Even though it still might sound strange for some people, learning how to invest in eSports has become a hot topic. With lots of companies believing in this sector and the fast-growing revenue that accompanies it, they may become your next investment.
The concept is foreign to most people. Nonetheless, they think it is weird to watch someone playing a game instead of playing themselves. But, for an extensive group of children and young adults, this is a part of the future of gaming.
And it has a large runway for growth. As entertainment, being a spectator of video games is becoming a popular activity. Shortly, we will probably see this specific niche conquering even the traditional and mainstream media.
A world where video games challenge “real-life sports”? Yes, this is a possibility in the expansion of the sports world. While in sports we admire the showcases of human athleticism, eSports provide entertainment through exceptional gaming skills.
One of the proofs that they are a genuine industry is that, in 2020, they have reached 495 million people across the globe, according to Statista. Also, the predictions expect it will be 1.5 billion dollars worth by 2023.
It is an eye-catching opportunity for investors around the world. And perhaps it is time for you to enter this universe. Therefore, keep reading to learn more about how to invest in eSports. Here are some topics we will explore:
- What are eSports?
- eSports growth over the years
- Invest in eSports: events
- Invest in eSports: what is already going on?
- How to start investing in eSports?
What are eSports?
Basically, eSports refer to gaming events that escalate in championships in several levels, from regional to international. Both professional and amateur players can compete against each other.
As the format expands, the sector provides an innovative ecosystem for business opportunities in the intersection of gaming and sports.
Some might call it an alter ego of the sports world because both industries are very similar in the way fans support their teams. Therefore, their logic is alike. As a means of entertainment, they engage people and display attention to the most popular teams and players.
History of eSports
StarCraft was one of the first games with a professional circuit in many parts of the world, such as the U.S. and East Asia. In 2003, pro-gamers started to organize teams, sponsored by companies, to play a computer game and compete.
Nowadays, competitions have expanded and it is already the main income of several professional gamers, through prizes, subscriptions, and sponsorship deals.
For those who are already familiar with eSports, they are like any other kind of sport. But instead of running through a football stadium, they sit comfortably on their chair to play games like League of Legends, Fortnite, and Call of Duty.
As a matter of fact, they also have a rigid set of rules and a whole infrastructure to mobilize teams, audiences, and media.
Do you need an example? Like a World Cup, players from all over the globe get together to participate in an event as the League of Legends World Championship. In 2019, the competition had already matched the Superbowl when it comes to viewership.
Also, young gamers from 18 to 25 years tend to watch 34% more eSports than the traditional ones. That happens because they are a digital native audience, and while the new generations grow, this habit might become even more common.
But who are the faces behind this industry? Who are the ones who make it work? Learn more about the eSports ecosystem.
The people behind eSports
Different from the traditional sports leagues, when it comes to eSports, companies usually wear multiple hats. For instance, some function could be organizing competitions, creating content, brand partnerships, and broadcasting it.
Here are some of the most common functions in the ecosystem, which open roads to invest in eSports.
They are the game developers and publishers, but also hosts for some of the world’s biggest competitions, like Riot Game’s LCS and Valve’s Dota International.
Meanwhile, they can also license their games to external organizers and streaming platforms.
Players usually provide advertising space on their streams and, later in their career, can evolve to game analysts and commentators. Or even community developers for tournaments.
When it comes to teams, they are usually formed by entrepreneurs and companies. Some brands sponsor their own teams, like the Red Bulls, Roccat, and Team Kinguin.
Third-party companies also run their own competitions and, then, the right to the broadcasts are sold to streaming platforms. Social networks, such as Facebook and Twitter, have begun to position themselves as sources for eSports.
Currently, there are a few ways to monetize championships, by selling tickets, working on TV deals, and partnerships in regional markets.
Brands and Advertisers
But brands are still the greatest source of revenue in this sector. There are several ways to work with them:
- Wearing brand logos
- Using specific products and equipment
- Allocating screen space, etc.
If you are a brand, there is a world of possibilities to create content on eSports tournaments and streams.
Another important aspect of eSport refers to the popular games in the segment. Therefore, we must also present some of them to conclude our brief presentation.
Popular games in eSports
After StarCraft started a whole new universe for tournaments, team-based combat-style games entered the game and are the most popular in today’s market. If a team wishes to thrive, they need to master the skills and technique for a great performance.
All of those who defend eSports will tell you that they are no less a competition than a game of soccer or a basketball match.
Check out some of the popular ones:
Fortnite allows players to create a world of many experiences. The games have four major modes:
- Battle Royale
- Party Royale
- Save the World
In 2019, the Fortnite World Cup awarded the winner with $3 million in prize money.
League of Legends
League of Legends is one of the most popular video games in the world. It is developed by Riot Games and features a team-based experience. As a complex game, it requires strategy and fast-paced gameplay.
Therefore, it is a task for those who have great gaming skills.
In 2021, Riot Games announced the return of League of Legends MSI and VALORANT Stage 2 Masters, the company’s main eSport events.
Last year, the League of Legends Mid-Season Invitational (MSI) was canceled due to the Covid-19 pandemic.
DotA is a multiplayer online battle arena (MOBA) game. Players intend to destroy their opponent’s Ancient, a guarded structure kept at the opposing corner of the map.
With this in mind, as a role-playing game, players level up and can buy equipment in their missions.
ONE Esports Dota 2 SEA League is an online tournament that features ten teams from Southeast Asia to compete over a prize of $100,000.
The original Counter Strike (CS) game was released in 1999 and published by Valve. Since 2001, major tournaments have been happening around the globe.
The first huge championship was at the Cyberathlete Professional League Winner Championship. Ninja in Pyjamas was lucky to win its prize, making history in esports.
Nevertheless, Counter Strike keeps selling millions of copies and the fan base is still strong.
Free Fire is a mobile representative of the battle royale games and it was developed by Garena. Its competition system is built around regional leagues.
Recently, in Brazil, it happened the C.O.P.A Free Fire, which attracted more than 570 thousand viewers.
Beyond Brazil, there are several leagues around Latin America as well as the Asian Pacific region.
These are just five of the most popular games in eSports at the moment. Nevertheless, this is a segment that keeps growing as we will explain in the next topic.
Invest in eSports: growth over the years
Over a decade, the championships have evolved from an underground culture into a mainstream industry, raising the interests of those who want to invest in eSports.
Mark Cuban, Alex Ohanian, and Ashton Kutcher as some of the investors that have already taken a shot in this segment.
The industry offers tremendous opportunities as its infrastructures and teams keep developing.
In the beginning, when the 20th century had just started, most tournaments were way smaller.
But as global organizations redirected their attention to the competitions, rewards as the $30.4 million prize pool of Fortnite’s World Cup became way more common. And an eye-opening opportunity for players around the globe.
Because most people who watch the competitions also play those games, there is a very particular difference from traditional sports. After all, after the tournament, they may have their own moments of glory from their own houses.
It is a turn of events on the audience engagement, which might reflect directly in the adherence over the next years. This opens seas for opportunities.
But how fast is the industry growing? Since its beginning, the market is growing rapidly, especially after the social distancing conditions imposed by the coronavirus.
On the other sides, many competitions have been canceled, as we have already mentioned.
Therefore, it is difficult to forecast its growth, but the projections are optimistic. There are lots of opportunities to expand its reach and lucrative marketing strategies.
Many favorable trends are boosted amid social-distancing initiatives, and the global demand for esports content continues to rise. Therefore, let’s take a look a data to understand how the market is growing.
Let’s take a look at the numbers
According to a Newzoo’s report, there are more than 173 million people who often watch esports and an additional 222 million people who watch occasionally today.
By 2022, the company expects a total audience of 645 million viewers, double of the entire population of the United States.
For this reason, the format has already become part of mainstream entertainment, while the industry seeks more effective audience monetization channels.
Discovering these channels is also a promising way to invest in eSports.
Also, by 2027, Data Bridge Marketing Research expects that the industry is projected to grow 400% and reach $4.28 billion. And some say this is a very conservative estimate.
So, in order to understand how companies invest in eSports nowadays, we will talk about some of the most popular ways, covering events and other market strategies.
Invest in esports: events
Esports events have become one of the most promising formats in the entertainment industry. Here are some of the events you need to know if you wish to invest in the segment:
The Electronic Sports League is one of the most famous tournament providers in Germany.
ESL ONE is one of the tournament formats, involving games such as CS: GO and DotA 2. They have already held competitions worldwide, as in Brazil and Poland.
ESL Intel Extrem Masters (IEM)
The Intel Extrem Masters (IEM) reunites the world’s best player. At the end of the season, the World Championship happens.
While in Season 1 (2007) the total prize was $160,000, in Season 11 (2018) it reached $1,373,750 for Counterstrike, StarCraft, and League of Legends.
League of Legends Championship Series (LCS)
This tournament, evidently, focuses on just one game: League of Legends.
By the way, it is held by the game’s creator Riot Games, and grand finals happen twice a year.
League of Legends World Championship
Beyond the last event, Riot Games already organizes a world championship for the game. In the tournament, 24 teams from around the globe participated in 2018. It has already been held on three continents.
This is the most endowed eSports event in the world, with a prize of $ 25.5 million in the DotA 2 tournament. Although it is organized by Valve (the game developer), most of the money comes from the fans.
Invest in eSports: what is already going on?
When interested in investing in eSports, it is completely natural to wonder about how companies profit from a business based on people watching other people playing video games.
There are many ways to make money from them, such as:
- broadcast licensing deals
- influencer marketing
- merchandise and others.
Many brands have already entered the game, such as Red Bull, Intel, and even Mercedes and Coca-Cola. Because streaming platforms, like Twitch, have a low volume of ads, they are a great space for creating content.
For instance, Red Bull has taken part in several strategies, such as partnering with huge companies, like T1 Entertainment & Sports, which is known for its League of Legends team.
In the partnership, players and teams have access to the company’s training resources, including places in Austria and California.
Other investments include sponsoring the League of Legends European Championship (LEC), and other teams, as G2 eSports, Cloud9, and Vodafone Giants.
Also, Red Bull has already hosted esports competitions in CS: GO, LOL, and other games, beyond partnering with influencers.
How to invest in eSports?
There are several ways to invest in eSports, and we will give you some tips on various forms. Although the market is still young, it is expected to grow a lot in the next few years providing new ways of investment.
We will probably see significant twists and turns on how it works, which might make it not such a good choice for risk-averse investors.
To be in the eSports segment it is important to be visionary, but also well informed.
Therefore, we will give some tips about investing in it as a company. Keep reading to learn more.
Firstly, find the right audience
It is vital to understand the eSports community before setting a marketing plan. Not all fans fall into the same category.
As a matter of fact, there are several genres of eSports, just like conventional sports. Some of them are:
- Player vs. Player (PvP)
- First-Person Shooter (FPS)
- Real-Time Strategy (RTS)
- Multiple Online Battle Arena (MOBA)
- Massive Multiplayer Online Role-Playing Games (MMORPG)
After that, create appealing content for your audience by reaching the teams they cheer up for. As a result, you both will be able to build lasting partnerships.
Choose the right channels
While getting to know your audience, you also need to know the channels in which they spend their gaming time. There are some popular streaming platforms, like:
- Youtube Gaming
- Gosu Gamers
- Bigo Live
A tip: compare subscription plans and user counts to enter platforms where you’re competitors aren’t.
Look for eSports influencers
Working with influencers might be an important part of your strategy because they can help you improve the reach of your campaigns. However, find those who communicate with the same audience as you and are active on your platforms.
Maybe you will need to sign up for influencer marketing to help you find those who fit your expectations. There are many ways to do it, such as partnerships, sponsorships, ads, and others.
For instance, a clothing brand called JINX partnered with Shroud (one of the top influencers on Twitch). On their website, they had jackets with Shroud’s insignia and were promoted with his streaming account.
Begin an eSports team
If you are a brand starting with a tight budget, starting a team might be a good option. Therefore, the team will work for you and advertise whenever they stream, which is way cheaper than partnering with big influencers.
Be the host of team events
If you’re new to the segment, start from a small scale and host events with your team. It is a great way to engage with your audience. Here are some types you might get interested in:
- Mini tournaments
- Multistreaming events
- Team meetings
Nevertheless, you can promote the event on your social media channels, encourage your team’s interaction, share advice with viewers, and even make a giveaway.
Sponson teams through agencies
You can also count on an agency to connect with a relevant eSports team for your brand. They assist you with influencer discovery and campaign management. But it can be more expensive than creating your team from scratch.
Also, your brand will be connected to the most reputable esports teams around the globe.
Here are some examples of influencer agencies:
- CheeseCake Digital
- Viral Nation
- Game Influencer
- Foreseen Media
- Flood Interactive
Co-sponsor eSports Events
When co-sponsoring an event you have a series of advantages, such as getting an audience that is already invested in the content. Also, you get a chance to build credibility on the platform you choose, if you partner with reliable brands.
Plan video ads
Ads may work when they are shown with the appropriate timing. A tip is to partner with a Twitch partner in order to do this because they are the only ones who can showcase them on the platform.
Content is king
The right content will help you establish your brand in the eSports industry. There are many useful strategies, such as having a blog with valuable information. Beyond that, you can collaborate with influencers for exclusive content and promote it.
Make sure to work on good titles and CTAs and the end of your blogs. If you succeed, there is a real chance of being recognized in gaming communities.
Revise your strategy
Finally, evaluate your strategy and make sure it brings the results you aim for. Keep studying trends and update them according to your expectations.
Learning how to invest in eSports is a new subject that might change your business. With the right information, you will enter this world and thrive.
What do you think about the tips we have given in this blog post? Have you started investing in eSports? Please tell us in the comments below.