Why Are So Many Sports Franchises Investing in Esports

It’s been an interesting rollercoaster of events. Video games were virtually non-existent in a competitive capacity until fairly recently. Yet, look at them go today. The business of esports or professional video gaming is a serious one. The industry definitely doesn’t lack big names investing copiously in it. You have rapper Drake and rock band Imagine Dragons as some of the biggest investors who deemed it worthy to put down serious cash on esports.

Then again, you have many other brands, including but not limited to BMW, KIA, Amazon, Coca-Cola, KFC, Red Bull, and athletes such as Michael Jordan, Stephen Curry, Kevin Durant, and many other mainstream sports legends spending a pretty penny on esports. Why? Can it be because esports is on track to surpass $1 billion in market valuation in 2020, or is it a matter of survival for traditional sports?

Esports: A Gateway to New Audiences for Sports

Posting an exact number of the people who watch video games as a past time, and specifically esports is rather difficult. Clearly the first group is much larger part of the population than the latter.

But, just like regular sports have an exact way to gauge engagement with their target audiences, so do esports have a way of telling. According to Newzoo, an analytics firm, the esports audience will grow to 459.0 million people in 2020.

Taking a closer look at these numbers reveals that estimated 222.9 million are esports enthusiasts, or individuals who engage with esports on regular basis as viewers and active participants. Another 272.2 million are referred to as occasional viewers, but interestingly, both numbers have been growing.

By 2023, there must be 646 million people around the world watching esports either as esports enthusiasts or occasional viewers. In other words, sports franchises want to make the transition esports and hopefully open a dialogue with younger generations who have plenty of disposable income to spend on their pastime.

Successful Sports Franchises to Have Invested in Esports

Success in the esports world is important, and the biggest stream of revenue to date is sponsorships. Instead of trying to forcibly convert esports fans into sports fans, most brands have realized that brand presence is important.

As a result, there have been several examples of successful business tie-ups between sports clubs and esports teams. One of the most notable partnerships is that between Paris Saint-Germain (PSG), a French soccer club, and LGD, a Chinese esports organization. The teams signed up in April, 2018 and LGD agreed to rebrand as PSG.LGD.

A key element of the success of the partnership was LGD’s acceptance of the sports team’s brand name as well as the following success when the team finished second in The International 2018 and won $4,085,148.

Other sports franchises decided to stay closer to home. Many teams in the National Basketball Association (NBA) decided to launch a virtual alter ego of sorts in the dedicated NBA 2K League, which is backed by the NBA and Commissioner Adam Silver. Many NBA players also participated in the league during the 2020 NBA Season hiatus.

Sports Legends Are Investing in Esports

Sports franchises and professional sport organizations aren’t the only ones investing. As it turns out, sports legends from Michael Jordan to Kevin Durant are all heavily investing in esports. Maybe, it’s a good business idea or just a passion they have felt inclined pursuing.

Either way, Durant, Jordan and Stephen Curry have helped rise over $100 million for esports and have invested their own money, too. The size and share of investment is growing, of course, and while it’s difficult to track with specificity, any athlete investing millions in esports is doing so expecting a return.

Meanwhile, the esports market is opening up globally. South Korea, largely regarded as the home of competitive video gaming, has taken considerable steps towards easing up the esports industry, according to GamblingNews.com.

Opening up markets such as South Korea and Southeast Asia (SEA) in general means that more sports franchises and athletic organizations may consider investing in competitive video gaming events.

Presently, the biggest names in sports to have invested in esports are in the United States where the biggest concentration of esports jobs is focused right now. Other sports legends to have spent money on esports include NFL Hall of Fall quarterback Steve Young, New York Giants’ Odell Beckham Jr. and Andre Iguodala, to name a few.

Diversifying Revenue Streams

A brand can benefit a lot from expanding into new markets, not least because it adds another revenue stream to explore. Even though PSG would never strike home with true, hardcore gamers, as a soccer team, PSG.LGD is a source of inspiration for many Dota 2 fans.

By creating an identity that gamers can relate to, brands are creating a more diverse portfolio and the basis of further expansion. Besides, brand value is important. Even professional soccer players do not earn so much because their team is successful.

It’s rather a matter of the sponsorships and viewership interest. Esports already outpace some traditional sports in terms of viewership. In the United States alone, the NFL is watched by 141 million people whereas 84 million watch esports. The number of people watching esports is growing much quicker than those watching traditional sports, too, owing to the generous model esports use. To put things in perspective, the global esports viewership doubled from 260 million in 2016 to almost 495 million in 2020, a trend that is going to stay true. This wave of popularity also lead to many gambling operators adding esports betting markets to their online sportsbooks to satisfy the new entertainment niche.

Exposure to so many people allows sports franchises to reach new audiences quicker than ever before. Another important thing is that while sports like American football are localized phenomena, esports is a truly global undertaking.

It’s not uncommon for Americans to follow and admire Chinese and South Korean teams and vice versa. By building adequate brand awareness, sports teams are reaping great benefits and their long-term prospects are looking better than ever.

About RJ Frometa

Head Honcho, Editor in Chief and writer here on VENTS. I don't like walking on the beach, but I love playing the guitar and geeking out about music. I am also a movie maniac and 6 hours sleeper.

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