Gaming Has Arrived And Brands Are Noticing: Advertising Using Gaming and Esports

Nutan Lele
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<div class="paragraphs"><p>Gaming Isn't Only For Nerds Anymore: Advertising and Branding in Gaming</p></div>

Gaming Isn't Only For Nerds Anymore: Advertising and Branding in Gaming

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Gaming has evolved over the past few decades and gone from having a small following of computer nerds to drawing over 2.7 billion players in 2020. Major publishers like Tencent and Sony Interactive are earning in the billions announcing major consolidations like the recent Bungie takeover and Microsoft’s acquisition of Activision Blizzard. Esports, the competitive wing of the gaming industry already has a considerable market size today, even surpassing many traditional sports in terms of both revenue and viewership. According to Statista, the size of esports audiences has grown considerably in 2021, consisting of 234 million dedicated viewers, and another 240 million occasional viewers. Viewers are spread across the world, with the Asia Pacific region becoming a growing hotspot for esports. In the United States, 13.4% of internet users in 2021 watched esports, with the figure expected to rise to 15.5% by 2023.

Free Fire is a growing mobile esport with considerable viewership in Asia and South America.

Free Fire is a growing mobile esport with considerable viewership in Asia and South America.

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While the live-streaming market is separate from esports, there is a significant audience overlap between the two as pro players take up streaming in their spare time, and sometimes even live stream tournaments. Top streamers are also increasingly participating in publisher-hosted tournaments.

As gaming and esports became more mainstream, large corporations started taking notice of the increasing prize pools and record-breaking streaming and tournament viewership. This has led to a string of advertising deals, sponsorships, franchising and brand integrations with heavy-weights like Mastercard, BMW, and Coca-Cola entering the space. Traditional sports brands like Adidas, Nike, and Puma are coming out with collaborative clothing lines and footwear for esports and gaming. Even luxury brands like Louis Vuitton and Armani are doing high profile collaborations.

Non-endemic brands have started using gaming and esports to advertise to a younger audience.&nbsp;

Non-endemic brands have started using gaming and esports to advertise to a younger audience. 

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As the industry booms, streamers like Shroud and Ninja have garnered celebrity status, attracting lucrative collaborations. Fortnite streamer and pro player Ninja was the first gamer to be featured on the cover of ESPN Magazine, a testament to how much esports has started surpassing even traditional sports.

Gaming has even transcended the boundaries of the screen and entered into pop culture territory, with League of Legends champions like Seraphine being personified to the extent of having a verified Twitter account and Garena introducing the likes of Christiano Ronaldo as a playable character in their mobile battle royale Free Fire. Fortnite revolutionized pop culture collaborations though fan favourite IPs (Intellectual Properties) of the likes of Marvel’s Avengers, and other pop cultural imagery into the game’s universe as playable characters - creating a metaverse of sorts. The pandemic has also led to new kinds of online events where artists like Travis Scott, Arianna Grande and Lil Nas X perform concert-type events to massive audiences in games like Fortnite and Roblox turning them into content delivery platforms.

How are brands tapping into esports and gaming?

Simply put, the esports ecosystem comprises of teams who play multiplayer video games, which are organized into tournaments and broadcasted on platforms for fans to watch - either online or in-person at a physical venue. Sponsors and advertisers come in at different points in the ecosystem to tap into the growing reach of esports to boost brand visibility.

Lucrative brand partnerships make up for a significant share of esports revenue. According to McKinsey, more than half of esports revenue (58%) comes from sponsorships. This helped generate over $450 million USD in esports revenue in 2019. Sponsorships in the esports world work similar to those in traditional sporting mega-events like the Super Bowl or NBA with merchandise and brand logos incorporated into the broadcasts at various levels, like player jerseys.

Along with endemic brands like Secret Labs and Razer, non-endemic giants like PepsiCo, Mastercard, BMW and Adidas have tapped into the growing clout of the esports world. Some of these initiatives include new physical training programs for esports athletes, branded replays, live in-stream stunts, remote streams at events, sponsored giveaways, and more. French luxury fashion house Louis Vuitton and Gucci are also entering the space, collaborating with publishers like Riot Games to release in-game content and a clothing line to go with it. Along with the brands come the pricetags like Gucci’s limited-edition $10,000 Xbox Series X.

One of the best examples of this high level of brand integration in esports today is the 100 Thieves Cash App Compound.

This 16-minute video tour of the massive 100 Thieves gaming facility features a number of brand names plastered all over the place including the Rocket Mortgage League of Legends Training Room, Totino’s Fortnite Training Room, a Chipotle catered kitchen and the Cash App lounge. All of which reinforces the brands in the minds of 100 Thieves’ seizable fanbase at every turn.

"Esports players have a direct line to their fans when they stream their games online," Heather Garozzo, Vice President of Talent at international esports team Dignitas said to S&P Global.

This direct line can extend to the advertisers as well. The rise of ad blockers is another blow for advertisers as an estimated 27% of internet users are now using some form of ad blocking causing marketers to miss out on roughly a quarter of potential ad targets. SurfShark identified Europe as having the highest ad blocker search volume per capita in Europe, followed by Asia in second and North America in third. With viewers moving away from TV and installing ad blockers, advertisers and brands had to get more creative when it comes to reaching newer, younger audiences and staying in viewer memory. No ad blocker could stop Tesla from introducing its Model Y, Gigafactories and Tesla Semis into player consciousness during its PUBG Mobile and Battlegrounds Mobile India (BGMI) events. Brands ranging from Mountain Dew, OnePlus along with movies and shows like King Kong vs. Godzilla and Jujustu Kaisen have seen collaborations with PUBG Mobile introducing their branding into the game itself.

Mobile battle royales like PUBG Mobile directly integrate media and products into the game, making sure players cannot avoid being exposed to advertising.&nbsp;

Mobile battle royales like PUBG Mobile directly integrate media and products into the game, making sure players cannot avoid being exposed to advertising. 

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And it seems to be working….

Compared to traditional sports, esports could be considered to be a more powerful branding medium because of the interactivity of streaming. While ad frequency during esports events remains low, streamers and pro players are willing to wear branded jerseys and consume products while broadcasting. For example, cans of Redbull and Monster energy drinks are a staple during live broadcasts at the desks of not only players but also analysts. According to McKinsey, with live chat, contests, and exclusive subscriber content, esports fans get to experience a level of intimacy with their favorite players and teams that traditional sports can’t realistically match.

"Viewers can chat while watching the games on Twitch, and the players often livestream behind-the-scenes as well, which in turn boosts viewer engagement. The NBA has already started doing this, as well, and you may see other sports organizations making the jump to Twitch,” says Heather Garozzo of S&P Global. Many pros stream in their spare time garnering massive followings through Twitch and YouTube. This allows for an unprecedented level of imitation intimacy, leading to viewers forming strong parasocial bonds with these personalities who in-turn push brand names and sponsors on their channels.

Streamers like Shroud, Pokimane and xQc interact with fans directly, giving the illusion of intimacy.&nbsp;

Streamers like Shroud, Pokimane and xQc interact with fans directly, giving the illusion of intimacy. 

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Everyone from traditional sports athletes to famous rappers have taken to live streaming on platforms like Twitch to boost popularity and stay in the public eye outside of the field and stage. This has opened the door for high profile collaborations like when Drake ended up ‘breaking the internet’ by streaming Fortnite with Ninja, drawing in 628,000 concurrent viewers.

Streamers like Ninja and Shroud have become celebrities in their own right and draw the same degree of influence as traditional stars in the pop culture space. A single mention of MeUndies by Ninja led to consumers flooding and eventually crashing the brand’s website. His popularity also resulted in multiple sneaker collaborations with Adidas which sold out in under an hour after the launch. This growing popularity of bankable “stars” has paved yet another way for brands to boost recall and affinity.

Fast food chains like Wendy’s, Burger King and KFC are using gaming as a marketing strategy and getting traction in the demographic frequently associated with Doritos and Mountain Dew.

Wendy’s online stunt ended up generating a 119% increase in social media mentions and 1.5 million minutes of Twitch viewing. KFC also generated hype by announcing its own gaming KFConsole in December 2020, boasting various features, including ray tracing, up to 4K resolution, and 240Hz output along with a "Chicken Chamber '' that can store and warm its signature chicken. Despite its ridiculous premise, and whether or not it is actually released, the console generated buzz around the fast food brand with the original announcement video garnering 625,263 views. It was later picked up by several content creators to millions of views.

The console is touted to have a novel hot-swappable GPU slot,&nbsp;ray tracing and a "chicken chamber".

The console is touted to have a novel hot-swappable GPU slot, ray tracing and a "chicken chamber".

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Gaming is bleeding into pop culture

The rise of intertextuality and its increasing adoption across media has also seeped into gaming. With mammoth movie studios looking to consolidate their IPs and trying to create metaverses of sorts, be it the dozens of sequels of Marvel or Facebook’s endeavor by the same name, the pressure to expand and integrate is high. Major studios like Nintendo and Activision Blizzard are already capitalizing on this phenomenon with titles like Super Smash Bros. and Heroes of the Storm. These games bring together characters from various major franchises owned by their respective entities under one roof. Disney attempted to do the same with the Kingdom Hearts series.

Games like Super Smash Bros. and Heroes of the Storm attempt to bring together different IPs of their parent companies under one virtual roof.

Games like Super Smash Bros. and Heroes of the Storm attempt to bring together different IPs of their parent companies under one virtual roof.

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Intertextuality is becoming increasingly monetized by publishers, advertisers and is feeding back into already established IPs. The hype train is real and the systems feed into each other. FOMO (Fear of Missing Out) plays a huge part in this crossover galore and has become a form of social currency; playing the next big game, getting that rare event skin is what makes you "lit".

Even before the pandemic hit, the industry was experimenting with new forms of online events like the Travis Scott Astronomical concert which drew in 45.8 million views worldwide. While Fortnite doesn't have an extended games universe to field characters from, it has been proactive in tapping into the hype around IPs like John Wick, Marvel, DC, Star Wars, Terminator, Alien, The Walking Dead and more. The experience of watching Chun-Li taunt Naruto while Kratos, Rick and Morty sneak up on him is quite surreal.

Fortnite has transcended from being a&nbsp;run-of-the-mill Battle Royale into a "content delivery system".&nbsp;

Fortnite has transcended from being a run-of-the-mill Battle Royale into a "content delivery system". 

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Garena Free Fire is also following this formula, introducing popular real life DJs, actors, singers and even football star Christiano Ronaldo as playable characters into the mobile battle royale. The release of Ronaldo as Chrono saw a spike in downloads for Free Fire among football fans in Southeast Asia and Brazil, where football is already popular.

Garena has tapped into the regional appeal of celebrities like DJ KSHMR, DJ Vegas and Hrithik Roshan to connect to Free Fire fans.&nbsp;

Garena has tapped into the regional appeal of celebrities like DJ KSHMR, DJ Vegas and Hrithik Roshan to connect to Free Fire fans. 

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Along with these real personalities, Riot Games, perhaps following the lead of previous virtual bands like Gorillaz, came up with a virtual k-pop band of their own, setting up a music label in the process. K/DA, consisting of fictional League of Legends champions Kai’Sa, Akali, Evelynn, Ahri and later Seraphine saw massive success with their debut single Pop/Stars and subsequent EP, later even performing at Worlds 2020.

The release of Seraphine, a virtual pop singer for the band, was seen by many as a successful marketing stunt. Indeed, manufactured authenticity has become a popular phenomenon in the content creation space in the past few years. Increasingly constructed authentic personas appear more relatable to their audiences, ‘just like one of them’. Seraphine is a good example of such manufactured authenticity. Her publisher Riot Games, has given her a relatable, aspirational personality, a verified Twitter account and an identifiable mental health struggle. Some have criticized what they call the exploitative nature of Seraphine’s “mental health” struggle, and its use to get thousands of likes, retweets amounting to free publicity for Riot.

Riot capitalised on the unexpected success of K/DA through tie-ins and merchandise.

Riot capitalised on the unexpected success of K/DA through tie-ins and merchandise.

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Impact of the pandemic

While several LAN events ended up getting canceled during the pandemic, many tournament organizers were quick to switch to an online format and several high profile tournaments continued across the PC and mobile esports space to an increasing number of viewers. The industry has adapted. The LCS continues to be the third-most-watched professional sports league in the U.S. in the 18-to-34-year-old demographic, said LCS Commissioner Chris Greeley, citing Nielsen data. "We hit nearly 35 million total hours watched, with an average minute audience of about 485,000 for our summer finals," Greeley said. "We had a peak viewership of somewhere over 550,000, which were our biggest numbers in four to five years."

Lockdown measures also resulted in an increase in live streaming viewership across all platforms. As people around the world were confined to their homes, time spent on online gaming and watching streams on Twitch, YouTube, and Huya went up. The pandemic also accelerated the adoption of live streaming. Newzoo predicts that growth rates will stay in the double digits for most developing economies throughout 2024. China is expected to become the largest market for games live streaming, with an audience of 193.0 million in 2021.

Esports market revenue worldwide from 2019 to 2024(in million USD)

Esports market revenue worldwide from 2019 to 2024(in million USD)

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NFTs in gaming and the future of esports

With the popularity of cryptocurrency and NFTs (Non Fungible Tokens) on the rise, publishers are increasingly looking to integrate digital currency and tokens into games. While NFTs remain a controversial topic, some smaller publishers have come out with games like Axie Infinity and CryptoKitties which allows players to generate cryptocurrencies and trade NFTs in their marketplaces. Bigger studios like Square Enix, Konami and Electronic Arts have announced plans to incorporate NFTs into their ecosystems while Ubisoft has already launched NFT items for ‘Ghost Recon Breakpoint’.

Games like Axie Infinity ands CrypoKitties have become popular NFT and crypto based games, through their adoption of a play-to-earn model.

Games like Axie Infinity ands CrypoKitties have become popular NFT and crypto based games, through their adoption of a play-to-earn model.

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The response to NFTs in gaming has been polarized. Ubisoft’s NFT launch has not gone as expected while some developers like Valve have banned NFT games on Steam. Not everyone is buying into the NFT hype and publishers like EA are already rethinking their initial interest. However, given their profit potential NFTs look like they are here to stay. Just like loot boxes or microtransactions (which drew a lot of initial backlash) NFTs may soon end up integrated into existing gaming and esport ecosystems. What remains to be seen is whether companies can take a fresh new approach that adds significant value to the NFTs players will hold or will they fizzle out once the crypto bubble bursts.

While NFTs and Crypto were touted as the next big thing to come up, the hype around them is slowing down. Esports organizations including the likes of G2 Esports, OG, and T1 continue to announce several NFT collaborations and saturating the market.

What's next for advertising in gaming and esports?

As esports leagues evolve, they're likely to move to a franchise system. League of Legends' esports leagues took this turn with League of Legends Pro League (LPL), followed by League of Legends Championship Series (LCS), League of Legends European Championship (LEC) and League of Legends Champions Korea (LCK) moving to a franchise system. Some like the Overwatch League started off there. Brand tie-ins would become a staple and advertisers will be able to streamline their campaigns and reach through these leagues.

If augmented reality, virtual reality and the metaverse take off, advertisers will get an unprecedented amount of access into consumer consciousness. It may work at first, but just like with traditional marketing, consumers will eventually become desensitised to this version of ads. Just like how we skip YouTube ads, set up spam filters and learn to tune out TV ads, players will just skip over a lot of marketing that comes in this way. The question then remains, when we start ignoring marketing that is staring us in the eyes, where do we go from here?

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