My son grew up in this space and he and his friends all truly think they can grow up to be e-sports stars.”

Another e-sports factoid that will make you pause: 40 percent of those watching e-sports aren’t even regular players of the games they are watching. It’s a different and hyper level of engagement, fermented by a mix of the 24-hour buzz of the Internet, the global nature of e-sports and perhaps a can or two of Red Bull.

A snapshot of that world: At 9:30 on a recent Tuesday morning in New York City, Andy Swanson, vice president of e-sports at Twitch, pulled out his smartphone and showed a stream of former “League of Legends” pro Imaqtpie.
Around 18,000 people were watching him practice a game, with some commenting on the accompanying chat stream.

“It’s like seeing LeBron shoot hoops in his gym or the New England Patriots practice,” Swanson said. “Except I am pretty sure the Patriots wouldn’t let you shoot their practice.”

The players have a new and different level of aspiration, which helps explain their addiction to live game play.

“My great insight was that I have two 11-year-old boys, so I could see how remarkable the engagement level is,” said Bornstein. “Fantasy football allowed fans to care about NFL games other than their home team and it’s expanded the fan base exponentially; that’s where we’re headed with this.”

It’s a different breed of fan.

“We all know that we’ll never be as good as the people we’re watching in the NFL,” said Dave Rosenberg, chief strategic officer at GMR, which recently launched an e-sports practice, with clients including Microsoft and Comcast. “These guys playing ‘League of Legends’ or ‘Dota 2’ feel like they can compete with the best, and the digital overlay on all of this means they can watch them and compete on a global level.”

Some estimates say traditional sports generate half of all social media conversation. If you think social media and sports are symbiotic, e-sports is at another level with social streams routinely part of the viewing experience.

Prime time play

“[Gross ratings points] by themselves aren’t enough anymore. At a time when we’re beginning to deal with cord cutters, the single most important factor in the media business now is overall engagement — are they watching, are they sharing, are they commenting on social,” said Craig Barry, Turner executive vice president and chief content officer. Turner is launching an e-sports league next spring with WME-IMG that will air on a yet-unnamed digital platform (possibly Twitch) for five to six hours daily Tuesday through Thursday, culminating in a weekly tournament on TBS Friday nights.

The size and scope of the Turner league has every other sports network looking at the space — if they weren’t

Gamer Felix “PewDiePie” Kjellberg has 40 million YouTube subscribers.
Photo by: Getty Images
already. Consequently, a leading question is whether the nature of e-sports will change by making it a prime-time TV show.

“E-sports has translated wonderfully on places like YouTube and Twitch,” said Morgan Howell, associate creative director at Octagon, which advises brands including Taco Bell on e-sports. “We’re all very curious to see how it translates to cable TV and if all those cord cutters will even have access.”

“Mainstream media adoption of e-sports is a huge validation,” said Twitch’s Swanson. “The challenge is that e-sports has grown up on a digital platform, so the migration has to be done carefully.”

Turner hopes to sell eight, low-seven-figure, category-exclusive packages combining TV and digital advertising, and the Turner Sports-owned Bleacher Report. One of the most interesting things about Turner getting involved is that Turner already has MLB, NBA, NCAA Final Four and PGA rights.

“This is an entirely incremental reach,” promises Seth Ladetsky, senior vice president of sales for Turner Sports Digital, “different demographic, different psychographic.”

Turner said it won’t break for ads in the midst of a game, online or on television. “We can’t be too advertorial — it’s about adding to the experience,” Ladetsky added.

Skeptical gamers

For marketers already frustrated by a millennial audience largely resistant to traditional advertising, e-sports represents an even bigger challenge. Some estimates have North American sponsorships within e-sports at more than $100 million, but it’s an audience that’s skeptical of outsiders.

“This is a very cynical demographic,” advised compLexity Gaming’s Lake, while lauding the marketing efforts of gaming accessories maker HTC, along with social media campaigns from Coke around e-sports. “It can be a minefield.”

In discussing the most appropriate ways for big brands to market within e-sports, the word “authentic” gets bandied about so much, you’d think it was a discussion concerning sports memorabilia.

“You have to prove to gamers that you’re in the space and supporting it,” said Erb, praising efforts by longtime sponsors like Red Bull, which titles the Battlegrounds tournament, and Intel, one of e-sports’ most tenured corporate supporters.

“You’ll get sniffed out in a moment if you try to hawk something to this audience that’s not relevant,” said Intel’s Kauffman.

Examples of appropriate marketing efforts were Mars’ recent porting of its “You’re not you when you’re hungry” campaign to the gaming community online at Twitch, via BBDO, New York. Keeping things endemic, mobile gaming specialist WGT Media includes branded flags and branded tee markers on the golf courses in its virtual golf games. Another example was from Wieden & Kennedy for Procter & Gamble’s Old Spice brand, which this year allowed gamers using Twitch to control the actions of a man dropped in a forest for three days.

“This is a skeptical audience that grew up on the Internet with ad-blocking software,” said Octagon’s Howell. “To get their attention, you have to be a brand that makes their experience better.”

The most consistent concern from marketers was whether e-sports was a fad, echoing the rise and fall of televised poker a few years back. “It might skew a little young for what we are selling,” said Chris Lee, senior brand partnerships manager with Esurance, “but I’m really more concerned about its longevity.”

Answered GMR’s Rosenberg: “Gaming is more broad than poker was, the audience is better and you get a youth audience and tech savviness that [televised] poker never had. This is here to stay — in whatever form.”

No NGB

The power structure of e-sports is disjointed at best, with a loose confederation of game publishers, teams and event organizers. The lack of a league or some sort of national governing body makes all sorts of things difficult; there isn’t even unanimity of opinion on how to spell e-sports.

“There needs to be some connections between publishers, teams and tourneys, now it’s all very loose,” said former MLS sales executive John Lane, who sold for Major League Gaming for almost six years. “Game publishers don’t want to be the league; they want to sell their games.”

Others feel that e-sports and its players are a disjointed community by nature and will remain so. Either way, it will take greater recognition by old-school marketers for sponsorship dollars to start flowing from your father’s sports to e-sports.

“We can talk about how large and compelling this audience is and how half the people in America will be mobile gamers this year, but getting over that hump of getting people to commit serious dollars to a video game sponsorship has been challenging,” said Lincoln Silver, WGT Media vice president of business development. “Too often we’re pitching a brand guy or an agency that are old enough that they’ve never heard of this stuff.”



Making the Investment

Thinking of investing in the burgeoning e-sports space? Better move quickly.

Much like the paid fantasy sports business, much of the smart money in sports, media and even the agencies servicing them has already taken positions in e-sports.

While it wasn’t vetted on “Shark Tank,” Dallas Mavericks owner Mark Cuban was an early-round investor in Unikrn, which is designing a system for wagering on e-sports.

Investors in Skillz, a mobile gaming company, include Milwaukee Bucks co-owner Marc Lasry and New England Patriots owner Robert Kraft’s The Kraft Group. A syndicate that included Memphis Grizzlies co-owner Steve Kaplan recently purchased an e-sports team known as Team 8.

St. Louis Rams offensive lineman Rodger Saffold bought into e-sports team Rise Nation Gaming in 2013. Houston Rockets general manager Daryl Morey is on the board of Major League Gaming.

In the embryonic world of e-sports paid fantasy, startup Vulcun has funding from CAA, while competitor AlphaDraft has an investment from CAA archrival WME.

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