Building a Business in Competitive Gaming

Esports (or electronic sports), is an exciting global industry of video gamers who compete in tournaments and leagues similar to traditional professional sports leagues. Furthermore, Esports represents an investable business opportunity with promising revenue prospects.

Streaming, media rights, merchandise sales and ticket sales are major sources of income in the industry; however, their profitability can be unpredictable and unpredictable.

Sponsorship and Brand Partnerships

Esports provides businesses with an exclusive opportunity to connect with an engaged audience and develop profitable ventures. By sponsoring or partnering with an eSports team, player, or event – brand awareness and visibility increase dramatically while an innovative activation strategy creates new customer pipelines.

Traditional sports typically boast sponsorship deals with only a handful of global brands; eSports can open up sponsorship and brand partnerships with numerous organizations. Even established sports brands are expanding their presence in eSports as they recognize its power and the audience that welcomes brands associated with an eSports league, event or team.

Red Bull, for instance, has joined forces with Team SoloMid to strategically promote its product to gamers through gaming content and to broaden Red Bull’s reach within this niche audience. Furthermore, their partnership has provided Team SoloMid with opportunities for new sponsor partners outside the gaming realm.

Others brands taking a more cautious approach to eSports have chosen events and competitions over individual teams as partnerships enable them to access an equally large audience with less risk.

Receptivity to brands by this audience is evidenced by the rise in eSports sponsorship, with non-endemic sponsors (brands that do not belong to gaming) shifting from experimental to dedicated budgets, and game publishers and tournament organizers allocating more dollars toward gaming-related activities through sponsorship dollars.

An effective eSports sponsorship requires careful planning and execution in order to maximize its return. This involves regular financial analysis in order to assess whether your business can cover payroll and expenses while making a profit.

Important considerations when sponsoring an eSports activity include being able to measure and quantify its impact. An easy way of doing this is creating a report outlining how the sponsored activity helped achieve your company’s marketing and business objectives, providing evidence of return on investment (ROI) of previous engagements and helping secure future partnerships.

Media Rights

The eSports industry has experienced explosive growth over recent years and is now one of the most lucrative parts of video game business. Attracting millions of fans, and making its players among some of the richest people worldwide.

However, it remains a relatively young and evolving sector with numerous challenges ahead. A major one is monetizing media rights: audiences accustomed to watching streams on YouTube or Twitch can easily consume media rights; with most tournaments held online rather than in person there is limited spectator income and in order for eSports to thrive it must find ways to generate substantial revenues from its livestreams.

One potential path for eSports companies to expand is through collaboration with streaming platforms to establish a shared subscription service for their content. One ad network Thece has taken this route by working with NACE Starleague and other eSports partners to find alternative methods of tournament rights monetization. Another avenue could involve working with smart TV manufacturers or streaming services that offer set-top boxes that could offer dedicated eSports channels with subscription plans for viewing pleasure.

An alternative option would be to seek support from video game publishers themselves in promoting and creating new revenue streams through eSports, though this could prove risky due to communication needs between gaming publishers and event organizers that must remain clear; any misalignments between these parties could damage reputation of game and decrease sales negatively.

Mainstream television broadcasters are beginning to consider collaborating with eSports and providing coverage of events on their channels, which could prove highly attractive as it will draw in digitally-savvy viewers who had otherwise abandoned linear TV. Furthermore, this could allow broadcasters to showcase the production values and excitement associated with eSports in an easily understandable format that’s easy for audiences.

Merchandising

No one doubts the enormous popularity and enormous audience of eSports, yet entrepreneurs must remember that running a successful eSports business requires capital and planning. You should do thorough research before seeking advice from those who have successfully built an eSports company themselves. Furthermore, you will need a budget, profit and loss account (P&L), accurate forecasts and draft a balance sheet in order to be successful.

One of the main revenue sources for eSports is merchandise and ticket sales; according to research firm Newzoo, global merchandise and ticket revenue from eSports will increase by 22.4 percent this year. Media rights revenue also constitutes a source of income; payments made by online streaming platforms to organizers for broadcasting their competitions as well as fees paid by foreign broadcasters for licensing copyright rights to show video content or images from events like these are considered media rights revenues.

Video game publishers also play an influential role in shaping eSports’ rules and dynamics, with their ability to update or alter game titles at any time, with consequences that affect leagues, teams, players and leagues alike. Some popular eSports titles, such as MOBA “League of Legends” and first-person shooter “Overwatch”, have seen significant modifications in rules and gameplay over recent years.

Merchandising can help eSports teams expand their fan bases and brand recognition by selling merchandise such as T-shirts, caps and jackets with their team’s logo or mascot printed on it. Some teams even have fashion lines like Fnatic’s stylish yet comfortable hoodies and jackets which combine both style and comfort!

ESports teams often partner with other businesses to offer unique fan experiences. Logitech worked with Cloud9 to develop a custom gaming keyboard, giving the company the opportunity to showcase its products before an engaged eSports fan base and establish themselves as leaders in gaming technology. Other partnerships use talent from these eSports teams as promotional assets for other products and services.

Advertising

Gaming industry in general and eSports specifically are expanding rapidly, drawing in audiences that were once considered “nerds”. As more audiences get drawn into video games that offer interaction among team-playing options and competitive events like these there is greater marketing potential for brands in this space than even two years ago.

Producing and publishing a game typically involve two primary companies. One provides technical personnel such as artists and programmers; while the other manages marketing, distribution, tournament platforms, communication tools for professional gamers as well as tournament platforms themselves. Traditional sports teams are organized into leagues that oversee tournament logistics, referees and prize money – something eSports does not resemble; as such it can be difficult for marketers to gain insight into viewership statistics. Furthermore, given that technology plays such an integral part of this form of entertainment, high latency – when commands take too long to be received and executed – can render matches unplayable.

Still, eSports offer advertisers highly valuable user data, segmentation and consumer proximity at a fraction of the cost associated with advertising in traditional sporting arenas or stadiums – not to mention that brands may sponsor an eSports team in their home country!

Entrepreneurs must conduct extensive research and carefully plan their businesses before embarking on them, which involves understanding your competition, conducting competitor analysis, creating budgets and forecasts, reaching out to local entrepreneurial groups for advice if required, and reaching out to financial advisers as soon as they arise if you feel you require any. Also vital is reaching out to their small business association so they can ensure you’re not entering a market that is too large for you – as this ensures they have all of the resources available to start their company without fail – something many entrepreneurs ignore or miss.