As esports continues to gain popularity and establish itself as a major form of recreation, many well-known corporations are investing in the industry. Esports presents a singular chance for businesses to interact with a youthful, tech-savvy audience and establish a more meaningful connection with them. Coca-Cola, Nike, Adidas, BMW, and Intel, as well as many more large companies, are among the brands that have made investments in esports. These companies have produced their own esports-related material and activities in addition to sponsoring esports competitions, teams, and athletes.
Esports Shaping the Way Big Business Invest in Gaming
Why does esports attract brands?
Money has long been an integral part of computer games. Even before video games became a global sports discipline, many players made money by pumping other gamers’ accounts for a fee. Now there are specialized companies like SkyCoach for this, where real professionals know by heart the passage of popular games like World of Warcraft, Destiny 2, FIFA, and many others. And if earlier players bought an account upgrade at their own peril and risk, today it is an official and legal service. A team of professional players offers the passage of difficult quests, the purchase of in-game currency, getting cool items, and upgrading accounts, as well as other services. Players use this service to save time and effort. And pro-gamers can earn money by mixing their favorite pastime with a high-paying job. And this growing popularity is one of the reasons why brands are investing in esports.
In this sector, there is a youthful audience that marketers often find challenging to connect with through other means and develop traditional marketing communication. It’s crucial for companies to have time to win over the millions of members of the so-called “digital” generation who are (not just, but mostly) starting to accumulate wealth.
CS:GO esports matches scored 448.4 million hours watched in 2022, which is 8.5% more than in 2021. The grand final of the most popular CS:GO PGL Major Antwerp 2022 tournament was simultaneously watched by 2.1 million viewers.
A huge number of world-famous brands have already entered this market. Among them are mainly those whose products are somehow related to gaming: gaming accessories, monitors, laptops, gaming chairs, video services, mobile operators, sportswear, crypto exchanges, bookmakers, banks, and payment systems. But there are other cases: more and more players appear on the market who, it would seem, are not directly related to the industry, for example, Gillette, Audi, Mercedes, Honda, DHL, etc., but come here precisely for the audience.
What business models exist here?
- Esports organization: as an organization, companies partner with esports organizations to capitalize on marketing opportunities, sponsorships, prize money, Publisher fees, and merch sales
- Tournament operator: Here people can earn on sponsorship, partnership, ticket sales, and merchandise.
- Broadcast studio: many earn sponsorship, partnership, and the sale of rights to the content.
- Streaming: companies can earn sponsorship, partnership, and streaming platform royalties. Brands actively partner with top streamers. There is a popular platform for gamers – Twitch. The most popular streamers with millions of subscribers are dollar multimillionaires. There are cases when developers paid streamers $1 million for several hours of playing, large streamers with an average audience of more than 1 thousand viewers can receive $5 thousand – $30 thousand per month, and top (single) Twitch streamers can bring in $500 thousand monthly.
- Cybersport club/arena: You can earn on the sale of game time, partnerships, and holding BTL. Such a business is often opened as a franchise, the platform allows you to gather a powerful loyal community.
- Own the eSports team: Dota 2 and CS:GO represent some of the most played games and provide some of the highest prize money in the world, with tournaments paying out up to $30 million annually (depending on the discipline).
However, you must make a sizable financial investment in your team and be ready to take risks before you can expect to make money from it. Here, having a solid grasp of the eSports sector is still essential. In any event, it is still less expensive and maybe more hopeful than making your own football “Barcelona.”
Looking at the numbers
According to researchers, the esports industry is comparable to the venture market in that it appears to have a high entrance barrier, but with the right approach, profits may easily outweigh expenses by a factor of many times.
Now eSports is an established industry that is taking over the world: gaming tournaments gather large sports stadiums along with offline concerts of world stars and millions of viewers online. Thanks to advertising, the youth becomes increasingly involved in a new sport aspiring to conquer world tournaments.
Sponsorships were the largest source of revenue in global esports last year, bringing in over $800 million, followed by media rights, followed by merchandise, ticketing, and game developer payouts.
Among the major revenue streams in the industry, the fastest growing are digital and streaming services. The average annual growth rate in 2020-2025 may be +27.2 and +24.8%, respectively.
And the support of e-sports is an excellent image-building variant of CSR: this sport, unlike most others, allows people with disabilities to fully and equally participate in tournaments.
What it all comes down to
Esports is not just about getting paid to play games. It’s also about the sportsmanship that lives in the core of most if not all sports, although in some countries gamers are not yet considered athletes. And, of course, it’s about money. In 2022, global esports generated about $1.38 billion in global revenue, and by 2025, according to Newzoo, the market size will reach almost $1.87 billion, an increase of more than 13% in five years. The global esports audience reached almost 320 million last year and is growing at an average of 8% yearly. Global brands have long understood that they must become a part of this. This is an industry that is developing more and more intensively every year, so we can conclude that the number of brands in it will also grow.
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