The Keys To Esports Marketing Dont Get Ganked Final PDF
The Keys To Esports Marketing Dont Get Ganked Final PDF
August 2019
Esports, or competitive video gaming, has been —— Esports has the potential to be an even more
around for more than 20 years, and sponsors powerful branding medium than traditional sports
such as Intel and Red Bull began hosting events because of the interactivity of streaming. Ad
over a decade ago. But the last year has been frequency during esports on Twitch, one of the
an inflection point; non-endemic brands such as leading streaming platforms, is currently very low,
Arby’s, Coca-Cola, and Mercedes moved esports typically with just a couple of ad interruptions per
from the experimental marketing budget to the core hour. Streamers are willing to wear, consume, and
sponsorship lineup, helping to fuel an estimated 34 endorse sponsors’ products while broadcasting.
percent growth industry-wide in 2019.1 And with live chat, contests, and subscriber-
only content, esports fans can reach a level of
The last year has also been a watershed for esports intimacy with their favorite players and teams that
investing. Inspired by multibillion-dollar valuations traditional sports can’t realistically match.
for traditional sports clubs, investors looking to get
in on the ground floor have valued at least three
esports organizations2 at over $100 million. Winning with esports sponsorship
Still, sports marketers seeking to target young men
The fundamental driver of interest in esports is its through esports face a real challenge in achieving
reach and engagement with young men: efficient reach. Brands tend to underestimate the
fragmentation of esports fans among many games,
—— There are 21 million esports fans in the United leagues, teams, and players. As a result, they risk
States, of whom 83 percent are male and 84 spending their money unwisely and ending up, like
percent under the age of 35. 3 Esports is now the so many unseasoned gamers, getting “ganked.”8
third-most-popular spectator sport for young Keeping the following considerations top of mind is
men; 38 percent of US men under 25 years old key to avoiding such a fate.
are esports fans. They watch almost an hour a
day of streaming esports. 4 In our proprietary 1. Playing is not watching
research, we found that 10 percent of esports With 211 million gamers9 in the United States,
fans report watching over 20 hours per week. 5 playing video games is hugely popular. From our
research, 83 percent of US males aged 13 to 49 play
—— Contrary to popular belief, millennials are still fans video games, and 66 percent play at least once per
of traditional sports (38 percent for millennials week. However, only 37 percent of those who play
versus 45 percent for Generation X) and have competitive video games at least once a week also
access to pay TV (78 percent for millennials watch esports weekly.
versus 84 percent for Gen X). However, millennials
watch much less TV, viewing 28 percent fewer 2. Too many game titles
hours per week of TV in 2016 than in 2010.6 There are currently esports leagues and compe-
Nielsen finds that esports fans are even harder to titions for over 30 different game titles. There is also
reach on TV, with fewer than 40 percent claiming significant churn: Fortnite and PlayerUnknown’s
to tune in on a weekly basis.7 Battlegrounds are two of the top five esports in
1
Esports sponsorship is projected to reach $457 million, according to Global Esports Market Report, Newzoo, 2019, newzoo.com.
2
For example, based on Cloud9’s $50 million series B raise in 2018, Forbes estimates the company is worth $310 million on $22 million in revenue.
Esports organizations, such as Cloud9, Team Liquid, or TSM, field multiple teams, typically one team per esports title (for example, DOTA 2, League
of Legends, or Overwatch). The teams share a common brand across the esports organization. This structure is similar to European clubs, such as
FC Barcelona, which is most famous for its football club but also fields teams in basketball, volleyball, team handball, ice hockey, and rugby.
3
Justifying brand investments in esports, MRI-Simmons, December 18, 2018, simmonsresearch.com.
4
“Nielsen releases unprecedented insights on esports fan attitudes and behaviors leveraging Twitch data,” a joint study from Nielsen and
Twitch, December 13, 2018, nielsen.com.
5
McKinsey US Esports Fan Survey, December 2018.
6
Daniel Singer, “We are wrong about millennials; they ARE sports fans,” Sports Business Journal, September 18, 2017, sportsbusinessdaily.com.
7
Esports playbook for brands, Nielsen, April 24, 2019, nielsen.com.
8
“In a video game, to use underhanded means to defeat or kill a less experienced opponent,” Oxford English Dictionary, s.v. “Gank,” lexico.com.
9
“Over half of the 211.2 million video gamers in the U.S. play games across multiple platforms, according to NPD,” NPD Group,
September 11, 2018, npd.com.
Esports organizations field teams for many different However, only 37 percent of avid US esports fans
titles, but none covers all of them. Players rarely recognized three or more leading esports teams
compete in more than one title, and therefore a in our survey. About 45 percent of avid US esports
sponsored athlete reaches only a segment of fans. fans say they have a favorite player or streamer,
which implies that more avid fans follow favorite
3. The most popular streamers are not players in their favorite games, with less concern for
esports pros which pro team (if any) they belong to.
The most popular esports events are still the major
team competitions, such as the League of Legends 5. No esports organization is globally dominant,
World Championship, which had 20 million average but most have out-of-market fans
viewers for the final match between China’s Invictus European and North American sponsors will find
and Europe’s Fnatic in 2018.11 that at least 30 percent of esports viewers are
from outside the team’s home country, particularly
However, pro competitions constitute just 11 percent in China, Japan, and South Korea, which leads
of esports viewing, according to Newzoo. Based on to wasted impressions. Several esports leagues,
2018 Twitch data,12 all of the top ten channels for the such as Overwatch League and NBA 2K League,
year were dedicated to esports, of which seven were have created city-based franchises to tap into
the personal channels of video-game streamers, fans’ hometown passion (and local sponsorship
led by Ninja (Tyler Blevins) with 230 million hours budgets). Nonetheless, these franchises report
viewed. Of these top esports streamers, only two that so far around 80 percent of viewers are
are currently members of pro teams (Dakotaz of outside the home metro area.
TSM and Tfue of FaZe Clan). The other five (Lirik,
Ninja, Shroud, Sodapoppin, and summit1g) are 6. Measurement is (still) imprecise
independent streamers (exhibit). Marketers want metrics that are comparable to
traditional sports, and esports has made significant
Independent streamers are all accomplished progress toward that goal. For example, Twitch
gamers, but they function more as entertainers and YouTube now report the unique viewers and
and coaches than as competitors. Some streamers average-minute audience size for each esports
operate as “content creators” for pro teams, which stream and clip, which gives third-party validation
means that they affiliate with the team on Twitch, for the size and engagement of fan bases.
YouTube, and other platforms, giving the team more
views and the streamer the opportunity to reach However, we still can’t segment esports viewers:
the team’s fans and benefit from its commercial How many are in the United States? Male? Thirteen
arrangements. However, it’s not yet clear how to 18 versus 18 to 35 years old? How many watch
sustainable the bonds between streamers and less than an hour per week versus ten-plus hours?
teams will remain, particularly for the most popular As with other forms of digital advertising, brands
streamers who have the scale to replicate the also have concerns about ad viewability, viewing by
benefits of team affiliation on their own. bots and fake accounts, and targetability.
10
Allegra Frank, “Apex Legends tops 50M players in first month,” Polygon, March 4, 2019, polygon.com.
11
Aaron Mickunas, “Riot says this year’s League Worlds had the ‘largest viewership number’ of any esports event in history,” Dot Esports,
December 11, 2018, dotesports.com.
12
Esports Observer, January 8, 2018–January 8, 2019, esportsobserver.com.
Exhibit
Twitch top channels by hours watched, Twitch top content by hours watched,
Jan 8, 2018–Jan 8, 2019, million Jan 8, 2018–Jan 8, 2019, million
Esports streamer
PlayerUnknown’s
Sodapoppin 52 Battlegrounds 374
Counter-Strike:
Dakotaz 51 360
Global Offensive
1
Independent streamers stream esport games but don’t compete on teams in organized competitions; teams associated with each streamer: Ninja: Luminosity, content
creator; Shroud: formerly Cloud9; Summit1G: formerly A51, Team Mythic.
Source: Esportsobserver.com; Upfluence.com
7. Most esports fans are also fans of is the only sport I watch.” Even among those who
traditional sports said that esports is their favorite sport to watch,
There is a perception among many sports marketers fewer than one in three said it was their only
that esports fans are separate and distinct from spectator sport. Research firm MRI-Simmons
traditional sports fans. “It’s like high school; the has estimated that 20 million of the 21 million US
jocks are in one cluster and the geeks in another,” esports fans are also fans of traditional sports.
one team president told us. Going to a major esports
event can tend to reinforce that impression; fan 8. Sports video games are secondary esports
behavior can be more like a comic-book convention US major leagues have embraced esports; for
than a football game. example, Major League Soccer, the National
Basketball Association, and the National Football
This perception is largely incorrect. Only 13 percent League have created competitions for Fédération
of US esports fans in our survey said that “esports Internationale de Football Association (FIFA),
—— Get face to face. Live esports events have proved The power of esports to reach millennials as well as
to be immensely popular, and sponsors value members of Generation Z, particularly males 12- to
in-person engagement in front of a passionate 35-years old, is now undeniable. Current valuations
arena crowd much more than via PC or mobile. for esports teams and leagues reflect burgeoning
investor confidence that marketing budgets for
—— Improve audience measurement. The major esports will grow accordingly. If the esports industry
streaming platforms should enable marketers can deliver efficient reach—through better sales
to cap ad frequency and measure unduplicated and marketing capabilities, standard audience
reach, including sponsorships sold by teams metrics, and aggregation of titles and streamers—
and leagues. that confidence should be rewarded.
An abridged version of this article originally appeared in Sports Business Journal on April 22, 2019.
Dan Singer is a partner in McKinsey’s New York office and the leader of McKinsey’s global sports and gaming work. He is also an
investor in TSM, an esports organization. Jayson Chi is a senior adviser to McKinsey, based in the Hong Kong office. He is also an
early-stage investor in interactive entertainment, with investments in Popdog, an esports and streaming agency, and in TSM.
The authors wish to thank Uta Allenstein, Oliver Gediehn, Alex Kimmet, and Daniel Sun for their contributions to this article.