The $ense & sensibility of esports

Non-traditional content like esports are no longer temporary distractions to be understood at arm’s length. We sat down with Malcolm Thorpe, VP of business development at Lagardère Sports - Asia, to gain exclusive insights on the evolving patterns in media consumption, and how brands can successfully plant their flags in both traditional sports and esports.

The rise of non-traditional sports in APAC

Q: What are some trends you have observed about the rise of non-traditional sport in Asia Pacific?

Malcolm Thorpe (MT): Well, the first thing we need to ask is: what is a traditional sport and non-traditional sport? To answer that, there are two trends we see going on at the moment. 

At the other end of the scale, the upshot in non-traditional sport is primarily led by esports. It has a lot of the same characteristics as traditional sports, in that it involves elite athletes performing in competitive tournaments. But obviously, it is a new genre of sports. Compared to traditional sport, it has a totally different viewing experience and distribution model. The interest level is high, especially among certain demographics, and even non-endemic brands are beginning to get more involved in partnering esports. Undoubtedly, esports is a prevailing trend in this region.

Changing patterns in media consumption

Q: Given that esports is a digitally-driven form of content, does the rise of esports also reflect how this generation of fans prefers to consume content?

MT: I think that’s exactly right. There is a big ongoing change in the method and style of consumption of sports and entertainment. There is a move away from traditional broadcast television and into the digital space through OTT delivery platforms like Netflix and Disney. In sports, this is evidenced by how sports rights owners and sports event owners are starting to use digital and OTT delivery systems for their sports content. This is really interesting but at the moment nobody has all the answers. I don’t think anyone has found the right way and there isn’t a single model that everyone agrees on. People are still exploring a lot of different ways and methods. There is no way they will all be successful in the short term, and the space continues to evolve even as people are trying to develop it.

Q: Do you also see a shift in tech companies finding rights to this content, as we see more people engaging with short-form content?

MT: I assume you are asking if the tech companies are going to become big buyers of sports content. Well, it’s interesting that so far, they have really only dipped their toes in the water. Amazon has done a few deals in Europe and in the UK to buy exclusive rights to content. Facebook has done a few deals here and there, but even they are still experimenting.
It was interesting to see that Facebook’s deal to buy Premier League rights in Southeast Asia was called off. This tells you that even people with big bank accounts like Facebook are not just paying whatever it takes to acquire the rights and then figure it out later. They are trying to find a model that will work for them and they are not just doing it for the sake of having it. They are trying to find a business model that works.

Conversely, the traditional broadcaster’s approach is different from tech companies. Traditional broadcasters are often looking to leverage their control over premium sports rights, not just to monetise that content for its own sake, but also to help drive their broader business. So, for example, they’re selling broadband and the triple-play packages and leveraging the sport rights as the real drivers to pull in the audience, which allows them to upsell other content and services.
Tech companies, on the other hand, are mostly interested in driving engagement. Facebook, for example, wants to make sure people are spending more time on their platform. For tech firms, it’s all about optimising the actual engagement with the ultimate consumer; whereas for a broadcast partner, it’s all about getting a sale done. Facebook wants people to spend more time on their platform because that is the metric by which they generate revenue through selling to advertisers. As for Amazon Prime, they are looking to have a more engaged audience so that people are spending longer within their sales platform.

Brand’s attitude towards esports

Q: Moving on to esports, do you think that in 2019, brands still think it’s a niche area of investment, or do you think it has become quite mainstream?

MT: I think it depends on who you talk to. And, to an extent, you need to divide brands between the endemic and non-endemic. The endemic brands understand the ecosystem very well and are very comfortable with it, whereas the non-endemic brands are still learning how to navigate in a totally new environment. It’s a very complicated environment but some of them have learned very quickly.

Part of what we do, when we represent esports rights, is to spend a lot of time educating brands about what the esports environment is: which game is which, what sort of audiences the different games engage with, where the audiences are for the different games and across the different platforms, etc. Then, we try to match a brand’s objectives with the platform that is the most effective for them. It’s an ongoing education process. There are still a lot of brands who have yet to engage with esports and don’t know enough about it.

As esports becomes more well-known, some games will become more popular than others in the same way you have bigger and smaller traditional sports. As the world becomes more familiar with esports, the industry will become more traditional. It’s a developing market but for us, as an agency, we’re very interested because esports is a great example of content that excites audiences and fans.

In many places, especially across Asia, football is the number one sport. But equally, we are aware that esports is very engaging for a particular demographic and the fans are very passionate about it in the same way that other fans are passionate about football. There’s also a crossover between them. You can be a football fan and an esports fan. The dynamics around it are the same. It is all about content that excites fans. For us, the question is: how can we bring that content to the fans in the most effective way, and how are brands able to leverage the passion that fans have for this content? That’s where value is created.

"[E]sports is very engaging for a particular demographic and the fans are very passionate about it in the same way that other fans are passionate about football. There’s also a crossover between them. You can be a football fan and an esports fan...It is all about content that excites fans," Thorpe. 

 

Q: Do you think it’s wise for non-endemic brands to dive straight into esports? Or should they first try to understand the industry nuances?

MT: Yes, I think you need to know where you are spending your money. Marketing directors need to understand the space before they start writing cheques. What’s really important for them is to identify their objectives. Is there a particular geographical market? What’s the specific demographic they are going after? Are they looking at a particular socio-economic group as well?

Once you start segmenting the audiences, you will look at what kind of platforms match those audiences; what are the properties that will allow you to have access to the content and other intellectual property, as well as access to the actual games that will enable you to effectively achieve your objectives. These objectives can be brand placements or engagement with fans through taking the IP out of the game and then putting it on your product in a physical environment.

Sometimes, there are opportunities to put the brand’s IP into the game which can be very effective. For example, in football, you’re not allowed to have a brand’s logo painted on a football field. However, in some esports, you can actually integrate the brand’s product and branding into the game. Some games are stricter about that than others but it’s a very flexible environment and therefore, there are plenty of opportunities to achieve multi-pronged objectives. So, I think there will be many brands that will enter esports because the partnerships can be set up to dovetail with the brand’s objectives. Generally, the audience of esports is a hard-to-catch audience, especially when there are other entertainment platforms and other content vying for their attention.

Measuring ROI: traditional vs. non-traditional sports

Q: Since a lot of non-traditional sporting content is consumed digitally, how does the measurement of ROI differ from traditional sport? 

MT: There is now a lot of sophistication surrounding how brands measure ROI. When it comes to advertising spend, there has been a massive swing onto digital platforms. Hence, this is one of the metrics that people use to measure brand visibility or actual audience engagement. Those same tools that are used in traditional sport can be applicable to esports, which means you’re looking for the same things but in a slightly different environment. You’re still quantifying the brand exposure, but in particular, you’re evaluating the engagement with fans, how these fans are engaging with the brands, and how is this fan passion turned into a value proposition for the brands.

There are increasingly more sophisticated tools available. There are agencies like Nielson that have specific esports valuation tools. The digital environment is much more measurable and trackable these days, and esports fits neatly into that. And because the measurement is readily available, it becomes an easier buy than more traditional forms of sports sponsorships where one is relying on intangible values.

Q: In that sense, would you say that esports has an edge over traditional sports?

MT: In some respects that is true, but even in traditional sport, there is an increasing move to satisfy the requirements of brands who desire a very clear return on their investment. There are increasingly sophisticated ways of measuring those requirements, whether it is brand awareness or the engagement with fans through the property. Modern-day partnerships should be created on a very individualised basis across the whole sporting environment, both for esports and for traditional sports. Marketers are seeking ways to drive greater fan engagement because that’s where true value can be harnessed. Therefore, the tools that are measuring those engagements are the ones that can provide the most value for the brand.

Do esports fans have deep or shallow pockets?

Q: There is an unfounded notion that esports fans do not have a lot of spending power. Is this true?

MT: Again, it depends on what your brand or product is. What are you trying to achieve through the spend? Yes, the audience is younger. They might not have the spending power today, but that does not mean creating brand affinity and brand preference isn’t something that will pay dividends in the longer term. In Europe, we’ve worked with brands like BMW around esports. If you take the view that esports audiences are so young and they don’t buy cars yet, then fine. But you can project the BMW brand as a cool brand and then use that to help you sell cars to those people when they grow up.

The reality is that a majority of the audience do have money in their pocket and are able to spend it now. Esports is not just for the kids; esports actually has quite a broad range of audience from a demographic perspective and it has been shown through studies that positive brand preferences can be forged with esports audiences. Esports possesses the ability to drive greater change and more tangible conversions than some traditional sports.

But fans are not fools—they are a critical audience. You’d only be rewarded with their trust if you prove that you are providing an authentic, additional value to them. The esports fans are a good audience to work with but brands must be able to demonstrate an authentic, value-adding proposition; and that’s going to be the same with all sports.