Group Created with Sketch.
Volume 21 No. 26

Esports

State Farm has become the first NBA partner to sign a separate deal to sponsor the new NBA 2K League, also making it the first non-endemic brand to sign league-level deals with three major esports properties.

 

“It’s clearly an opportunity to complement our traditional sports opportunities, because the fan of esports is not always a stick-and-ball sports fan,” said Ed Gold, State Farm advertising director. “At the same time, the demographics are significantly younger than most of the traditional sports, which is certainly appealing to a brand that wants to reach a younger audience.”

State Farm is the first non-endemic sponsor of the NBA 2K League, which had already signed deals with four gaming hardware suppliers.

NBA 2K League sponsors

Intel

Dell Alienware

HyperX

Scuf Gaming

State Farm

In January, State Farm became the first sponsor of the reconstituted North American League Championship Series, run by Riot Games, and then in March signed on for the fifth season of the Rocket League Championship Series, run by Psyonix.

In the NBA 2K League deal, State Farm gets virtual courtside signage during the next two regular-season tournaments and the NBA 2K League finals in August. It also gets presenting rights to pregame segments on the Twitch broadcasts called “Game Mode,” which feature players sharing strategy and insights from their games. The videos also will be distributed on league social channels and on a weekly feature at nba2kleague.com.

Despite its provenance within a respected major sports league and the popularity of the 2K series among casual gamers, the 2K League has faced doubts about the market’s interest in a basketball simulation as a spectator property.

Gold acknowledged the 2K League is a “learning experience.” Financial terms and the duration of the 2K deal were not disclosed, though Brendan Donohue, NBA 2K League managing director, said the vast majority of its deals cover multiple years. One industry source said 2K League deals were priced in the mid-to-high six figures.

“I think that we’re all going to learn whether players of console games will become fans of the esports leagues that utilize that game,” Gold said. “I think it’s a learning experience for all of us: game makers, leagues, teams, partners, everybody.”

In its first two weeks, 2K League viewership on Twitch peaked at 13,703 on its May 1 opening night, then gradually fell off into the high four figures by the finals of the tipoff tournament and the first week of regular play, according to The Esports Observer Audience Insights. By comparison, peak daily viewership during Overwatch League action ranged from 126,000 to 203,000 in the same window.

Donohue said the league is happy with its viewership, calling it “pretty close to what we expected.”

State Farm joins Intel, Dell Alienware, HyperX and Scuf Gaming in the NBA 2K League’s sponsor portfolio.

ReKT Global is State Farm’s esports agency of record. CEO Dave Bialek, who is credited with bringing the idea of buying advertising space on basketball hoop stanchions to State Farm in the 2000s, advised on the deal.

For more coverage of the business of esports, visit our partners, esportsobserver.com

Activision Blizzard is shopping additional media rights and major apparel and licensing deals for the Overwatch League.

 

Twitch is just five months into a two-year, $90 million exclusive streaming deal that covers the globe except for China, home to its largest fan base outside the U.S. by a wide margin. In China, two of the three streaming partnerships are one-year deals, meaning executives are already back in market.

Brandon Snow, new Activision Blizzard esports chief revenue officer who was recently hired away from the NBA, said being able to return to the massive Chinese market with actual viewership data from the first four months of the season will drive up prices.

“I would say that we see substantial growth in the media rights and distribution of our games,” said Snow, who spent two years in Beijing developing the NBA’s Chinese business. “When we think of the game growing, we’ve got 43 million people playing this, with over half that audience being outside the U.S., and a lot of that coming from China. The ability to distribute our league and games in those markets has a lot of upside beyond where we currently are.”

Snow would not speculate on what those deals would be worth, but two league sources believe new China deals could draw well into the eight figures annually. Prices were never disclosed for the initial round of Chinese rights, but sources said they were not major revenue drivers compared to the Twitch deal.

Executives of the esports property are back in the market for streaming partnerships in China.

Activision Blizzard also is targeting Chinese markets in its goal of selling six expansion franchises in the Overwatch League. Today, the Shanghai Dragons, owned by Overwatch distributor NetEase, is the only Chinese-based team in the league. The Dragons are 0-30 in Overwatch League play.

NetEase’s streaming platform also has media rights in China, along with ZhanQi TV and Panda TV. The latter two are the one-year deals. Snow said Activision Blizzard has “a lot of flexibility” about how to structure its distribution in China.

“Any other relationships we may add through the franchise-based approach will help kind of shape that,” Snow said. “But the demand is there, it’s just a matter of putting it together the right way based on our business.”

Snow said the Overwatch League also is pursuing linear TV deals elsewhere for shoulder programming and feature content not covered by the Twitch deal.

Separately, Activision Blizzard also has been searching for help building an apparel and licensing business.

The league issued an RFP for a licensed merchandise partner at some point in the last few months, sources said. The initial respondents blanched at the terms, sources said, but Activision Blizzard reworked the terms and discussions are continuing. Legends and Fanatics are among those involved.

There’s also a hunt underway for an apparel sponsor/licensee, and talks have included traditional athletic apparel brands and others less familiar to the sports industry, Snow said. Activision Blizzard wants a company eager to re-imagine the entire concept of esports competition and lifestyle wear, he said.

“One of the things we’re very excited about is redefining what esports wear actually is,” Snow said. “To me, I don’t understand why the industry defaulted to just soccer jerseys as what the athletes wear. So the leadership position we have with Overwatch League, and what we are as a global footprint, allows the opportunity to maybe reset what that looks like.”

Teams believe there is serious unmet demand for team- and game-branded merchandise, but diversity of products and inventory management have been difficult with Activision Blizzard handling it in-house so far, one source said.

For more coverage of the business of esports, visit our partners, esportsobserver.com