Why Brands Spend Millions in Esports Sponsorship

Esports is a growing industry, with a bigger viewership year after year. As many eyeballs are on esports, this an opportunity for brands to reach a new, engaged audience. Through advertisements and sponsorship, some brands are massively investing in esports.

As esports get more popular, brand reach new marketing opportunities

More and more companies are investing in esports. In the first years of esports, the sponsors were mainly companies related to video games or the overall computer and high-tech industries. A few years later, the public watching esports changed. Instead of avid gamers supporting a few teams of an obscure scene, esports competitions now fill stadiums and air on major TV networks.

The audience of esports evolved from a circle of initiates to the general public. Esports events now gather both knowledgeable gamers, sports fans cheering for the online version of their favorite team, as well as kids and grandparents.

As the audience gets larger, more companies have the opportunity to target their customers. Brands from various industries are now sponsoring esports, such as Coca-Cola, Gillette, Redbull, BMW, Nike and Louis Vuitton.

A growing market of over $1 billion

In 2019, the esports industry generated $1.1 billion in revenue according to a Newzoo report. Of that amount, $456 million came from sponsorship deals, a 34.3% increase from the previous year.

The main sources of income in esports are:

• Sponsorship (42%)
• Media rights (23%)
• Advertising (17%)
• Merchandise and tickets (9%)
• Game publisher fees (9%)

Sponsorship is the main revenue stream of the esports industry and is the second-fastest-growing factor alongside media rights. Additionally, esports generate a whole parallel economy. Video content, written guides and even whole esports schools are opening all around the world. Betting sites have also started venturing into esports.

The different form of sponsorship in esports

Just like traditional sports, brands chose their sponsorship depending on their budget and marketing goals. Sponsorship in esports can take various forms, and brands get different value from sponsoring an event, tournament, team, or player.

Major brands feature esport events to maximize their exposure to esports viewers. Some examples include:

• The Overwatch League sponsored by Intel, T-Mobile, Coca-Cola, Omen by HP and Toyota;
• The League of Legends North America Championship Series (LCS), sponsored by State Farm, Alienware, Secretlab, Rocket Mortgage, Honda, MasterCard, GreenPark Sports, Red Bull and Bud Light;
• StarCraft II’s IEM Katowice 2020, sponsored by Intel, Vodafone, Acer Predator, MTN Dew Game Fuel and Euronics;
• Counter-Strike: Global Offensive IEM Masters XIII sponsored by Intel, Vodafone, Acer Predator, Game Fuel, HyperX, Betway, paysafecard and NEEDforSEAT.

Even if sponsoring events is the best way to be seen by a maximum of players, it requires a budget some companies are not willing to spend for a single event. Most sponsoring goes to teams, as in traditional sports. Esports jerseys now feature several brands, the same way soccer jerseys usually do.

The main difference in sponsoring a team in esports rather than traditional sports is the concept of structures. Major teams often belong to a company owning several teams competing in different games. Signing a sponsorship deal with such a structure ensures maximum visibility in different esports scenes.

Some brands even go as far as creating their own esport structure, as LDLC, which now has teams competing in Counter-Strike: Global Offensive, League of Legends, FIFA, PlayerUnknown’s Battlegrounds and Fortnite.

The future of esports sponsorship

As a booming sector, esports will face many challenges in the years to come. The interest of the mainstream media is growing, especially following the increase in the esports viewership during the quarantine. Traditional sports came to a halt due to the COVID-19 lockdown, but esports can happen anywhere, anytime.

This period marks a new beginning for esports – the introduction to the general public. More viewers mean more marketing targets for brands, which will keep on investing in a sector in full expansion.