Category: Esports

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When people think of American esports, Los Angeles is often the first city that comes to mind. The proximity to multiple game studios, universities and the entertainment industry make it a natural fit to serve as America’s esports capital. Surprising many, the biggest esports hub outside of LA is the Dallas area. Team Envy and Complexity call Dallas home, as do multiple professional service companies. Nearby Arlington is home to Esports Stadium Arlington, the largest esports-focused facility in the United States. 

 

While admittedly a bit biased,  KemperLesnik believes Chicago is set to become the next big esports hub. We’re welcoming our first franchised team, Call of Duty’s Chicago Huntsmen, this year, and Chicago offers a central location with access to top schools and a growing community of innovators. This prime location makes it ideal for esports growth and events, such as ESL’s 2019 Intel Extreme Masters for Counterstrike: Global Offensive held at the United Center or the League of Legends 2016 World Championship Quarter Finals held at the Chicago Theatre. We think things are just getting started for the Windy City!

 

Innovation Hub

Chicago is home to many innovators, in startups as well as esports. Robert Morris University was the first school in the nation to offer an esports scholarship back in 2014. Collegiate esports has grow to the point that in 2019, $15 million was offered in esports scholarships across the country, with no signs of slowing down. Multiple universities have started to offer courses and build facilities to host esports events, including Division 1 schools such as Marquette University. Multiple esports stars got their start in Chicago as well, including Ninja (Fortnite), Nadeshot (100 Thieves) and Hector Rodriguez (Optic Gaming, NRG).

 

There are also multiple gaming and esports companies headquartered in Chicago. Ignite Gaming Lounge, a pay by the hour gaming lounge, features locations in Skokie and Chicago. Lightstream, a supplemental service for streaming platforms like Twitch, and NetherRealm Studio, who works on Mortal Kombat, both operate out of Chicago as well. 

 

This innovative nature extends beyond esports into the broader tech community. 1871, Chicago’s top business incubator, is considered the best in the country, and among the best in the world. The State of Illinois awards the second-largest  amount of computer science degrees in the US, placing only behind California. Many Illinois STEM graduates are now electing to stay in Illinois as well, with graduates 4.5 times more likely to stay in Illinois than go to San Francisco, the second top location. STEM students make up over half of those participating in their college’s esports programs, according to a study done by Midgame, an esports analytics company. 

The STEM students of today will become the biggest esports fans of tomorrow. As Chicago grows as a hub for innovation and the demand for talented STEM workers grows, so too will the demand for local entertainment. 

 

Schools

Chicago offers proximity to multiple colleges and universities, providing ample opportunity for company partnerships for developers, teams and professional services. Robert Morris is the obvious example, thanks to its successful esports program, but there are numerous schools teeming with esports talent, as well as potential fans. 

 

Universities like Northwestern and the University of Chicago are considered some of the best in the nation, while DePaul University, Columbia College Chicago and Loyola all feature popular entrepreneurial programs. In 2018, DePaul University entered the esports space with multiple lounges across its two campuses. The Blue Demons also have a Rocket League team that recently won the EGF Big East Invitational, proving that DePaul Esports can compete on a high level. Only a few hours away is the University of Illinois Urbana-Champaign, not only one of the best engineering schools in the country, but home to one of the best collegiate League of Legends teams.

Esports in higher education cascades into the high school level in Chicago as well, with a robust competitive system and state-level governing body, IHSEA. Ben Bruce, a local high school esports coach for Barrington High School, a school in the northwestern suburbs, notes growth within his school’s program as well as the number of schools competing. “This is only the second year of our program at BHS, but our numbers have grown since last year. I see new schools starting programs, and have been reached out to often by other high schools for guidance. High school esports is growing rapidly in Illinois.” These high schools often compete in tournaments hosted by Robert Morris University, and will even travel out of state for events. 

 

Location

Chicago serves as a hub for the entire Midwest. O’Hare International Airport is the country’s busiest airport and many train lines and roads converge in Chicago. Thanks to these numerous and convenient travel options, the city serves as a focal point for not only the Midwest, but the entire country. As more esports events pop up, Chicago will grow to become the ideal location for Midwest esports events, and also a central location for both national and international events.

 

Chicago’s location is also convenient due to the many food and beverage companies located within the city and surrounding region. Esports has proven to be a successful way to connect with an increasingly hard to reach audience of young people. F&B is an ideal esports sponsor, and with multiple F&B companies headquartered in Chicago, esports enterprises will be able to easily connect with potential sponsors directly.

 

Wrigley, makers of DoubleMint, Juicy Fruit and more, is often the first Chicago-based company that comes to mind thanks to Wrigley Field. However, many other food companies call Chicago home. McDonald’s, Kraft-Heinz and ConAgra are all headquartered in the Chicago area. GrubHub, one of Chicago’s tech darlings, sponsors esports team TSM.

 

Moving Forward

With multiple events coming to Chicago in 2020, including two possible Call of Duty events and IEM Chicago, more attention will come to the Windy City as the next big thing in esports. More events will welcome more sponsors and more demand for Chicago esports, encouraging more schools to invest in esports and more teams to participate in Chicago. With all of these changes, the KemperLesnik esports team looks forward to being part of the growing Chicago esports movement!

To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

 

2019 has been quite the year for esports. From a record breaking prize pool of  $34 million for the Dota 2 International, the announcement of a Call of Duty franchised league and massive investments into esports companies around the world, esports continues to see massive growth. This year followed up on 2018’s breakout year of Fortnite, when Ninja became a household name thanks to streaming online with Drake, Travis Scott and more. People are more familiar with esports now than ever before, and are starting to take gaming celebrities seriously. Here’s a list of the top three esports trends of 2019, and where that will bring the industry in the new decade.

 

Esports Becomes a Lifestyle 

For decades, gaming has been seen as the activity of the antisocial. Stereotypes depict gamers as basement dwelling, junk food consuming, antisocial young men. The reality is that gaming is a cultural staple for the vast majority of today’s youth, not to mention vast swathes of older generations – the first Super Mario Bros was released in 1985. Gaming is increasingly part of everyone’s lives – all ages, genders and beliefs. 

 

For the better part of a decade, esports organizations such as FaZe Clan and Optic Gaming have built content around their lives as gamers. Not only were these guys great gamers, they were also cool to be around. Young people across America idolized the likes of FaZe Banks and Hector Rodriguez, they were top players as well as great personalities. Supported by content that brought fans into an inner circle, these top gamers were emulated much like professional athletes. Imagine if Michael Jordan released vlogs every week when he was at the top of his game, discussing how he’s playing, his personal life and his favorite food, music and more.

 

FaZe Banks engages fans with stories from his life

 

This type of lifestyle content has started to build a culture of its own, with its own values, jokes and even fashion. Fans buy apparel from esports orgs and streamers to be part of something bigger, similar to how one buys merchandise at concerts or to support their favorite sports team. Much like how skateboarding was an underground phenomenon that eventually hit mainstream fashion (Vans, Supreme, Santa Cruz), 2019 has been the year of esports apparel drops. In five minutes, 100 Thieves sold $500,000 worth of clothing in an exclusive release. FaZe Clan’s New York pop up shop had to be shut down due to massive lines. 

 

100 Thieves has taken apparel a step further. In July, the esports organization raised a $35 million Series B and announced it would be opening up a storefront in Los Angeles. The world of esports is hitting retail and traditional brands are taking notice. Sportswear brands such as Champion, Adidas and Nike have all released esports lines in partnership with esports teams and players. Not only available online, shoppers can find this esports influenced sports apparel across the country. League of Legends LCS jerseys are sold in Walmart. Being a gamer, formerly a taboo, is finally cool.

100 Thieves creates streetwear inspired esports apparel

 

Livestreamers Sign Exclusivity Deals

Tyler “Ninja” Blevins, the biggest household name in gaming, made waves in August when he announced he was leaving Amazon’s streaming platform Twitch for Microsoft’s Mixer. As one of Twitch’s top performers, Ninja made thousands a month from his subscribers (more on that here) and thousands more from deals with Red Bull and other sponsors.

 

Long the market leader, Twitch is the go-to platform for watching live gaming content, such as esports tournaments, but also streamers like Ninja and others. In Q2 2019, over 72% of livestreamed hours were watched on the platform, eclipsing YouTube, Facebook and Mixer. 

Twitch dominates the livestreaming space

While Ninja’s departure to Mixer has not appeared to have made significant impact on Mixer’s viewership share, this hasn’t stopped platforms from signing streamers away from Twitch. Mixer has gone on to sign shroud and FaZe EwOk, YouTube has signed Courage and Facebook acquired both Mkleo and DisguisedToast. Protecting itself from bleeding more streamers, Twitch recently signed deals with top streamers already on Twitch, as well as signing away a few from other platforms. Similar to the “streaming wars” between Netflix, Disney and more, these platforms look to draw viewers by having the best content. 

 

As we’ve written about previously, streamers serve as taste makers and influencers among the gaming community. If a streamer tries a new game out on stream, their audience may be more inclined to buy it. Similarly, if a streamer declares a game to be boring, or “not cool”, the game may be doomed to fade away into obscurity. Apex Legends notably used a streamer centered strategy to promote its release in early 2019 and was downloaded over 50 million times in its first month. 

 

By using streamers to highlight new features of the platform, each company looks to differentiate itself in the streaming marketplace. In the future, we will likely see more integration between the platforms and their parent companies. Amazon will provide Twitch users with bonuses on Amazon Prime and for the games they develop. YouTube may integrate with Google Stadia and Facebook can offer support through Instagram, Whatsapp and Oculus VR. Microsoft, a longstanding member of the gaming community, can use Mixer to show off XBOX as well as exclusive games such as Halo, one of the largest franchises in gaming. 

 

Esports Finally Goes Mainstream

Now that gaming is officially cool, the mainstream media has started to cover the space with more depth. Multiple esports stars have appeared on The Tonight Show with Jimmy Fallon, including Ninja, Fortnite World Cup Winner Bugha and players from the San Francisco Shock, the winners of this year’s Overwatch League Finals. Dr. Disrespect also appeared on Jimmy Kimmel and the League of Legends World Championship was parodied on Saturday Night Live. Esports has also appeared on shows like Ballers, and esports television shows are currently in development.

Ninja appears on Jimmy Fallon

With this coverage comes a need to educate the mainstream about the space. One of the most common mistakes by the media is the use of “e-sports” or “eSports” when referring to esports. This has gone so far as shirts have been made mocking those that use these terms – it’s a telltale sign that someone isn’t familiar with esports. 

 

Because the space is so new, it’s often met with criticism when first encountered by mainstream journalists, particularly those from traditional sports. People will declare that esports “aren’t sports” and immediately dismiss an entire industry. An entire industry that is expected to reach $1 billion by the end of this year, and has taken plenty of investment from athletes like Michael Jordan and Rick Fox, as well as notable sports companies such as Kroenke Entertainment and the Kraft Group.

 

Over time, this misunderstanding of the industry will fade away. The lines between esports and the mainstream have already started to blur, as esports stars become celebrities, and celebrities try their hand at esports and streaming. Several rappers, including Lil Yachty, Post Malone and Offset have streamed themselves gaming. Football player Juju Smith Schuster reportedly earned $100,000 streaming himself watching a football game, and has appeared at Fortnite Pro-Am events. Gaming and esports will soon be viewed in the same light as film, music and sports, with those at the top as mainstream celebrities, not just personalities of the gaming world. 

 

What’s Next?

In 2020, we can expect gaming and esports stars to have a bigger influence on all things pop culture, be it apparel, food, movies and more. Celebrities, wanting to capture the same magic, will start streaming, with mixed success. Those that have always gamed, and know how to leverage the unique engagement that live streaming provides, will flourish and extend their personal brands. Those that stream but don’t take it seriously will flop and be seen as fake. 

As we’ve covered previously, brands must be authentic to succeed in esports. Many brands have taken this to mean going all out with messaging claiming that they support gamers and always have. This approach often falls flat. The esports audience will quickly dismiss any brand that comes off as ingenuine. A better approach is that of Mastercard’s. By approaching esports the same way as it does traditional sports, Mastercard has successfully become an “uncool” esports brand. By focusing on its values and what those values mean to esports fans, Mastercard has gotten in on the ground floor of the next big thing in entertainment.

To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

This article is the sixth in a series designed to educate on the many parts of the esports ecosystem. This article will cover esports fans. For the fifth article, covering game developers, click here. To start at the beginning of this series, with esports platforms, click here. 

Brands are struggling to find ways to connect with their target customers. Less people are watching live television, particularly younger viewers. As Millennials and Gen Z enter the workforce and become the biggest share of spending, brands have turned to esports as a way to resonate with their increasingly hard to reach target market. This article will cover who watches esports, the motivations behind esports fandom and how brands can connect with esports fans.

 

Who Watches Esports?

There is no “one size fits all” esports fan. Some only watch one game or genre, while others will follow an esports team such as Cloud 9 in any game they compete in. On average, fans follow two esport games, while the esports ecosystem consists of over a dozen titles. Twitch reports its average esports fan is 27, yet 63% of Fortnite players (over 18) are between the ages of 18-24. While esports vary drastically, there’s one thing for certain – esports fans are digital natives. According to a report by Goldman Sachs, 80% of esports are watched digitally on platforms such as Twitch and YouTube. This is in direct contrast to sports fans, where only 20% of fans watch digitally. 

This high share of digital viewership ties directly into cord cutters and cord nevers, those who have cancelled cable subscriptions and those who’ve never had one. Variety reports that by the end of 2019, 34% of American households won’t have a traditional TV subscription. Esports fans not only avoid traditional mediums of entertainment, they also eschew traditional entertainment. A Newzoo report indicates that baseball, America’s pastime, is just as popular among men aged 21-34 as esports. Esports reflects a larger trend of people moving to digital and the decline in once popular entertainment such as baseball.

source: Newzoo

 

With an estimated 20 million American esports fans, other traditional sports are not faring much better. Roughly 55% of esports fans don’t watch the NFL and 50% don’t watch the NBA, according to Newzoo. It’s not that esports fans are disinterested in competition in general, esports is resonating with a new market in a familiar way. The same community based, competitive engagement that has driven sports fandom for years has finally taken hold in an underserved market. 

 

Motivation to Watch

Esports fans tune in to competitions for a variety of reasons. Many have a favorite team or player. Often, if a team’s brand resonates with a fan in one game, it transfers over to other games. As an example, a fan of Cloud 9’s League of Legends team is more likely to support Cloud 9’s teams in other games, such as Fortnite or Counterstrike. Fans may also follow a certain player, such as League of Legends star Doublelift, to whatever team he is on. Counter Logic Gaming (CLG), the team where Doublelift got his start, lost many fans when he left for Team SoloMid (TSM), and this repeated when he left for his current team, Team Liquid.

 

Fans support teams and players based on personality and skill. A viewer may feel a connection to 100 Thieves based on their brand’s personality – a mixture of fashion, music and more, that cultivates in a fandom more similar to a lifestyle brand than a sports team. Others will support Team Liquid for being the most dominant League of Legends team in North America, or for Cloud 9’s history of investing in the next generation of esports talent. Once an esports team successfully turns a viewer into a fan, the reward can be immense. Puma’s sponsorship of Cloud 9 generated 73% positive sentiment on social media, 700% higher than the sports norm.

Midgame, an esports performance analytics platform, conducted a survey of college students involved in esports at their schools. More than half of college students that participated in their school’s esports club/program were studying STEM fields. Students also cited the ability to compete and represent their school and the community as key reasons they enjoyed their esports program. Despite being a different medium, esports resonates with students in a way quite similar to traditional sports. At the core of esports fandom is community, competition and aspiration, just like in basketball, football or any other sport. 

 

Brands

To tap into esports fandom, brands must assess their strengths and weaknesses. Mastercard, who sponsors global League of Legends events, has done an excellent job knowing who they are. As Brian Lancey, VP and global head of sponsorships said, “We’re a financial institution … we’re not a Nike, we’re not a Red Bull — we’re not a really cool brand.” Mastercard hasn’t tried to change its branding or messaging in order to appease esports fans. By handing out gifts to top League of Legends influencers, and being transparent about its advertising, Mastercard found more success in its five day campaign for World’s 2018 than it’s had for some five week long campaigns. The brand’s approach is no different than their approach to traditional sports. Lancey further explains, “If you think about esports no differently than you do sports as a whole, then the model works.” 

 

The same holds true for brands such as Puma. The athletic apparel brand’s messaging, success in performance and increase in ability, holds just as true in sports as it does esports. Wendy’s, a brand notorious for its sarcastic, hilarious online presence activated within esports by broadcasting itself on Twitch destroying restaurants in Fortnite. By keeping true to its brand values, and not changing itself for esports (which fans will spot a mile away), brands will earn the trust of esports fans and tap into the rapidly growing market. 

 

In order to succeed in esports, a brand must understand that esports fans are not all the same. Each game has its own culture and values that don’t always transfer to other games. If a brand maintains its core messaging and is transparent with its advertising, it can bring value to esports fans. By treating the audience just like any other audience and avoiding blatant pandering, a brand can establish itself in esports early, and reap the benefits for years to come. 

 

To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

 

This article is the fifth in a series designed to educate on the many parts of the esports ecosystem. This article will cover game developers. For the fourth article, covering streamers, click here. To start at the beginning of this series, with esports platforms, click here. 

Esports would be nothing without its games, and its games would be nothing without developers. Game developers are the companies that develop and create the video games played in esports competitions. This article will discuss major esports developers and their role in the esports ecosystem.  Game developers, also known as studios, vary widely in size based on the kinds of games they make. Most popular esports titles are made by larger studios. Some, such as Activision Blizzard (Call of Duty, Overwatch), are publicly traded. 

 

The current model for most esports developers revolves around the “games as a service” model. Most games are free, and feature in game purchases in order to generate revenue. The majority of these purchases are for aesthetic upgrades commonly known as skins. Skins provide no advantages to in game performance, and function more as a way for players to express themselves and their favorite characters. Skins have become so popular that children today may be bullied if they don’t have the right Fortnite skins. 

Esports can serve as a marketing lever for these skins. If a viewer sees their favorite player using a certain skin, they may be inclined to purchase it themselves. Riot Games, developer of League of Legends, has taken skins to an entirely new level. Louis Vuitton designed skins for the League of Legends 2019 World Championship, and Riot reinforced the activation further by creating a hip hop group based off of these skins. 

Some game developers still function on selling the game, either digitally or physically, along with skins. The primary developer doing this in esports is Activision Blizzard, makers of Call of Duty and Overwatch, as well as other games. The studio also makes Hearthstone, which uses a free to play model while selling packs of cards, indicating that the studio isn’t using one model for all of its games.

 

The competitive scene of an esport is largely dependent on the developer’s role. Riot Games and Activision Blizzard have developed franchised leagues for their games similar to the NBA or NFL, with the entire league managed by the developer. This includes creating a code of conduct, facilitating player trades and securing sponsorships for esports broadcasts and sponsorships. In this scenario, developers often take full control of all competitions and restrict other tournament organizers from creating tournaments using their games.

 

Other studios are far more liberal with their games, most notably Valve, creator of Dota 2 and CSGO. Valve recently provided more insight in a blog post about its views on esports, emphasizing how it provides free licenses to tournament organizers in order to “get out of the way of third parties creating value for our customers.” Valve provides oversight for major events and the official competitive circuit, but also lets smaller tournament organizers get involved as well.

 

Nintendo has actively repressed its esports scene in years past, though recently it seems the Japanese company has had a recent change of heart. Super Smash Bros. Melee, released in 2001, still has a thriving esports scene to this day, thanks largely to its grassroots community. Wanting to emphasize a more casual experience for its fans, Nintendo had previously pulled the rights from tournament organizer from broadcasting Melee matches. However, it seems the studio has changed its mind to an extent, inviting top players to play its new game, Super Smash Bros. Ultimate, when it was released in 2018. 

 

Along with support for the competitive scene, developers also directly affect the game through patches, which are updates to the game. Patches are released to release new content (skins, characters) as well as update current characters, maps, weapons and more. Some studios release patches as frequently as every two weeks, while others take months in between patches.

 

As these updates make direct changes to gameplay, they have a significant impact on the competitive scene. Some changes are minor, while others can drastically alter the value of certain strategies, which can have a direct result on competitive play, and thus tournament earnings. Epic Games, creators of Fortnite, have repeatedly been in hot water over this issue.

 

Epic has been notorious for updating Fortnite weeks, days or even hours before significant matches, such as for WSOE 3. To put it into perspective, imagine if three days before the NBA finals, it was announced that a three point shot would now be worth four points. Players that excel at three pointers would instantly be worth quite a bit more and the entire strategy book would have to change in an instant. Esports players have to react to changes like this all the time, and it’s up to the developer to balance between updating the game for casual fans and maintaining the competitive integrity for its esports community. 

 

Moving forward, developers will become more powerful as they become not only the makers of games, but also the governing bodies for the sports of the future. For brands, this will create more opportunities to integrate at multiple levels within esports – at different levels of competition, as well as activating within the games themselves. 

To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

 

This article is the fourth in a series designed to educate on the many parts of the esports ecosystem. This article will cover streamers. For the third article, covering esports teams, click here. To start at the beginning of this series, with esports platforms, click here. 

Perhaps the only thing bigger than esports in the gaming space at the moment is streamers, people who broadcast themselves playing video games online. These streamers broadcast on platforms like Twitch, Mixer and YouTube to millions of fans. Some are former esports pros or are currently competing; others are simply skilled entertainers. Fans tune in to watch the top streamers play their favorite games, and increasingly, just to chat. 

 

While esports competitions are also watched on Twitch, the majority of content watched on these platforms consists of streamers. There are streamers like Voyboy, a former professional League of Legends player, who focuses primarily on League while occasionally playing other titles. Others focus on certain genres or are variety streamers, playing whichever game is most popular or relevant to them at the time. 

 

Along with playing the newest, most popular releases, fans tune in to interact with streamers. Most streaming platforms offer a chat, where the audience can interact with one another and the streamer in real time as they’re broadcasting. Fans can comment on the action, make fun of a play gone wrong and ask the streamer questions as they stream. Streamers provide tips, answer personal questions and connect with their fans live, providing unprecedented levels of engagement with their community. 

 

Streamers can be thought of as the taste makers and influencers within the gaming community. The best example of this is the release of Apex Legends in early 2019. Eschewing traditional marketing, publisher Electronic Arts decided instead to focus on using streamers to promote the new game. 

 

As a new game entering the Battle Royale space (dominated by Fortnite), EA targeted Fortnite streamers and paid them to stream Apex Legends on its release. Ninja, a famous Fortnite streamer, was reportedly paid $1 million to play Apex Legends on release. The strategy worked – a month after its release, the game had amassed 50 million players. 

Many developers have partnered with streamers for the release of new content for their games. Riot Games, creators of League of Legends and Teamfight Tactics, partnered with streamers to highlight new content being released for Teamfight Tactics, letting each streamer unveil new characters. Streamers can serve to promote new content, but also as a lever to retain players in between content cycles, making them important to any developer. 

 

The power of streamers as influencers extends beyond games to non-endemic brands as well. Many streamers are sponsored by brands such as DoorDash, Red Bull, Venmo and others looking to reach a younger audience. Ninja even sells his headbands at Walmart. 

Streamers make money through not only sponsorship, but also through the platforms themselves. Twitch, YouTube, Mixer and others offer subscriptions to streamers, often at the price point of $5/month. Subscribers get access to exclusive emojis to use in the chat, and increasingly, access to exclusive content and giveaways. Streamers earn half of this, and get better cuts of the subscription fee as they get more popular.

 

Streaming is not without its challenges, though. As it is a live feed, there is the concern of someone making a gaffe live, such as swearing or other inappropriate content. Streamers must balance the line between being engaging, treating their viewers as friends in a casual manner, and not speaking in a way that would offend an audience or their sponsors. Should a streamer mess up, they could lose fans, sponsorship deals or even be banned from the streaming platform. 

 

For brands looking to enter esports and gaming, streamers offer unparalleled engagement. No other platform lets fans interact with their idols in real time, using gaming and other mediums (chatting, music, art) to directly connect and relate. The opportunity for brands lies in identifying streamers who can authentically promote their product.

To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

 

This article is the third in a series designed to educate on the many parts of the esports ecosystem. This article will cover esports teams that compete in tournaments that fans watch. For the second article, covering esports competitions , click here

Esports teams around the world are raising capital at a breakneck pace. 100 Thieves recently raised $35 million and has investors from a variety of industries, ranging from Dan Gilbert (Cleveland Cavaliers) to Toronto rapper Drake. The opportunity is clear – get in on the ground floor of what could be the next Yankees or Cowboys. Valuations of esports teams have skyrocketed, with American based Cloud 9 estimated to be worth $310 million according to a 2018 Forbes article. 

(source: Forbes)

 

At its simplest, esports organizations, also known as orgs, field players to compete in competitive games and esports, and to stream online on Twitch and other platforms. Orgs pay a salary to players and often times more, including housing and food, and in return make money through sponsorship and merchandise sales. Perhaps the largest difference between esports organizations and traditional sports comes from branding – while a sports franchise such as the New York Yankees will only have its baseball team, an esports org such as Team Liquid fields competitors in over a dozen different games. Imagine if the Yankees had both a baseball and a basketball team competing under the same name in their respective leagues. This creates an opportunity for esports organizations to extend their brand reach to a variety of gamers, but also challenges for teams that lack a clear brand focus.

 

Esports organizations have positioned themselves in a variety of ways to create value for themselves, their investors and perhaps most importantly, their fans. Some focus on competitive success, others dive deep into a certain genre of game or emphasize a home city. While many orgs struggle to find a clear voice, 100 Thieves currently has the strongest positioning of any esports org, focusing on apparel and CEO Matthew “Nadeshot” Haag, creating a lifestyle brand around gaming and esports. 100 Thieves merchandise “drops” routinely sell out within minutes. 

 

Along with apparel, sponsorships make up the majority of an esports organization’s revenue. This often includes patches on jerseys, branded content and social media posts. However, nearly every esports team is running at a deficit. Operational costs continue to escalate, from player salaries to staff (coaches, analysts, managers, talent scouts), gaming houses and facilities, travel, marketing, content and more. 

 

A major cost for esports teams has been franchising fees to participate in franchised leagues run by the developers of top games such as League of Legends and Overwatch. These leagues offer the highest level of competition, as well as security for teams that may have an off year competitively. This allows teams to invest in developing new talent and to sign multiyear contracts with sponsors. Some franchises include a revenue sharing model based on the sale of league sponsorships and media rights, but come at a steep price. Franchise fees for the upcoming Call of Duty league are estimated to be around $25 million.  You can read more about esports competitions and franchising here.

 

Moving forward, teams will have to find more ways to differentiate themselves in order to obtain valuable sponsorships. A team such as the Dallas Fuel and sister teams Dallas Empire and Envy Gaming will have to activate locally within the Dallas area to build a loyal fandom, through partnerships with universities, high schools and more. 100 Thieves will have to continually innovate within apparel and entertainment to maintain its status, and we’ll likely see some brands fade into obscurity. For brands looking to get into esports, the opportunity lies in finding the right partners that have a clear vision for building a long term fandom within the esports ecosystem.

To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

 

This article is the second in a series designed to educate on the many parts of the esports ecosystem. This article will cover the esports competitions that fans watch. For the first article, covering esports platforms, click here.

 

The first World Championship for League of Legends was held at Dreamhack Summer 2011, as one of many featured competitions,  garnering over one million viewers. Comparably, the 2018 League World Championship Finals saw competition duke it out at the Incheon Munhak Stadium in Incheon, Korea, which has been the host for World Cup matches and the Asian Games. Viewership for the 2018 League Finals exceeded 99 million fans globally.

Image via D Magazine

Competition is at the heart of esports, just as it is for any other sport. What started off as a grassroots community has evolved into an event that fills out the largest stadiums in the world. There are franchised leagues, massive prize pools and a voracious audience to match. This article will go into detail on franchised leagues, competitive circuits and smaller scale competitions, to determine which sort of investment will achieve a brand’s goals.

Franchised Leagues

The NBA and NFL have more in common with franchised esports leagues than just structure; many have shared ownership. Robert Kraft, Stan Kroenke and the Golden State Warriors are just a few examples of NBA and NFL owners involved with franchised esports leagues.

In the United States, there are currently franchised leagues for League of Legends, NBA 2K and Overwatch, with Call of Duty scheduled to join in 2020. Prior to franchising, many esports teams struggled to find talented players and secure sponsorships, since sponsors weren’t comfortable signing multi-year deals with a team whose talent may get poached next year. This meant that teams were unable to invest in developing talent, as there was a constant concern of getting relegated, resulting in recycling of players well past their prime.

Franchising provides security for teams and sponsors alike, with Riot Games (League of Legends) and Activision Blizzard (Overwatch, Call of Duty) creating the LCS, OWL and CDL for their games. Activision Blizzard has taken a step further, having each participating team also represent a city, such as the Dallas Fuel. In 2020, each team will host competitions in their home city, creating an opportunity for each team to connect more with their local fans, as opposed to all matches currently based out of Los Angeles. 

Franchising has been criticized for preventing new teams from entering the space due to the high cost to buy into a franchise. However, this higher buy in serves to vet candidates looking to invest in esports, and provides more security for players, franchisees and their sponsors. This security comes at a premium cost for sponsors, given the stability that comes with it. 

Competitive Circuits

Most commonly seen in Dota 2 and CSGO, both developed by Valve, some game studios take a more offhand approach with their esports competitions. Valve lets multiple tournament organizers, such as ESL and FACEIT, host tournaments with varying prize pools. Valve then helps determine the magnitude of each event, such as determining whether it is a Major or Minor, and how it will play into the global competitive circuit. 

Some like this approach as it provides tournament organizers with more opportunities to create competitions, and therefore more opportunity for teams, players and sponsors to get involved in more events. This is particularly common in CSGO, where there may be large tournaments in consecutive weekends for teams to play and earn money. Often times, these tournaments have online qualifiers that will seed into an offline event. 

Such freedom is not without its challenges, though. Constant tournaments can lead to player exhaustion. Astralis, a Danish team considered one of the best in the world, started to find more success when they didn’t go to each tournament, preferring instead to be more selective with the events they chose to attend. 

A common complaint, particularly in Dota 2, is that there is a great deal of money for those at the top (the prize pool for the 2019 International exceeded $34 million). However, with no guaranteed minimums for teams (such as in a franchised league), there is concern that it’s difficult for new teams to get involved

Grassroots

With such high investment costs to get involved with franchised leagues and competitive circuits, there is a growing interest in grassroots esports competitions, including at the collegiate and high school level. Such competition offers a more authentic experience at a lower cost, though rarely sees large viewership on platforms like Twitch. High school and collegiate esports competitions are not on the level of traditional sports, meaning an activation in the space must be focused on the in-person brand connection as opposed to online fans. 

Investing in the collegiate and high school space offers the ability to connect with a hyperlocal area, such as sponsoring a Chicago collegiate tournament, or a Midwest high school match. However, lower costs and more targeting demands a much more hands-on approach. To ensure everything goes smoothly, presence at the event itself is usually required, to make sure all branding and products are handled properly. As it is meant to be a localized approach, connecting with the audience on-site provides the opportunity to build a relationship with collegiate esports fans. 

To invest in esports competitions, a brand must first evaluate their goals within esports. Sponsoring a franchised league or team comes with high costs, but the most security and the potential to be perceived as a foundational partner for esports. Competitive circuits offer more flexibility, but can also be inconsistent. Grassroots competitions have the highest potential for brands, but also require the most attention, requiring an expertise in not only esports, but in event management and brand activation. Ultimately, it is up to the sponsors and fans to determine what type of competitions will be the most sustainable within each esport. 

This article is the first in a series designed to educate on the many parts of the esports ecosystem. This article will cover digital platforms where esports fans watch content. For the next article, covering esports competitions, click here.

In the world of esports, online broadcasting–also known as streaming–reigns supreme. One of the reasons why esports is so valuable is that it captivates a hard to reach demographic. College students, recent graduates and young people of today are watching far less television than previous generations, becoming known as cord cutters or cord nevers. In a recent report by Goldman Sachs, it was revealed that 80% of esports content is consumed digitally, while only 20% of traditional sports are consumed digitally.

The primary platform for streaming esports content is Twitch, which was acquired by Amazon in 2014 for $970 million. If Twitch is the new television, then streamers and organizations are the new broadcast stations. Each broadcast, be it a professional, large-scale esports tournament, or a lone gamer in their room, has their own channel. Anyone can create their own channel – it costs nothing, though investments into quality production, including a high-definition camera, microphone, and high-end computer are more likely to get people to stick around or engage. Channels are then searchable by the type of content being streamed, such as the game or genre. 

Photo Credit: The Verge

Streamers broadcast themselves playing games, performing a DJ set, or simply talking, and viewers pour in by the thousands – 9.36 billion hours of content was watched on Twitch in 2018. Fans tune in to watch their favorite personalities, learn how to defeat a hard boss in a game and interact with a like-minded community. The audience engages with one another on Twitch Chat, a live feed where fans comment on the action and interact with both the streamer and fellow audience members–asking for tips, celebrating a big play or making new friends.

Twitch, like most platforms, makes money through advertisements, run before and during a livestream. Streamers even make a cut too, if they’re popular enough, with top streamers also having sponsors of their own, such as HyperX, a gaming hardware company, or an energy drink like Red Bull. Fans subscribe to their favorite streamers for $5 a month, gaining access to unique features in Twitch Chat and sometimes private streams. The streamer and Twitch then split the profits, with the streamer gaining a more favorable cut the more popular they are.

Long unopposed, Twitch has recently seen more competition rise in the market. The most notable competition in recent months is the Microsoft-backed Mixer, which signed an exclusive streaming deal with Ninja, arguably the most popular gamer in the world. Other top competitors in the space include YouTube and Caffeine in the West and Huya and Douyu in Asian markets. A common trend for Twitch streamers is to broadcast on Twitch and clip highlights to share on YouTube, dipping into both the live streaming and video-on-demand markets. 

For brands and investors looking to get involved in esports, platforms like Twitch are a necessity. As the primary method of consuming esports and gaming content, brands need to be aware of the most popular games and streamers and what type of content would best represent their brand. The biggest opportunities lie in not sponsoring a big personality like Ninja (think prime time television), but rather in finding a streamer or channel that resonates with their target demographic in a similar way. A streamer that can champion a brand in an authentic way is far more likely to drive results than a blanket call to action.

 

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To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

 

Last week, it was announced that Twitch had signed popular Fortnite streamer Nicholas “Nic Eh 30” Amyoony, and that he would start streaming exclusively on Twitch starting September 1. Amyoony, who has 4.2 million subscribers on YouTube, will still upload stream highlights to YouTube, but will now stream gameplay only on Twitch. This comes just weeks after Ninja, perhaps the most famous name in all of gaming, announced he was leaving Twitch to stream exclusively on Mixer, Microsoft’s streaming service competing against Amazon’s Twitch. 

Ninja is also sponsored by Adidas

Twitch, a longstanding streaming platform for people to watch gamers broadcast their play, has long run unopposed as the top streaming service. Mixer’s signing of Ninja and Twitch taking a swipe at YouTube, goes to show that the competition for live streaming is only getting started. Both Twitch and Mixer offered incentives for fans to join their favorite streamers in jumping ship. Twitch offered loyalty badges to those that had a channel membership to Amyoony and Mixer offered three months of membership to anyone that joined Ninja on their platform. Just five days after joining Mixer, Ninja already had 1 million subscribers on the Microsoft-backed platform.

Similar to the content exclusivity wars between Netflix, Hulu and other video streaming services, a new battle has begun between popular video game streaming platforms to have the top content, in this case in the form of streamers and casters. Both Twitch and Netflix can be seen as first movers in the space, proving that there’s a market for the streaming of gaming content, movies and TV shows. Now that market demand has been established, more competitors are entering the space. While Twitch showed 25% growth in viewership between 2017 and 2018, Netflix saw a drop in American subscribers in Q2 2019, suggesting that competition is starting to heat up. YouTube Gaming saw its streamer base grow by 343% in 2017, Twitch by 197%, according to TechCrunch.

Source: TechCrunch

The next step for these platforms will be to further vertically integrate with their parent companies and take advantage of all assets they have access to. Amazon Prime members could automatically get Twitch Prime, for example, and Ninja streamed a first access look at Gears of War 5, set to release exclusively for Windows and XBOX on September 6th. When Google Stadia releases in November, there will likely be integrations with YouTube for content creators.

As competition grows, so too does opportunity for brands and sponsors interested in investing in esports and gaming. There are now more choices for brands to sponsor, lowering the price and making gaming and streaming a better investment to get brands in front of a hard to reach and highly engaged demographic. Having said that, more variety also makes it harder for a potential sponsor to identify who the right partner is when entering the space. To keep an edge, brands will have to stay vigilant and on top of an ever changing space, to ensure that they reach a valuable audience authentically. 

To stay up to date with all of our esports content and news, click here to subscribe to our Esports Newsletter.

 

Last month, The Esports Observer released numbers on the top ten most popular Twitch channels and the top ten most popular games in 2019 to-date. At first glance, nothing seems out of the ordinary. League of Legends and Fortnite dominate viewership, and the explosion of Apex Legends brought the game and its top streamers into the limelight.

Upon looking further, as others online were quick to point out, one ratio is particularly striking when analyzing this data. The Overwatch League’s (OWL) Twitch channel places second on top channels of Twitch, putting it behind only Riot Games, with 56 million hours of content watched by viewers in 2019. However, this number looks far less healthy when comparing it to the total number of hours streamed, a more modest 127.3 million hours watched.

To put that into perspective, the Riot Games Twitch channel, which broadcasts western League of Legends competition, had 59.1 million hours watched, but League of Legends had 512.3 million hours of content watched in the first half of 2019. The OWL’s official broadcast accounts for over 40% of streamed Overwatch content on Twitch, while the LCS and LEC combined make up 11% of streamed League of Legends content.

In simpler terms, it suggests that plenty of people want to watch League of Legends at all hours of the day, be it as an esport or more casually streamed. The fact that so much of Overwatch viewership is tied to its esports broadcast indicates that not only are people far less interested in non-esports related Overwatch content but that streamers aren’t interested in playing Overwatch either.

The Power of Streamers

After the launch of Apex Legends this year, which rapidly gained astronomical viewership and playerbase thanks to its influencer/streamer strategy, the impact of streamers has become clear. The famous Fortnite streamer Ninja reportedly earned $1 million to stream Apex Legends once. This attention from the streaming efforts of Ninja and others led Apex Legends to reach 50 million downloads in the first month after its release.

Streamers help set the tone for what games are cool and fun to play. Streamers not only serve as a marketing tool for new games, they also help create player retention. Studios have taken notice of this, and found ways to partner with streamers to benefit both parties. 

Riot Games announced a new partnership program with streamers where they can give out skins, be the among the first to announce new aspects of the game, and in turn promoted on Riot’s digital channels. Not only does this empower streamers with more reasons to stream League of Legends content, it gives Riot the ability to promote through a more authentic experience. 

Epic Games and Fortnite have gone a step further, where streamers were allowed to broadcast themselves attempting to qualify for the Fortnite World Cup. Most studios are quite restrictive in terms of control over broadcasting their esports events. There are concerns of cheating (someone watching a competing streamer to find out the streamer’s positioning, weapons, etc.) as well as traditional concerns regarding giving up control of the event from a broadcasting perspective. 

This method seemed to work quite well for Epic though, who has struggled to broadcast Fortnite successfully, since the game can be difficult to watch and understand. Tracking dozens of competitors around a map is difficult enough – let alone quickly finding the action in real time to broadcast to fans. By letting streamers broadcast themselves qualifying for the World Cup, Fortnite remained on the top of Twitch viewership for weeks on end and empowered streamers to both benefit off of the event, ultimately providing free publicity for the World Cup at the end of July. 

The Role of Game Balance

Perhaps the most important part of any game is whether it is enjoyable to play, with the intent to be an esport or not. Studios struggle with this consistently as games transition to more of a “games as a service” model, where games are constantly updated through ongoing patches, offering changes to the game as well as new purchases for gamers to make, as opposed to full-game re-releases every year.

Overwatch has notably struggled with this recently, with the adoption of the GOATS meta. The GOATS strategy, named after the team that popularized it, revolves around players using three tanks and three supports for their team composition, completely forgoing having any primary damage dealers. Lacking damage, this strategy rewards passivity and essentially removes the incentive to make aggressive plays. 

Blizzard has already taken steps to resolve this problem, such as implementing role lock for OWL players. This limits the number of tanks and supports that a team can field in competitive play, redefining the optimal style of competitive play. This may solve issues with fan engagement of esports broadcasts, but the damage to the Overwatch player base has already been done. Some professionals have quit the OWL, citing not being engaged with the game anymore, leading to posts on Blizzard’s forums wondering whether Overwatch is a dead game. 

This doesn’t mean the solution is to change your game all the time either, which has caused Fortnite developer Epic Games to come under fire. Some argue that Epic, through its constant releases of new content, hurts its esports scene by not offering their professional players consistency. While the constant stream of new content is great for streamers like Ninja and his fans, those looking to watch the highest level of Fortnite competition are constantly frustrated by the frequent updates. 

Two weeks before the Fortnite World Cup, Epic Games released a new feature to Fortnite – Air Strikes. This feature quickly kills players and structures alike, fundamentally changing the landscape of competitive Fortnite. Many professional players have been upset about the change, as new strategies had to be found quickly and rendering practiced strategies useless, which is incredibly frustrating when there’s $30 million on the line. 

Some will argue that as professionals, changes to the game are part of the job, and that the best players should still rise to the top. However, this has proven to be an unconvincing argument,as teams at the League of Legends World Championship that are slow to adapt to the changing game in the first week, come out swinging hard and succeeding during the second week of group stages every year. 

Streamers can make or break the popularity of a studio’s game, serving as both the advertisers and a retention lever. By partnering with streamers effectively, a studio can promote new campaigns and retain its playerbase. However, if a studio caters too much to streamers and their audiences, it can quickly polarize another segment of its playerbase, most commonly their esport players and fans. Game studios have to find the right balance between appealing to streamers while also balancing their games effectively, keeping games fun for a more casual fan, while maintaining entertainment value for their esports audience.