Authenticity Proves Key as Esports Sponsorships Remain on Track to Hit Record Revenue
In a new SuperData research report, Nielsen reported that digital games earned $3.9 billion worldwide between Black Friday and Cyber Monday, putting game spending on track for a record-breaking year. And as the entire esports ecosystem booms, sponsorships and partnerships are predicted to grow as well. In fact, earlier this year, Newzoo predicted that esports sponsorships would generate $636.9 million in revenue in 2020.
While esports event delays and cancelations due to the pandemic may have revised these estimates, data from SafeBettingSites.com reported esports sponsorships are still forecast to increase by 7.5 percent year-over-year.
In recent years, online gaming is a channel that has proven to be effective in meeting the Millennial luxury consumer, though certainly not limited to any demographic.
“There are tens of millions of esports fans,” explained Adam Deutsch, managing director, telecommunications, media and entertainment at Deloitte Consulting LLP. “They are global, reaching every large city around the world. These fans are generally a young, taste-making demographic and the fan base has disposable income.”
According to Sarah Willersdorf, global head of luxury at Boston Consulting Group, from a consumer perspective esports represents a significant shift in entertainment and culture, capturing a huge amount of people’s time and attention and ultimately creating a new channel for customer engagement. In fact, Boston Consulting Group’s estimates suggest that the esports audience will grow to 646 million globally in 2023, with the most frequent viewers in the Asia Pacific — an essential market for growth in luxury and fashion.
To put that into context, Willersdorf explained, “Twitch and YouTube Gaming have a larger audience for gaming alone than the combined audiences of HBO, Netflix and ESPN. This audience is young and affluent — making it even more attractive for brands. It is also an audience that is highly engaged, and we see playing and viewing time increasing by double digits every year. One of the key reasons that esports represents a significant opportunity is because it is dramatically under-indexed on monetization today.”
Recently, partnerships like the one between Louis Vuitton and Riot Games created notable noise in the industry and a limited-edition lipstick collection created by MAC for the game Honor of Kings sold out in under an hour on Tmall in 2019. Still, until a couple of years ago the collaboration between the e-sport and fashion luxury space was still relatively underdeveloped.
“Today, there are many ways fashion and luxury brands are engaging with esports — namely sponsorships of teams, sponsorships of events, getting involved with gamers, making general-purpose gaming-related products, as well as creating products together for in-game and real life,” said Willersdorf. “We expect the way luxury and fashion brands will partner with esports to continue to evolve, as the market is currently under-indexed from a monetization perspective. We expect the virtual and real-life product development, events and sponsorships to continue to grow, and we’ll also see brands begin to invest in their own games.”
Further, Deutsch explained it is important to recognize the distinct consumer that is both an esports fan and a luxury shopper.
“It is important for luxury brands to elevate esports and esports fans,” Deutsch said. “Fans in the space know they may not be as mainstream as traditional sports. They wear this uniqueness as a badge of honor, but they also want the sport they love to be validated and elevated.”
“Luxury brands that celebrate esports and make it special and differentiated can make inroads with fans,” said Deutsch. “It’s critical they stop to think about how their brand fits in. Figuring out where a luxury brand truly intersects with esports and its audiences can be difficult, but when it is done right, it’s an opportunity to drive significant brand affinity and loyalty with a highly vocal and loyal consumer.”
Similarly to any collaboration, the process requires some creativity from both parties.
“Over the past decade, fashion and luxury brands have become increasingly creative as to how they approach partnerships and collaborations,” Willersdorf said. “There are many similarities between how luxury and fashion brands collaborate with esports, and how they collaborate with lifestyle brands and influencers. Many e-sport franchises are brands in their own rights, and the gamers that play them are huge influencers [both] in-game and in real life. This mix of in-game and real-life events and products is a key difference. Another difference is that the engagement levels of gamers are typically higher than other types of influencers.”
Deutsch agreed, noting there are significant parallels between the two industries. “Like most luxury or lifestyle influencers and consumer brands, esports fans will critique things they perceive as inauthentic to the brand,” Deutsch said. “Finding a way to collaborate, versus simply advertising, is the key. Why should esports fans view a brand’s involvement as a net gain in this passion of theirs? There’s a desire among fans to see the games and esports teams and athletes they love get mainstream attention, but not at the cost of what they believe makes them unique.”
At the same time, Deutsch told WWD opportunities between fashion and esports does continue to look a bit different.
“The esports audience can be a little skeptical of advertising and sponsorships as the fanbase wants to see evidence that the brand is committed to the gamer culture,” Deutsch said. “In order to ‘earn’ their way into the esports audience consideration set, lifestyle brands are best served showing stamina with long-term advertising commitments. Beyond duration, working to smartly integrate into the esports culture is also essential to be authentic. For example, gaming influencers hold a great deal of sway in terms of defining ‘how’ brands activate with them to ensure the partnership is true to the influencer’s brand and to the esports audience. Authenticity and stamina are what it takes to win with the esports fan base.”
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