Non-gaming firms overpay for e-sports brand sponsorship

10 September 2019 3 min. read
More news on

As sponsors rush to support teams, tournaments and individual players, the financial backing that e-sports already enjoys can only be matched by a handful of traditional sports. While the digital arena does give access to younger demographics, however, a new report has suggested that companies may be overpaying to back e-sports, as these engagements are typically difficult to monetise.

E-sports are a form of competition using video games as the field of engagement. Most commonly, e-sports take the form of organised, multiplayer video game competitions between individual professional players or teams. Although organised online and offline competitions have long been a part of video game culture, these were largely between amateurs until the late 2000s, when participation by professional gamers and spectatorship in these events through live streaming saw a large surge in popularity.

In the late 2010s, e-sports have become a significant aspect of the booming video game industry, with many game developers actively designing their games toward a professional e-sports subculture. At least 350 million people are estimated to watch e-sports around the world, with that figure expected to jump to 600 million as quickly as 2020. Exemplifying the heights e-sports have reached, the recent Fortnite World Cup attracted more than 2.3 million viewers, and with it a bucket of sponsorship money which enabled the 16-year-old winner to take home a jackpot of $3 million in prize money.

Estimated annual e-sports sponsorship deal value by industry

To an extent, this makes perfect business sense. Modern businesses are plagued by fears they will no longer be able to reach younger generations through traditional advertising avenues – and e-sports consistently reach a younger demographic than traditional sports, irrespective of sex and gender. That means brands have flocked to competitions in the hope of tapping into a hyper-engaged audience; however, a new report has warned that seeing e-sports as a silver bullet for all marketing concerns risks wasting significant funds.

A study from market intelligence firm Sportcal found that non-endemic sponsors – those whose products do not directly relate to the activity they are sponsoring – are likely to struggle to monetise their sponsorship investment. Of the $78.05 million poured into e-sports by firms across the industrial spectrum, only $3.5 million came from the gaming and gambling sector, so this conclusion could mean huge amounts of capital are ultimately being flushed down the drain.

Consumer goods firms made up the largest investors in e-sports advertising, sinking an estimated $21.8 million into professional gaming events. While technology firms could argue they are more directly related to gaming to justify their $15.9 million spend on e-sports deals, meanwhile, clothing and accessories firms spent $13.35 million on e-sport marketing. Of the other big spenders, beverage firms will likely think nothing of the $4.75 million spent on deals with e-sports promotions, but financial service companies almost equalled them to engage with a sport that is unlikely to engage large numbers of customers in the short-term.

Speaking on the findings, Conrad Wiacek, Head of Sponsorship at Sportcal, said that the brands might not understand the landscape of e-sports, meaning they are spending more on the emergent sport than they need to. While endemic brands seem to have a better understanding of this, and likely see healthier returns on their investment, the continuing attractiveness of e-sports to non-endemic brands is not assured. However, there may still be some non-endemic sponsors who are playing a longer game, and will remain committed to e-sports.

Waicek concluded, “The brand benefit from these sponsorships is in growing their awareness and visibility among a devoted and engaged audience, helping them to find and develop new brand advocates.”