The Business of Esports

Where can you find a highly engaged young audience? The answer is, not surprisingly, in gaming and esports. But the business of gaming and esports is more surprising as this content form is growing in acceptance and value for marketers. BIA sponsored a panel discussion, moderated by Zach Oscar, Consultant for Hocus Focus, on the State of Esports and Gaming in 2021.

Esports Landscape

In the Video Game ecosystem, there are Publishers who develop the game itself and the strategies to take the game to market. These companies include Tencent, Apple, and Sony Interactive. There are the Games themselves which is a $180billion worldwide revenue industry and growing. Currently 68% of all U.S. persons 2+ play video games. There are Game Franchises such as Mario and Game Streaming and Streamers who compose the participants and viewers and the overall bucket of esports within gaming which, according to Oscar, are organized live events and streamed digitally showcasing multiple teams and players that are akin to traditional sports, with Leagues, and have reached revenue levels of $1.1billion. For advertisers, these industries offer a rich opportunity to reach a highly engaged audience through sponsorships, native video and product placement.

Esports Audience

Nicole Pike, Global Sector Head of Esports and Gaming at YouGov, noted that, “most people are gamers,” today and that they constitute, “a broad group with lots of nuance.” From her perspective gamers represent the trends that indicate where media is heading. These gamers are, “super-passionate and traditional forms of media are not reaching them,” she added.

For David Tucker, Senior Vice President, Managing Director, US Strategy, MAGNA, gaming and esports is the place to, “reach a vital audience.” He explained that, “There has been a -54% decline in 18-49 in linear TV viewing. Look at the magnitude of figures. Amazon has seen a 73% growth in ad revenue from Twitch.” It is there, he added, where you can find a valuable audience. But advertisers are lagging, he admitted. “There is a big gap in what today’s advertisers think about (gaming) and the amount of spend,” they attach to it.

Covid’s Impact on Gaming & Esports

The pandemic, which has impacted and initially limited the amount of general sports content available to viewers, might have fueled this dramatic increase in gaming viewership. Pike believes that while there has been some impact because of Covid, especially on gaming use hours, growth would have happened anyway. “There will likely be a slowing speed of acceleration,” she explained, but added that this growth was part of an overall trend.  “Covid was the accelerant of a trend that was already in place,” which ramped up what might have been three years of growth into one year. She also believes that, “trends have stickiness,” inferring that the end of the pandemic may slow but not stop this growth.

Nick Barrionuevo, Gaming Partnerships Lead for Samsung Ads, saw a, “footprint spike at the beginning of the pandemic,” then the spike came down to a new plateau and incremental rise.

Gaming & Esports Business

For Barrionuevo, the audience shift to gaming is causing a business shift. Currently, he reported, there is more viewing on streaming than viewing to linear on Samsung TVs. “OTT content is the way to reach gamers,” he stated and added that he is working on ways to serve this audience and reach them where they are.

According to Dave Madden, Executive Vice President, Gaming and OTT, Simulmedia, “Brands have to figure out how to turn these (gaming) environments into marketing opportunities,” because Covid has created a new social structure for young consumers. To that end, he recommended co-marketing partnerships, more like major league sports.

Ultimately, for esports, gaming, and game streaming to fully compete with other media like TV, there have to be a common viewership metric that can be easily comparable. “What is the opportunity cost of moving money to gaming & esports. We need a comparative metric,” Pike stated.

For Oscar, the future of gaming and esports looks very bright. “As a young millennial myself, I can tell you that I have never owned a cable subscription and I don’t really plan on it. However, I can tell you I’ve banked hundreds if not thousands of hours online with my friends in some of my favorite games, watching some of my favorite streamers, and cheering for my favorite esports teams. For me and many others, gaming isn’t a solo activity - it’s how we stay in touch with our social networks. Marketers who are willing to put in the effort and not just stick to the status quo of advertising in traditional formats have an incredible opportunity to reach a great audience and build unique and exciting ways to connect with them,” he concluded.

This article first appeared in www.MediaVillage.com

 

Lesson From Advertising Week – It’s The Data

When I think of autumn, I can't help but think of advertising week which is a jam packed series of overlapping events highlighting how our industry is innovating, evolving and transforming. At the end of it I always marvel at how much I have seen ... and how much I have missed because of time. But the one thing I have not missed (because it is ubiquitous) is the recent exaltation of data and analytics in our industry. I am thrilled by the recognition of the value of research as a strategic revenue driver.

So here are my research takeaways from Advertising Week and the OMMAs:

It's Not Big Data. It's Smart Data

Data by itself tells you nothing. It has to be put into context with all of the different datasets' inter and intra relationships. Too much data for data sake is problematic as David Tucker of UM noted "We have the capacity to know more about people today but it’s like boiling the ocean and data makes the ocean deeper. People don't say what they think and don't do what they say. We need more careful insights." But not having enough data is problematic as well as Claudia Perlich of Dstillery said, "Do you have enough data to go into the details?" So finding that optimum amount of quality, meaningful data will be the Holy Grail going forward.

Use Data to Look Ahead, Not Back

The use of data to forecast has never been more promising. Anush Prabhu of Deutsch explained, “Back 10 to 15 years ago we analyzed effect. Over the years, it has become how it will affect. We are looking forward with more data. We are looking at what is going on culturally. We can do and create things.” Traditional methods have been based on past performance - how a program rated in the past, for example, used to project future ratings. But now with machine learning, AI and expert algorithms, we may be able to better ascertain content attributes and target segmentations in such a way that even without prior actual performance, we can forecast the chances of its success.

Identify, Measure and Monetize –

The mantra, “If you can’t identify it, you can’t measure it. If you can’t measure it, you can’t monetize it” has been gaining in volume over the past year. Initiatives that have been calling for industry standards are gaining traction. For example, CIMM’s Trackable Asset Cross-Platform Identification (TAXI) was developed to cover the entire content identification spectrum - programming and advertising – as a way to verify exposure to assets as they travel across platform. CIMM’s Jane Clarke explained, “The way it is now, everyone has their own proprietary tag and code. There isn't an open and inter-operable standard. And so we just kept saying to ourselves, as with the UPC code, couldn't there be a UPC code for media? CIMM has been collaborating with Ad-ID and the Entertainment ID Registry (EIDR) along with the Society for Motion Picture and Television Engineers (SMPTE) to bring UPC code-like benefits to tracking assets through the media ecosystem. This will drive innovation not only for cross-platform measurement, but also for other automated innovation in digital TV.” The IAB’s Randal Rothenberg offered his view, “There is no universal coding system across platforms but we are closer to embedding Ad-ID in digital which will enhance measurement and inter-operability. This will be a major panacea to digital marketing community.” Nancy Hill from the 4As added, “Ad-IDs will not be a replacement for the ISCI code. The faster we get Ad-IDs implemented across the chain, the more relieved we will be. We are structuring norms and behaviors that allow us to do business and not contain innovation and creativity. We need to be able to grow profitable businesses over time.”

No One – In Digital or Traditional- Is Happy With Current Measurement Analytics

There are many executives from across the spectrum who are frustrated with the rate of change and implementation of audience based standard measurements. While there is “pressure for more measurable media” according to Anush Prabhu, "Analytics have a long way to catch up to what we are doing in digital" added Kevin Rettig from Accenture. MediaVest’s David Shiffman believed, “Everyone is creating their own solution for their own platform for their own needs. It doesn't serve the whole.” But there is hope, Shiffman added, “(comScore’s) Project Blueprint brings together various data streams. They have a convergence panel to understand how data comes together. They take a consumer oriented view - not channel by channel – and it has the potential to shift the conversation. There is excitement and hope around that initiative.”

The Future Belongs to the Nerds

The future looks bright for those of us who understand and work with data. Mediapost’s Steven Smith noted that “Trend lines have been more to analytics” while David Tucker said that “Opportunities have always been there. They are not new. What data allows us to do is find those moments more frequently. Data is unlocking and making solutions more visible for us.” Even conversations with clients have changed according to GroupM’s Harvey Goldhersz as they realize that "Everyone we made fun of in college will be our bosses." Oh do I hear music?