eSports IQ, Marketing
'Following the Money in eSports' and more insights

eSports IQ week 21: ‘Following the Money in eSports’ and more insights

This week the ‘eSports IQ by Alex Fletcher‘ features the following content: ELEAGUE needs cause marketing ; Following the Money in eSports.

ELEAGUE needs cause marketing

Last week brought announcement of Turner Sports’ partnership with leading online streaming platform, Twitch, to deliver live and on-demand content for the upcoming ELEAGUE. The fact that ELEAGUE, an eSports league for pro teams in the popular Counter Strike Global Offensive (CSGO) video game title, will be broadcast on linear TV and digitally comes as little surprise, given that the vast majority of eSports audiences are digital natives. However, the challenge lies in enticing viewers to consistently tune into the TV broadcasts, each Friday at 10pm; especially given the digital content load available on Twitch throughout the week. For more mainstream audiences, ELEAGUE needs to establish context that will generate significant interest past temporary curiosity. To do so, Turner must leverage create touchpoints with crowds outside the world of eSports.

Counter Strike Global Offensive (CS:GO) is a first-person shooter (FPS) video game title where players compete on teams to complete objectives and eliminate the enemy team. Due to a combat backdrop involving terrorists, weapons and death, the Entertainment Software Rating Board (ESRB) gave CSGO a Mature Audience label for its depiction of blood and intense violence; a reality that has concerned some prospective sponsors. On the other hand, the various themes do hold context for a large segment of prospective viewers across the United States, ELEAGUE’s TV broadcast home: Military service men and women. While it’s critical for Turner to shy away from overt political/ideological affiliation, sports leagues have successfully managed to create relationships with the armed services, e.g. the National Football League’s (NFL) Salute to Service. And as of 2014, there were 21.8 million veterans of the U.S. armed forces, so this is no small segment.

Since ELEAGUE’s TV broadcast will be US-based, Turner has an invaluable opportunity to develop creative cause marketing activations, involving the country’s service men and women, something which will create context for non-gamers to consider tuning into TV broadcasts. This could be as simple as personal interest stories which have an armed service theme or as involved as donations, based on the outcome of matches, to deserving charities. Anything that draws attention to notable causes and the people behind them, courtesy of ELEAGUE, is a powerful tool for growing interest in competitive video games. Unlike traditional sports, which can rely on a high degree of acceptance by the wider culture, eSports needs to give larger audiences a reason to care. These, and similar, marketing tactics will help bring a game like CSGO into the lives of more than just its immediate community, while also humanizing its role in larger society.

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Following the Money in eSports

This week brought rumors of a $500 million deal between ESPN and Riot Games to broadcast League of Legends Championship Series (LCS); followed by both sides going on record denying the talks. While both Riot and ESPN have gone on record denying the talks and the original story contains some general reporting faux paus, the rumors raise some interesting questions about the dynamics of eSports ecosystems. Simply put, if ESPN, or any other media outlet, decides to purchase exclusive broadcast rights, how would the inflow of revenue affect the overall health and viability of the competitive scene?

Where does the money flow?

In professional sports, leagues function as an alliance for the interests of member teams. Revenues from the sale of league rights flow back into the coffers of its clubs through apportioned revenue distribution. In the case of the rumored ESPN deal, the $500 million would represent a massive influx for Riot, and majority owner Tencent, but would not flow impartially to the LCS teams who compose the backbone of the eSport product. A look at the general flow of money in eSports ecosystems, the LCS and otherwise, illustrates exactly why (see diagram below):

follow_the_money

The assumption that sale of broadcast rights would be a net plus for the entire ecosystem doesn’t quite prove sound, upon close examination. The absence of structured, e.g. legally agreed upon and collectively bargained, revenue sharing between tournament organizers and game publishers behind various leagues, and the teams, which compose them, does not bode well for equitable distribution of, what could turn out to be, significant sums of money.

The question isn’t if funds will make their way to teams, and their players, because they will. Instead, as eSports evolves out of current role as marketing channel for game publishers and line of business for tournament organizers, into a standalone ecosystem, how the revenue pie is divided becomes incredibly crucial. Without precedent of revenue sharing, and given the nascent state of most eSports team organizations, plus lack of player unionization, the balance of power is a major issue for sustainability.

What about the teams?

Obviously, team organizations in eSports can and do generate revenue. After all, it costs money to compete at the highest levels in competitive video games. And recently, for teams in the LCS, the entry of private investment has increased the value of teams. According to, Andrey “Reynad” Yanyuk, owner of a competitive organization eyeing entrance into Riot’s eSports league, “To buy an LCS spot plus a roster and everything was going to cost me $1.5 million.”

This is no small sum, but keep in mind that eSports is bigger than just the LCS. The overwhelming majority of gaming organizations do not have an LCS spot, which puts onus on being able to monetize through other channels. Yet, a close look at the general structure of eSports teams reveals gaps in revenue generation opportunities (see diagram below).

org_models

Unlike traditional sports, where teams benefit greatly from media revenues, ticketing, talent sale, and other mature commercial opportunities, eSports runs primarily on sponsorship fuel. Why is this relevant? Well, these teams are currently walled off from a rising tide of revenue which will stem from the media rights marketplace, over the next 12 to 24 months. A startling fact, considering the role that teams and players play, as the lifeblood of competitive video games, which, along with fans and enthusiasts, is the very core of the eSports phenomenon.

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About ‘eSports IQ’

The ‘eSports IQ’ is compiled by Alex Fletcher, the founder and president of Entiva Group, LLC, and features insights on the latest emerging trends in eSports. By curating invaluable content from a wide range of information sources you get the leading edge in the business of eSports.

Past eSports IQs:

Image source: eslgaming.com, Photographer: Adela Sznajder

One Comment


  1. Patrick Mahony

    May 31, 2016 at 3:22 pm

    Very interesting overview of the esports ecosystem and the money flow in this new entertainment market. Don’t forget that eSports does reach tens of milions of people on a regular basis and like others sports the main contributions comes from fans and brands.

    Reply

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This blog is published by the ENPE Media GmbH, a German marketing and event agency located in Cologne, which focuses on conception, realization and supervision of events and marketing campaigns in eSports.

On this blog we cover marketing-relevant content within the eSports market. Additionally we introduce newcomers to the potentials, structures, risks and features of the eSports market.

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