Esports continues to attract marketers, even as other categories take hits from COVID-19
For many marketers, the coronavirus pandemic has been nothing short of a nightmare. Brands have had to pull ads or decrease their marketing spends, and TV, digital, media, search, audio and out-of-home categories are suffering.
One area that appears to be immune, and perhaps even thriving, is esports. With people confined to their living rooms, coupled with the absence of live sports on the air, the competitive gaming sphere is seeing increased interest from brands, both large and small.
On Thursday, BMW announced its largest esports play to date. The German automaker is partnering with five top esports organizations around the world: Cloud 9 (U.S.), Fnatic (U.K.), FunPlus Phoenix (China), G2 Sports (Germany) and T1 (South Korea). Each have teams with more than 200 players and act as rivalries in the League of Legends. The multi-year partnership includes sponsored content creation, social media campaigns, BMW’s logo on jerseys and BMW vehicles to transport players to future tournaments.
The campaign has two hashtags: #UnitedinRivalry (to celebrate the rivalries between the teams) and #UnitedatHome (now that players are confined to their homes because of the pandemic).
Stefan Ponikva, vice president of experiential marketing at BMW, says the partnership, which has been in the works for a year, was initially postponed due to the pandemic, but now the brand doesn’t want to wait any longer. “We have had many talks with different players of the industry and we decided to go ahead,” he says. “We see, all over the world, a huge increase of esports consumption. It’s getting crazy.”
While Ponikva did not reveal how much BMW is spending, he says the brand shifted “existing resources” last year.
BMW’s competitors have also ramped up their esports presence in recent weeks. At the beginning of April, Subaru partnered with sim racing platform iRacing to sponsor a racing championship. Nissan has doubled up on sponsored content with esports partner FaZe Clan, which is part esports company, part media agency and part influencer agency. Ford, meanwhile, has called on gamers to design a new virtual car.
The fact that big-spending auto brands are still moving forward with esports campaigns is notable. While the category has been early to advertise and sponsor in the esports space, during this time, auto brands have still seen their sales tank and their marketing plans disrupted from canceled sporting events. The pandemic ended an estimated 120,000 sports and entertainment sponsorship agreements totaling $10 billion, according to consulting firm IEG.
Brands across categories are also continuing with their esports plans. This week, Zenni Optical announced it would renew its sponsorship of Golden Guardians—the League of Legends esports affiliate of the Golden State Warriors NBA team—and took on additional partnerships with Pittsburgh Knights and Houston Outlaws. And rather than cancel its second annual Challenger Series gaming tournament, Chipotle will stream the event on Twitch and YouTube on April 25, with half of the $50,000 prize money going to COVID-19 relief efforts.
Some marketers have decided that, with live sports off the agenda indefinitely, now is the time to break into esports. Maisie Antoniello, VP of marketing at Jones Soda, says the beverage brand had to pivot from a skateboarding marketing push ahead of the postponed Olympics and chose to instead to sponsor Torque Esports’ five-week All-Star Esports Battle on YouTube and Twitch, which aired via ESPN and CNBC International. The event was put together in 48 hours after the coronavirus forced the cancellation of the FIA Formula 1 World Championship in Australia. “It became clear we would have to pivot,” says Antoniello, who notes that the videos are seeing millions of views.
Esports companies say that since the pandemic began, demand for their advertising services and livestreams has only increased.
Jeff Pabst, chief revenue officer at FaZe Clan, says the company hasn’t lost a single client since the pandemic began, but has gained five new ones, which it plans to announce in the coming weeks.
“Ad spend always follows consumption. In the case of gaming, ad spend is three to five years behind. COVID changed that really quickly,” says Pabst. “With the void of live sports and popularity of Twitch right now, brands are trying to figure out how to get involved in this groundswell that’s taking place and this audience migration. I hate to say that anyone is benefiting, but on our end, we’ve seen Fortune 100, Fortune 50 brands come to us.”
FaZe Clan, which operates the “Faze House” for its influencer gamers, already works with Nissan, G-Fuel and SteelSeries, and Pabst says those brands have approached the agency to do more social content and livestreaming events during this time. Since the quarantine began, Pabst says FaZe Clan has released 10 original videos for Nissan, the company’s exclusive automotive partner, featuring its gamers. The company is also working with Verizon to program weekly gaming livestreams for its #payitforwardLIVE initiative that supports small businesses.
To raise money for COVID-19 relief funds in April, FaZe Clan created a weekly online tournament around the new game “Call of Duty: Warzone.” The #Fight2Fund livestreams paired FaZe Clan gamers with musicians like Marshmello, Diplo and pro-athletes like Paul George and Ben Simmons. It raised $125,000 for charities affected by COVID-19, and featured brand partners Trojan, Activision, Softgiving, SteelSeries and UMG Gaming. Each livestream pulled in up to 60,000 concurrents and around 3 million views.
He says brands have been mostly coming to the agency to pull together livestream programs. “We have a sponsorship where you own a category and that’s usually the traditional sports marketers: The Nissan’s, the G-Fuels and Steel Series of the world,” says Pabst. Typically, those are seven-figure deals.
FaZe Clan’s now has over 215 million followers across its social and gaming platforms, and on Thursday, it closed a $40 million series A funding round to support expansion, player acquisitions and operations. Investors include rapper Pitbull, professional skateboarder Nyjah Huston and Epic Records Chair and CEO Sylvia Rhone.
G2 Sports, an esport partner to BMW, Red Bull, Logitech, Philips and Mastercard, is also seeing more brand interest since the onset of the pandemic.
“Our sponsorship pipeline of brands has doubled in size in the last few weeks,” says Carlos Rodriguez, CEO and founder of G2 Sports. “Everything we see across the board is marketing budgets shifting to digital.”
Of course, the coronavirus pandemic has also affected the business models of esports companies, and they’ve had to make their own compensations in dealing with the pandemic. Many esports companies run live, in-person tournaments and have had to take those events solely online. Still, unlike live sporting organizations, the esports category is well-equipped to make the migration. Even with the loss of live ticket sales for tournaments, esports companies say they are on track to reach their revenue marks.
Lester Chen, head of gaming content and partnerships at YouTube America, says COVID-19 has impacted esports leagues less than traditional sports. “We have seen esports leagues on YouTube rebound and continue streaming and uploading content in short order,” he says. Although he wouldn’t reveal specific numbers of viewers or new advertisers, Chen says gaming viewership is up, with more than 200 million users watching it daily.
Faze Clan’s YouTube channel, for instance, with 7.6 million subscribers, has seen a 300 percent increase in viewership since the beginning of March, says Pabst.
Chen also points to the fact that many traditional sports have turned to esports to try to replicate their events on the platform. The NBA launched a Players Tournament vbia the game NBA2K, featuring players like Kevin Durant; Formula1 moved their races to racing simulator machines within the Formula1 Game; and FIFA organized digital events with professional soccer players playing EA’s FIFA 20 game.
For marketers, the largest reason to move forward in the space (or to break into it right now) is the rise of viewership and the popularity of video game streaming. The category has steadily been rising in viewership year over year, but during coronavirus lockdowns people are turning to video games and streaming as they stay quarantined to their living rooms. For some people it’s in lieu of sports programming.
“Esports and gaming are providing much-needed entertainment to fill the void left by traditional sports, so there’s incremental effect now,” says Zenni Brand Communications Officer Sean Pate.
At the end of March, Nielsen Gaming found that, around the world, people were not only playing more video games, but were streaming more gaming content. In a survey of 3,000 individuals across France, Germany, the U.K. and the U.S., Nielsen found that a third of those polled said they were watching more streaming in quarantine, while 50 percent of U.S. participants said they were streaming more. Verizon conducted its own study and saw a 75 percent increase in gaming activity across the Verizon network.
On Twitch, viewership has nearly doubled in the past week. The platform averaged nearly 2.5 million unique viewers at all times beginning the week of April 13, marking a 79 percent increase from a weekly average of 1.4 million since the end of February, according to data from TwitchTracker, which tracks the number of unique viewers on Twitch at all hours.
“People are indoors, they want to be entertained and there’s this need for connection. Gaming in itself is filling this void of inherently live action.” says Pabst.
The rise in gamers also has to do with two high-profile esports game releases since the onset of the coronavirus pandemic: Activision’s “Call of Duty: Warzone” in March and the beta version of Riot Games’ tactical shooter game “Valorant” at the beginning of April, says Pabst. “Call of Duty: Warzone” reached 30 million players in only its first eight days, according to the game's Twitter account.
These audiences are made up almost entirely of Millennials and Gen Zers, hard-to-reach audience cohorts that are on the minds of marketers, even at this time.
“With so many sports canceling or postponing their televised games, esports has become an attractive alternative for some advertisers seeking new ways to reach younger sports fans who otherwise don’t watch much linear TV,” says Ross Benes, analyst at eMarketer.
Room for all?
Unfortunately for many brands, getting into the space right now is just not possible. On Thursday, Gartner released a new study finding that 76 percent of 360 marketers surveyed say they expect a decrease in marketing budgets.
“Prospecting isn’t something that is top of mind,” Ted Prince, president of analytics solutions at marketing technology company Neustar, told Ad Age in a live event on Thursday. He adds that a lot of brands are shifting their media spend to email and direct mail. “We’re seeing a lot of people honing in on their existing customer base.”
Many brands, especially those that are family-centric, have also stayed away from marketing in the gaming category due to the often violent nature of games. BMW, for instance, is finding a way to work around the blood and gun violence by only promoting games without it, and leaving its logo off the rest.
But there are signs that the esports landscape is becoming more sponsor-friendly. On Wednesday, “Valorant” creator Riot Games said esports organizers have to toggle a new “show blood” mode to “off” during tournaments so that no bloody imagery is shown.
“By turning off blood, we allow more sponsors and distributors to join the ecosystem, ultimately creating more accessibility and stability for everyone,” Whalen Rozelle, Riot’s senior director of sports told Bloomberg.
Before the pandemic began, Newzoo projected that the global esports category will reach $1.8 billion in revenue by 2022, with 69 percent of it coming from sponsorships and advertising. Goldman Sachs has predicted esports will have 300 million viewers by 2022, “on par with NFL viewership today.”
Projecting just how high those numbers could go is no less unpredictable than establishing when the pandemic might end.