Esports: Don’t get ganked
As American youth watch less TV, brand marketers in technology, cars, fast food, energy drinks and other categories are under pressure to find new ways to engage their target consumers. A compelling alternative is esports. With 21 million U.S. fans, 84 percent of whom are under 35 and 83 percent male, esports is now the third-most popular spectator sport for young men, according to Simmons Research.
Esports has the potential to be an even more powerful branding medium than traditional sports on TV. Fans watch almost an hour a day of live matches on streaming platforms (Twitch, YouTube) and streamers are willing to wear, consume and endorse sponsors’ products during broadcasts. In the last year, brands such as Mercedes-Benz, Coca-Cola, and Arby’s have moved esports from the experimental marketing budget to the core sponsorship lineup.
Still, marketers eager to enter the arena are discovering that the complexity and fragmentation of esports makes it impractical to reach fans through a single league, team or athlete. Brands need to understand the challenges and what it will take to overcome them. Otherwise, like so many unseasoned gamers, those same marketers risk getting ganked. Gank: “In a video game, to use underhanded means to defeat or kill a less experienced opponent.” (OxfordDictionaries.com)
1. Playing is not watching
With 211 million gamers in the U.S. (EEDAR research, September 2018), playing video games is hugely popular. Yet only 37 percent of those who play competitive video games at least once a week also watch esports weekly, according to McKinsey’s proprietary survey of 383 U.S. esports fans (December 2018, men ages 18-49).
2. Too many game titles
There are currently esports leagues and competitions for over 30 game titles, with frequent shifts: “Fortnite” and “PUBG” are two of the top five esports in terms of Twitch hours watched in 2018, and neither existed until March 2017. This year, “Apex Legends” reached 50 million players in its first four weeks. No esports organization fields teams for all the titles. Players rarely compete in more than one title, and therefore a sponsored athlete reaches only a small segment of fans.
3. The most popular streamers are not esports pros
The most popular individual esports events are still the major team competitions, such as the League of Legends World Championship, which had 20 million average viewers for the final match between China’s Invictus and Europe’s Fnatic in 2018 (Riot Games, “2018 Events by the Numbers,” from Dot Esports, December 2018). Pro competitions, though, constitute just 11 percent of video game streaming. Seven of the top 10 Twitch channels for 2018 were the personal channels of video game streamers, only two of whom are currently members of pro teams.
4. No esports organization is globally dominant, and most have out-of-market fans
Sponsors will find that at least 30 percent of esports viewers are from outside the team’s home country, which leads to wasted impressions. Several esports leagues, such as Overwatch League and NBA 2K League, have created city-based franchises to tap into fans’ hometown passion (and local sponsorship budgets). Nonetheless, these franchises report that so far around 80 percent of viewers are outside the home metro area.
5. Measurement is imprecise
Twitch and YouTube now report unique viewers and average audience for esports. However, we still can’t segment esports viewers: How many are in the U.S.? Male? How many watch less than an hour per week vs 10-plus hours? As with other forms of digital advertising, brands also have concerns about ad viewability, bots and fake accounts, and targeting.
6. Most esports fans are also fans of traditional sports
There is a mistaken perception among many sports marketers that esports fans are completely separate from traditional sports fans. Only 13 percent of U.S. esports fans in our survey said that “esports is the only sport I watch.”
7. Sports video games are secondary esports
NBA, NFL and MLB owners see the potential to activate sponsors and fans across real-world and virtual teams. However, none of the top 10 video games in 2018 were sports-based, and those who play only sports-based video games are less likely to watch esports. For marketers, reaching esports fans requires association with combat-oriented games, which presents brand risks.
Esports will be thwarted by fragmentation and opacity, unless the industry takes concerted action:
■ Activate consistently. Esports organizations can solve the efficient reach problem for sponsors by activating under the same team name across multiple leagues and titles. But they must beef up their marketing and analytics talent.
■ Lock in the streamers. There is natural synergy between streamers and the esports teams — they can cross-promote, make joint appearances and deliver better engagement than platforms and better market coverage than leagues. But teams are in a battle with agencies for the top streamers.
■ Get face to face. Live esports events have proved immensely popular, and sponsors value in-person much more than digital engagement.
■ Improve audience measurement. The major streaming platforms should enable marketers to cap ad frequency and measure unduplicated reach, including sponsorships sold by teams and leagues.
■ Target. Esports is now at an efficient scale for ad targeting, and the industry should enable sponsors to target microsegments of esports fans.
This year promises explosive growth for esports sponsorship, but only if the industry lays the foundation for mainstream brands to succeed.
Dan Singer leads McKinsey & Company’s Global Sports and Gaming Practice. He is also an investor in TSM, an esports organization. Jayson Chi is a senior adviser at McKinsey and an early-stage investor in interactive entertainment, including investments in TSM and Popdog, an esports and streaming agency. Uta Allenstein, Oliver Gediehn, Alex Kimmet, and Daniel Sun of McKinsey & Company contributed valuable data, research and expertise.
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