Esports is Having a Cultural Breakout Thanks to Overwatch - But It Has a Long Way to Go

Oscar Garza and Zach Oscar each had a similar aha moment. Both ad executives are immersed in the burgeoning esports field—a sector that has been seeking some sort of a breakout, mainstream moment for several years.

They both took notice of something that literally and figuratively turned their heads.

“When I saw Overwatch on in a bar in LA I knew something was up,” said Oscar, an esports Analyst.

Garza enjoyed a similar lightbulb moment recently when he saw people gathered to watch professional gamers battle in a sports bar, just like they would to catch March Madness. “It’s on in bars, it’s on ESPN, it’s legit,” he said.

That’s not to say that every red-blooded American NFL and NBA fan is suddenly going to be spending their Sundays glued to the couch watching esports. But there’s mounting evidence that esports, i.e. a catchall term for multiple forms of competitive gaming, is having a cultural climax.

That’s led a wider group of top marketers to jump in, including recent not-exactly-early adopters like State Farm, Coke, Gillette and AT&T.

Big names from traditional sports are drawing attention

Esports still has a long way to go before we can call it a fan or marketing staple. From a fragmented field of leagues, games and players, to a generational gap, to agency infrastructure challenges—esports has major hurdles to clear.

But something is clearly happening.

Thanks to Drake and Fortnight and Steph Curry.

And Robert Kraft.

First off, let’s look at some of the data.

More than 70% of Americans—over 200 million folks—play some form of video game.

According to the Washington Post, 38 percent of young Americans say they are esports fans, versus 40% who claim to be NFL fans. And 30% of 16-to-34-year-olds in North American streamed some form of live gaming once a month in September 2018, according to a GlobalWebIndex survey.

Big numbers for sure.

But it’s important to keep a few things in mind.

Playing video games doesn’t necessarily equate to watching video games.

And just like watching a group of friends play pickup basketball isn’t the same thing as watching an NBA game, watching people play video games, whether on Twitch, YouTube or other platforms—doesn’t equate to being into esports.

So while the audience for esports is clearly growing, it’s decidedly young and it's still much larger in Asia than in the U.S. According to the Esports Ad Bureau, 58% of the esports audience in the U.S. is between ages 18 and 34, which comes out to roughly 48 million people overall.

However, given the nature of esports, you’ll find data that is all over the place.

That’s because esports viewing is also highly fragmented. Not only are there multiple platforms via which to watch competitions (including more and more TV broadcasts thereof), there are also tons of different games that are played at a competitive level, e.g., League of Legends, Call of Duty, et al, each of which then has a myriad number of tournaments, organizations and owners.

Saying you’re "into esports" isn’t akin to saying you’re an NBA fan or even a basketball fan, since the current landscape resembles a few dozen different NBAs, NCAA division and D-Leagues, with varying levels of organization.

Add to that mess the fact that in esports, individual game publishers often act as their own broadcasters. It’s an immature space, and a unique one to be sure.

Overwatch wants to be the big leagues for gamers

Things are evolving though, thanks to Overwatch. Oh, and a little game called Fortnite.

Founded in 2017, Overwatch League is an attempt to channel the very American old school sports world concept of city-based teams to the ultra fragmented esports world.

Launched by Blizzard Entertainment, Overwatch features 20 global franchises, including the New York Excelsior, Dallas Fuel and Seoul Dynasty.
Overwatch features a traditional pro-sports-style season culminating in a championship. It’s very much an attempt to make esports more accessible to new fans by getting them to root for the home team.

Overwatch’s growth—10 million fans globally watched the finals last year - has helped accelerate marketer interest in esports, while given non-gamer CMOs something to wrap their heads around.

“Overwatch has moved the needle,” said ad veteran Chris Pizzurro, advisor for the esports Ad Bureau.

Pizzurro said that he’s seen an uptick in non-gaming advertisers that show interest in esports in the past eight to 12 months.

“Brands get ‘fomo’ for sure,” said Kasra Jafroodi, Strategy & Analytics Lead at Blizzard Entertainment. “They see T-Mobile sponsoring a tournament and they want in. And that’s one spot that isn’t open to them.”

Another catalyst has been the investment money and attention Overwatch has drawn, said Jafroodi. The league—which just hosted its All Star game this past week—has smartly enticed influential billionaires to buy franchises, and be seen at events. Owners include New England Patriots owner Robert Kraft, as well as Dallas Cowboys owner Jerry Jones.

And beyond Overwatch, the likes of Magic Johnson, Steph Curry and Drake have all invested in esports, helping raise its profile considerably.

According to Goldman Sachs, investors have pumped $3.3 billion into esports-related start-ups since 2013.

Over-nite success

If Overnight has helped bring esports more conventionality, it’s the massive cultural phenomenon that is Fortnite, that has helped thrust gaming to the forefront.

“Fortnite has 250 million players,” said Essence’s Garza. “This is simply where people 12-to-35 are spending their time.

The explosion in popularity of Fortnite, a Hunger Games-styled multiplayer competition, has thrust gaming’s power to the new levels. Even if the average 40-something CMO thinks League of Legends is an upcoming Marvel movie release, Fortnight has likely invaded their lives in some fashion.

However, it’s again worth noting that millions of people playing Fortnite doesn't necessarily translate into millions of people watching someone else play Fortnite. Playing and watching pros play are two different things.

That’s reflected in recent ad spending estimates for this category.
Marketers are forecast to shell out $178.1 million in esports ad spending in the U.S. in 2019, according to eMarketer. That still pales in comparison to say the $70 billion TV market, let alone the monster $129.34 billion digital ad market in the U.S.

Advertising in esports is still verdant

While esports advertising for 2019 is expected to show a healthy 25% growth rate versus the previous year, it's worth noting that eMarketer pegged esports ad growth at 39% in 2018—indicating that growth is actually decelerating in this very young (in all senses of the word) market.

One of the reasons that esports isn’t growing faster is that the ways advertisers can buy into esports is all over the map. For example:

• Brands can sponsor individual teams, or events with signage, t-shirts, giveaways, etc. “It’s very Nascar-y,” said Pizzurro.
• Brands can look to ‘own an individual game’ by running ads/sponsors at a series of stadium events and live streams.
• Brands can create and sponsor their own tournament or event. “This is the easiest way to get started,” said Rob Davis, head of digital at Ogilvy USA. “Right now, that opportunity is wide open and it may not always be.”
• Brands can run campaigns with popular esports influencers such as Ninja, who boasts 5 million followers on Twitch
• Brands can simply run video ads during gaming competitions on Twitch, or they can run TV ads during broadcasts on ESPN and Turner. This is a much more standard media buy.

This all creates a less-than-straightforward path for budgets to change hands. Many sponsorship deals come straight from brands themselves, others through gaming specialists agencies and others through media buying firms.

Besides a non-linear buying path, esports faces a familiar challenge. Like any relatively new ad vehicle, measurement is rocky. There is no established third party research body like Nielsen tracking overall ratings.

“Right now if an advertiser runs an integrated [esports] campaign, they may get their numbers back from multiple sources such as Nielsen for TV, Comscore for digital, social from the streaming platform, arena data from the venue,” said Pizzurro. “It’s not ideal.”

That’s a major obstacle for big marketers who want to compare esports to TV sports. Even as esports’ popularity grows, the audience numbers for traditional sports, at least in the US, are way ahead.

“Brands also need to know that the gaming and esports communities are hyper aware of intrusive and irrelevant marketing,” said Ed Tomasi, Managing Director of esports at Big Block // Subnation, a creative agency and lifestyle platform. “In fact, ads like that can get brands shunned (flamed) almost instantly and with a mass global impact."

Brands have a lot to learn - and a lot to look past

Goldman predicts that US esports viewership will surge by 50% to 46.2 million in 2023. That would translate to 15.5% of U.S. internet users streaming esports at least once a month.

Beyond measurement, there’s esports ‘unfiltered’ reputation. For instance, the average Twitch stream can feature lots of rough language and misogynistic chatter.

“Big brands are already struggling with brand safety on the web,” said Garza. “And many already think game inventory is not high quality.”

“People think of games, and they think of guns,” said Oscar. “That’s a challenge. As is just understanding the content and how to engage properly.”

Garza concurred. He said that for too many marketing and ad executives, esports is completely foreign.

He recalled some advice he received earlier in his career from a top CMO.

“He asked our team, ‘do you use Snapchat?’ and many of us said ‘No.’ And he said, ‘You’re spending $30 million on Snap, you ought to know how it works.’”

For Garza, the best way for a brand to get it is to get to a live event.
“You have to learn about this world,” he added Davis. “And the only way to do that is by investing.”

Ogilvy’s Davis said it’s imperative for marketers to move now, despite the medium’s inherent growing pains, “We need to move faster,” he said. ”We missed an opportunity when video games first hit the market, and we don’t want to miss this one.”

On that note, CMOs now have an excuse to hit the sports bar this weekend.

Header image via BagoGames on Flicker; it has been cropped.