Ten years ago, the thought that you could make a living playing video games was unheard of. If anything, admitting that you were a hardcore gamer either got you shoved into a locker or scolded by your parents to turn off your computer and get back to studying. I would know. I was part of the era of online gamers that helped pioneer today's legendary world of e-sports.
Today? The world of e-sports is as big as professional athletics. Inc Magazine just named Riot Games--the developers behind the smash hit video game League of Legends--as 2016's Company of the Year. Here are a few numbers that will make your head spin: The virtual goods players can buy inside League of Legends are set to yield nearly $1.6 billion in sales for Riot. And more than 100 million die-hard gamers log in to play each month.
Madison Square Garden? Formerly reserved for iconic musicians and Hall of Fame athletic showdowns, it now boasts big-screen TVs and crowds of screaming fans supporting their favorite e-sports competitors and teams. What was once seen as a hobby for the socially inept has quickly become a mainstream phenomenon.
And it's only going to get bigger....
For those outside the industry, it's difficult to understand the appeal. After all, as big as e-sports has become, it is an extremely niche community. You are either part of the clan or you are very, very far from it. For big brands, this is both the biggest challenge and also the industry's biggest appeal.
According to a 2016 report, total e-sports revenue was estimated at $892.8 million in 2016. Direct consumer revenue grew 36 percent year-over-year, with e-sports consumers spending $231 million on tickets, merchandise, and prize pool contributions alone. Although Asia leads the market, North America and Europe are not far behind.
By 2018, the e-sports market is set to reach $1.1 billion.
Need more proof of the market's potential? I remember being a 17-year-old, back when I was one of the highest ranked World of Warcraft players in North America. This was in 2007, and the game's maker, Blizzard Entertainment, had just announced it would be hosting the first World of Warcraft e-sports tournament. I explained to my parents and friends that I wanted to go compete. Everyone looked at me like I was crazy, and I was assured that gaming was, in fact, "not a real sport."
Well, ESPN now has an entire section of its site dedicated to e-sports, with high stakes matches bringing in massive viewership on national television.
Not only that, but long-time professional sports associations are now buying up e-sports teams in the hopes of capitalizing on the action. For example, the Philadelphia 76ers became the first sports team in North America to dive in and purchase e-sports troupe "team diginitas."
So, where do the brands come into play? Well, as of right now the e-sports economy is primarily driven by sponsorships and advertising, generating close to 78 percent of total revenues produced. But the challenge for big brands, especially those that might not seem like immediate fits for the booming industry, is figuring out how to effectively navigate the emerging landscape.
There are several categories of brands right now looking to capitalize on the industry's recent popularity.
The first and most obvious are the tech companies: Intel, for example, recently sponsored the Intel Extreme Masters--a series of international e-sports tournaments. Companies that manufacture keyboards, headsets, mice, etc., make for viable pairings with the tech-savvy consumers filling the seats of these e-sports competitions.
Next, are the beverage companies, like Coca Cola, Monster, and Red Bull, known for sponsoring elite e-sports competitors. The tie-in here is the fact that gaming requires an extreme level of focus and long hours spent in front of a computer screen. The energy drink brands were some of the first to enter the space and have become staples in the industry.
Then, surprisingly, are the health and fitness brands--and this is a perfect example of how much of the industry has yet to be defined. Since professional gaming is now considered a "sport," health, fitness, and supplement brands are looking to weave themselves into the narrative by supporting players' physical well being in order to help them compete at the highest levels.
One of the first to enter the scene was Cellucor, which saw a massive opportunity to become a resource to e-sports athletes. Because here's the thing: One of the biggest challenges competitive gamers face is the toll that gets taken on their bodies by sitting in front of a computer for hours on end. Gamers, in general, tend to be stereotyped as athletically challenged and nutritionally deprived--when in fact, these high-level competitors fly around the world maintaining travel schedules sometimes as rigorous as any professional athlete. For health and fitness brands like Cellucor, this is an obvious (and yet not-so-obvious) sidestep into a parallel industry of high-performance competitors. They don't want to just sponsor these players--they want to help them thrive through the same rigorous travel schedules (and stress that comes with competition) a professional athlete would face.
Combine that with the fact that colleges are now offering scholarships to competitive gamers, and it's clear that gaming is, in every sense, now considered an actual sport.
When you think about the demographics of the e-sports industry, the kinds of brands entering the marketplace make perfect sense: The 16-to-34 male demographic is highly coveted, and reaching it on a regular basis in a way that is not intrusive has become a big challenge. Big brands hope that by partnering with e-sports events with viewership that now rivals professional athletics, they can not only get in front of those target consumers but win them over.
The challenge the rest of the mainstream brands are facing, however, is in figuring out how to make themselves part of the narrative. The gaming community, especially, is a savvy bunch. They run ad blockers. They are known for pirating content. They spend all their time online and can spot poorly executed influencer marketing a mile away. Winning them over is a challenge. And more than that since, if you cause a disruption, they are a vocal bunch. The world of competitive gaming is not for the faint of heart, and its chat rooms and community make any "locker room talk" you've ever heard sound like cordial conversation.
Having watched this industry explode from the very beginning, I feel these are exciting times. In fact, I recently partnered with a startup in the scene called LVLUP Dojo, looking to capitalize on one of the aspects of the industry few have yet to tackle: education. Since its message rings extremely true with me, I launched an online course with LVLUP Dojo, teaching gamers the value of building a personal brand online. Because when I was a 17-year-old competitor, I didn't understand the value of what I was doing. I didn't know having 10,000 people reading my gaming blog every day was valuable. I didn't know how much I should be getting paid by a sponsor. I didn't know how to navigate the industry--and even today, that remains a serious problem.
The most astounding thing is that it's not just the brands that are confused--it's the gamers, too. They don't know their own worth. There's money being thrown around and nobody really knows who deserves it--is it the players bringing in the viewers or the brands hosting the competitions? The players are young, so they don't know what contracts they're signing. Lawyers are just now getting involved in brand-player negotiations. The entire industry is like the wild West, and everyone is out there figuring it out together.
But the numbers are there, and they only seem to be growing. And in our world of rapidly changing technology and war for attention online, professional gaming houses some of the most devoted fans, followers, and viewers.
That's what everyone wants a piece of--undivided attention from consumers.