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How the gaming and esports sector is coming of age in Asia

After a year that saw gaming thrive, SportsPro asks Sportfive's Adrian Staiti for his views on the state of the esports sector in the APAC region, including sponsorship, media rights and what the industry could be doing better.

30 April 2021 Tom King

Adrian Staiti, APAC president of sports marketing agency Sportfive, believes traditional sports would do well to adapt and learn from esports, especially in the area of fan engagement.

While the ongoing disruption caused by Covid-19 remains a threat to a number of traditional sports sectors, by contrast the pandemic has seen gaming, esports and its affiliated industries thrive.

In Asia the momentum enjoyed by the e-gaming market is set to continue especially in the emerging markets, bolstered by a number of factors aligning almost perfectly for the industry. Increased smartphone proliferation across the region coupled with the implementation of sophisticated IT infrastructure is deepening the industry’s penetration, while the expanding middle class population continues to increase its disposable income.  

According to Newzoo, a provider of market intelligence covering the global games, esports, and mobile markets, that trend will be maintained even once the pandemic has passed. Newzoo’s 2021 Trends to Watch in games, esports and mobile report says that this year, 2.8 billion global gamers, over 30 per cent of the world’s population, will lift the games market income to US$189.3 billion, with markets such as China and Southeast Asia driving much of the revenue growth.

SportsPro asked Sportfive’s Adrian Staiti for his views on the state of the esports industry in APAC, including sponsorship deals, media rights, the increasing engagement of global brands and what the industry could be doing better.

How competitive is the media rights market for esports at present and do you expect to see it grow exponentially?

Staiti: Esports has evolved using a totally different model from traditional sports for media rights distribution, with free to access coverage used to maximise engagement with the audience through platforms such as Twitch, Facebook, YouTube and more. Globally, there have been a few media rights deals where major esports properties have sold their rights for significant fees, but these are very much the exception rather than the rule. And even in these deals, access to content still remains free of charge to the consumer – so these deals are more a strategy by the platforms to promote themselves rather than being driven by the esports rights holders.

In recent years, there has been an increasing amount of esports content, with the number of different games and esports events rising steadily. Against this backdrop, the question will be as to which premium content will be able to drive value from a media rights perspective.

The fact is that traditional media platforms have also yet to figure out esports. There remain questions about what the right type of content is, and what is the right format of esports content that is appropriate for traditional media platforms.

There is also the question of whether esports audiences will be looking at traditional media platforms to access esports content. The current mantra for rights holders is to go to where their audience is – and the esports audience is still primarily on free platforms like Twitch, Facebook and YouTube. So, this is a complex and evolving landscape, and the ultimate winners or losers are still yet to be determined.

The current mantra for rights holders is to go to where their audience is – and the esports audience is still primarily on free platforms like Twitch, Facebook and YouTube. So, this is a complex and evolving landscape, and the ultimate winners or losers are still yet to be determined.

Are there new companies or established specialists entering the esports rights market?

There has been an increasing number of agencies (usually small ones) that are holding themselves out as experts in the esports space. For rights holders and brands to get to the best advice on their esports strategy, it is critical that they turn to agencies that are established in esports with proven results to show.

Sportfive has in the past year implemented a global esports unit that is supported by our unique global sales network of local market experts. With this setup, we expect to further expand our agency’s leading position with rights holders on a national and international level with the support of a dedicated brand partnership sales team. Through our significant investment into our esports knowledge and resources, we have built up a specialised industry knowledge so that we can provide a premium service in this ever-expanding sector.

Are global brands establishing sponsorship strategies for esports in Asia?

Until relatively recently, the majority of esports sponsorships came from endemic brands such as software manufacturers and consumer electronic brands. However, as the popularity of esports has increased and with the infrastructure of the competitions/leagues becoming more established, sponsorships are rapidly starting to come from a broader range of sources including global and mainstream brands. With Asia generating nearly half of all global esports revenue, it is no surprise that global brands are starting to establish their sponsorship strategies for esports in Asia.

For example, Nike has signed on as the exclusive apparel partner for T1 last year, where the global brand will design uniforms for all of T1’s rosters. Nike had also committed to provide cutting-edge training facilities at T1’s headquarters in Seoul to aid in empowering the organisation’s players, as well as create training programmes for the players as part of its strategy to learn more about the relationship between improved physical fitness and athleticism as it relates to gaming.

In an unprecedented move for the market, Louis Vuitton has also got into the esports action by tying up with video game developer Riot Games for the League of Legends World Championship, which was said to be a move by the luxury non-endemic brand to expand its consumer base since esports offers a fairly large group of potential customers who are aligned with where luxury brands are looking for growth.

Nike signed on as the exclusive apparel partner for T1 in 2020

Has Sportfive in Asia increased its commitment/coverage of the esports sector?

Sportfive has a global strategy to increase its commitment to esports. We are actively involved in helping companies with developing an esports strategy, facilitating sponsorship deals for esports teams, and in acting as an esports consultancy for our event venue clients.

In a recent deal concluded, we have been appointed by esports organisation Team SMG as its commercial sales representative, where we will leverage our extensive global network and expertise in sports and esports consulting to develop and sell sponsorship packages to both endemic and non-endemic brands, uncover new business opportunities, and conceptualise unique activations to build awareness of the Team SMG brand in Asia.

We have also been in talks with our sports venue clients about the potential of esports events in Asia and we are currently busy with supporting two major game publishers with their esports event projects in Asia.

Do you have any examples of recent sponsorship deals in the esports sector in Asia?

As the exclusive commercial agency for T1 Entertainment & Sports (T1) – where its championship team T1 is headlined by legendary player Faker – Sportfive has successfully brought on numerous sponsorships for T1, including partnerships with Nike, BMW, Logitech and Samsung. We have also cultivated extensive efforts in esports in China over the last few years.

With esports being a strong area of growth across the different markets in APAC, we expect for our APAC business to establish a major role in the growth of esports at Sportfive while the agency continues its leadership position in esports.

Over the last six months, we have brought Red Bull on board in a multi-year partnership deal with T1 across all their competitive rosters. We have also brokered a deal for HP Omen, where they have been brought on as a sponsor of the League of Legends Champions Korea (LCK), and where the gaming computer brand will equip LCK professional players with their high-performance computers, in addition to having its computers at the Riot Games PC Café at the League of Legends Park in Seoul.

Where in Asia outside of China do you expect to see the biggest growth of esports?

In Asia, we are seeing countries like Korea and Japan becoming more of a mature esports market and we believe that Southeast Asia is the next region to look out for, where there has been an ever-increasing growth across all sectors of the esports environment. While many opportunities lie ahead for SEA with so many games and so much going on, it remains to be seen which of the games or publishers are going to become premium valuable properties.

For example, while Riot Games’ League of Legends holds a dominant market position globally, it is not the dominant property in SEA, so the development by Riot of new games like Valorant and Wild Rift gives them an opportunity to grab a bigger share of the SEA market.

During the pandemic esports tournaments have transitioned easily from offline to online. Are there other areas where you think traditional sports could learn from their esports peers?

At a time when sports fans are missing out on live sports, we see esports stepping up to fill the void. While esports is typically seen to be a threat to the traditional sports industry with its wider, younger, and more engaged audiences, traditional sports would do well to adapt and learn from esports, especially in the area of fan engagement. For example, traditional sports can look to engage remote global audiences during live games through live chatting or the implementation of technologies in VR and AR. As traditional sports look to reshape the viewers’ experience, they will be able to earn the participation of fans, diversify revenues and successfully monetise international fanbases.

There is also the issue of accessibility of the players to brands and fans, which is a big differentiator between traditional sports and esports. While we can have esports teams and players feature in campaigns and activations for brands or for fan engagement, it is relatively more challenging to get traditional sports teams and athletes to be involved in such campaigns, where their participation might just be at best a quick appearance at an event with little to no engagement.

In addition, while esports fans can usually interact with their favourite gamers in real time during a live stream, for example, there is often little access for fans to engage with traditional sports athletes. Even though we are seeing a few major traditional sports athletes stepping up to engage more actively with fans via social media – and especially so during the pandemic – more can definitely be done in terms of learning from their esports counterparts.

Wolves star Pedro Neto plays Fortnite online with YouTuber MrSavage

What are esports organisations doing right and what do you think they could be doing better?

I think that esports organisations have done really well in brand investment as part of sponsorship and advertising, which is also where the majority of the esports revenue comes from. In sponsorship, major non-endemic brands are entering esports every month, whether they get involved with the events and leagues, or through sponsoring individual players. Esports organisations have done a good job convincing brands that their players and teams have the innate ability to drive engagement to the brand. To add on to that, esports organisations have seemed to figure out the right ingredients that go into an ad or a paid stream that viewers want to watch. Marketing authentically, engaging and inviting interaction with youths have been crucial to the success of these esports organisations.

In terms of what they could be doing better, I believe that the esports industry remains heavily under-monetised relative to its audience potential, and there is more that esports organisations could do to drive better organisation and implement more sophisticated infrastructure to further professionalise the industry.

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