Esports: The race to invest

26 November 2018

Watch my vlog or read the blog version below.

 

In my last article, What happens when the regulator comes in?, I highlighted the growing number of major partnerships being struck throughout the esports ecosystem, citing what a coup it was for the wider esports industry, not just for those involved.

These deals give the tantalising prospect of future partnerships involving similar sized brands on a similar scale, as they look to follow suit. For example, PwC’s sports survey 2018, says that 74% of traditional sports teams surveyed are likely to invest in esports teams, demonstrating this increased activity. But can big names afford to wait and bide their time before commiting?

First mover initiatives

On reflection, any major brand or organisation entering the market - to either sponsor a top level, global esports tournament, or to invest heavily in a leading team - feels like a first mover initiative. I know many may not agree and suggest partnerships have long been in existence in esports, often involving major brands and famous faces; but the recent big deals that have been made are not just testing the market, nor are they using a light touch partnership to learn about the ecosystem. The investors are in fact trusting the metrics and data analytics which demonstrate agreeable demographics and growth projections, underpinned by unrivalled passion in the industry - and they have jumped right in.

So have these investors won a race they did not know they had entered? Have they sprinted to the front of the queue, to showcase their brand to a youthful, global audience.

A deal that works both ways

Endemic organisations involved will certainly benefit from the skills and expertise that major brands can bring. They often have track records in partnering major global sporting events: European football, World Cup football, major golf tours and events, top US franchised sports, the Olympics - the list goes on, but this is the company those endemic organisations now keep.

There is however, a key differentiator that an esports partnership has compared to those listed above. Albeit those listed are each iconic and (for the moment at least) have a larger global reach; that global reach is to a saturated market. A market that is very familiar with the major brands, their services and their competitors. A market that is often pretty loyal to their preferred brand. Partnering with esports opens up a whole new demographic, many of whom may be new to the brand and services they provide.

A limited pool of opportunity?

There are only so many seats at the table. Everytime the music stops, a new partnership will be made, and a chair will be taken away, leaving fewer major opportunities. There is only a finite number of major globally recognisable teams; even fewer top titles and then again fewer major publishers. You have a handful of recognisable event organisers putting on a finite number of annual global tournaments, then that is it - top tier global market covered. After this attention can be turned to the tiers below the international series and then on to the local, no less important markets, where risk is increased while looking to back the next big thing in a competitive start up environment.

So what next?

As the industry grows, more opportunities for investment and sponsorship will develop. In fact, as the available investment and sponsorship opportunities are taken up, this will stimulate the growth and increase further opportunities. So all is not lost if hesitant investors lose this particular race, they will be given opportunities down the line - it just may cost a bit more to enter the market at that point.

More and more investors, from private individuals to private equity, as well as major brands, have over the past 3 to 4 months cast their eye on esports and are looking for the right entry to the market that works for their brand and supports their strategic objectives. Drake & Scooter Braun have recently invested in 100 Thieves; Michael Jordan in the parent of Team Liquid; Nike have signed a leading player; PwC’s sports survey 2018, shows that over 70% of sports leaders see it as necessary for traditional sports to develop a strategy to enter the space. That is a lot of new entrants over the next few years!

Perhaps some organisations do know they are in a race to maximise partnership or investment opportunities after all? Time will tell.

 

For more of my views on what's happening in the esports industry, check out my earlier blogs on the growing presence of the UK in esports and what happens when the regulator comes in? - and get in touch.

Andrew Fahey | Director
Profile | Email +44 (0)7738 845455

Twitter
LinkedIn
Facebook
Google+

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated and will not appear until the author has approved them.