By Gill Dennis and Aumair Qayum, of Pinsent Masons LLP
The COVID-19 pandemic has had a fundamental impact on the market for sponsorship rights in traditional sports. However, one industry which has by its very nature been primed for this moment is e-sports. As such, where unpredictable cancellations and postponements of sporting events have led to sponsors feeling frustrated, e-sports offer a new horizon of opportunities.
Rising popularity of video gaming
The worldwide popularity of video gaming has never been in question. When development budgets and gross profits for best-selling games began to dwarf those of most Hollywood blockbusters (Rockstar’s Grand Theft Auto V grossed an eye-watering $6 billion from a budget of $265 million), interest from those outside the industry began to peak.
As video gaming continues to become more impressive and accessible (more people play video games today than ever before), the subculture has grown with it. As each new anticipated title is released, a plethora of official (and unofficial) YouTube and Twitch live streams, play-alongs and compilations follow, with countless forums, discussion boards and discords also opened. So, it is of little surprise that where a new game is focused on or has an element of multiplayer competition, the e-sports giant has always been ready to swallow it up.
Emergence of e-sports
E-sports is essentially a form of professional sporting competition through the medium of video games. Competitions can take place anywhere in the world, both online and offline, with the most popular events being held in large arenas with packed crowds. Depending on the game in question, players can compete individually or as part of teams and win substantial cash prizes.
When the COVID-19 pandemic first hit, e-sports were not entirely immune. The prestigious Dota 2: The International tournament which was due to take place in August 2020 in Stockholm was cancelled. The popular tournament was last held in Shanghai at the Mercedes-Benz Arena in front of an 18,000 capacity crowd and with a prize pool of $35 million. However, other major e-sports competitions, such as Activision’s Call of Duty League Championship 2020 took place online. Despite lost ticket sales, players at that event could play for a total prize pot of $4.6 million. Similarly, Blizzard’s 2020 Overwatch League continued online, retained its $5 million prize pool and was picked up by mainstream broadcasters and aired on ESPN, Disney and ABC. The pandemic also saw other smaller regional organisations and competitions continue to thrive.
During the crisis, other sports were able to embrace e-sports, either for the first time or with an increased emphasis, with event organisers arranging alternative e-sports events for real-life sports matches or races that would otherwise have to have been cancelled or played without crowds in stadia.
The Premier League hosted an online ePremier League: Invitational tournament where Premier League players, including Liverpool’s Trent Alexander Arnold and Manchester City’s Raheem Sterling, played FIFA 20, competing against one another with matches streamed on YouTube. Similarly, Formula 1 also shifted online, with drivers such as Jenson Button, George Russell, Lando Norris and Charles Leclerc taking part in a virtual grand prix using the F1 2019 game. Both competitions were viewed by millions online. The Premier League’s own ePremier League tournament is due to go ahead in 2021, where professional gamers will initially compete online in the hope of reaching the finals broadcast live on Sky Sports, YouTube and Twitch later in the year.
Opportunities for sponsors
With e-sports continuing to adapt and thrive in the context of the pandemic and receiving unprecedented mainstream media attention, an opportunity opens for sponsors to share the limelight.
E-sports offers unrivalled flexibility and choice for sponsors. Interested commercial partners can select the endorsements that are the best fit for their own brand objectives. Would-be sponsors can also choose whether to partner with organisations, tournaments, teams or individual players. They can target different regions and select the limits on their endorsements – from single events to multi-year partnerships.
For example, a sponsor with a focus on the North American and EU markets will most likely wish to target tournaments centred on the FIFA or NBA video games, given the popularity of live football and basketball in both regions. Conversely, a sponsor with a more universal approach may look towards organisations, tournaments and teams focused on the globe’s most popular e-sports games, such as CS:GO, League of Legends and Dota 2.
While past sponsors for e-sports have included names synonymous with the industry itself, more mainstream names have recently entered the e-sports market. For example, Mercedes-Benz recently announced a partnership with leading e-sports company ESL, which includes Mercedes-Benz sponsoring ESL’s flagship events taking place across several global markets. McDonalds has also tied in with various organisations, most recently with global organisation Gen.G and Czech organisation Entropiq, in relation to their respective events. US clothing brand Levi’s also recently partnered with NUEL, the United Kingdom’s biggest university e-sports organiser. Other household names which have also entered the e-sports world include Coca-Cola, Marvel Entertainment, Beats Electronics, Pizza Hut, Gillette and DHL.
E-sports appear to be here to stay; the e-sports market is set to grow to be worth more than $1.5 billion by 2023. With COVID-19 restrictions still in place in many countries, uncertainty remains in the traditional sports sponsorship market. Sponsors should explore whether the diversity in selection that e-sports offers can help them to achieve their brand objectives in an ever-changing landscape.
This article was originally edited by, and first published on, www.internationallawoffice.com.
For further information on this topic please contact Gill Dennis or Aumair Qayum at Pinsent Masons by telephone (+44 20 7418 8250) or email (Gill.Dennis@pinsentmasons.com or Aumair.Qayum@pinsentmasons.com). The Pinsent Masons website can be accessed at www.pinsentmasons.com.