Getting Stations Into The Esports Game

Did you know that some colleges have full-fledged esports teams with coaches, daily practices, and league matches? Or, better yet, that sought-after gamers are being offered college scholarships? What began decades ago as a small collective of competitive video gamers has grown into a billion-dollar business.

Television networks are already taking esports very seriously. Recent examples include NBC Sports’ coverage of this summer’s Universal Open Rocket League tournament, totaling 40-plus hours of event coverage across live streaming, video-on-demand and linear platforms.

NBC Sports joins other networks like ESPN, which launched a website devoted to esports in addition to its on-air coverage, and TBS, which teamed up with IMG in 2016 to form ELEAGUE, a premium esports tournament and content brand. In June, Disney XD launched a new programming block dedicated to the world of gaming targeted to viewers 13 and older.

Media companies are also focusing on the venues where major gaming competitions bring together each game’s leading players to compete for stakes that can be as high as $20 million. Last year, Turner opened a 10,000 square-foot arena in Atlanta dedicated to filming esports competitions.

In June, Madison Square Garden, which has hosted esports events including the League of Legends World Championship, purchased a controlling interest in the event’s organizer, Counter Logic Gaming, which also manages several additional high-profile gaming events.

Exploring The Role Of Local TV

When you consider that NBC, ESPN and others take advantage of regional sports nets and affiliated channels as a means of providing regional coverage for esports events, it begs the question “How can local TV stations participate?”

That idea may have seemed far-fetched at a time when stations needed to program for broader audiences. However, the digital world has created the same possibilities for local broadcasters. An upgrade to ASTC 3.0 will add capabilities that supplement stations’ local production, multicasting, online and social media operations. The new standard offers the ability to incorporate virtual reality views and provide greater personalization of the user experience.

ATSC 3.0 will also allow stations to stream video content over-the air, bypassing the potential for mobile bottlenecks during popular events. Joost van Dreunen, CEO of SuperData Research, provided a recent example of this phenomenon involving my home city of Chicago. In late July of this year, cell networks and game servers proved unable to handle the data load for the Pokémon GO Fest in Grant Park, preventing participation by many attendees who had traveled from around the world.

Assessing The Market’s Potential

SuperData’s van Dreunen, who holds a doctorate in video gaming from Columbia University and also teaches at the NYU Game Center, described the impact video gaming and esports are having on the media industry in a keynote speech during MFM’s Media Finance Focus 2017 conference in May. SuperData’s research indicates that 164.3 million people around the globe will either watch or play competitive multiplayers games this year.

Overall, SuperData reports the worldwide digital video games market grew by 12% over the past year (June-June), with the PC segment dropping by 16% as the mobile and console platforms continued their double-digit growth trends (17% and 12%, respectively). And according to PricewaterhouseCoopers’ estimates, video gaming garnered $72 billion globally in 2016 and will rise to $85 billion in annual revenue by 2020.

A Growing Audience For Esports

As these findings suggest, esports is gaining greater audience share. A recent survey by the Entertainment Software Association (ESA) finds 67% of all U.S. households own a device that can be used to play video games, with at least one person playing three or more hours of video games a week in most of those same homes.

Significantly, also according to SuperData, one in four esports viewers doesn’t have cable TV. At the same time, ESA surveys show that about 75% of video gamers use the Internet to access games, and predicts it will be their preferred way of consuming games moving forward.

Want more proof that esports is growing in popularity? Look no further than Amazon’s 2014 purchase of Twitch (twitch.tv) or the YouTube channels devoted to esports.

The Surge In Sports TV Streaming

Conference keynoter Mio Babic, president-CEO of iStreamPlanet, which provides streaming video services for NBCUniversal and Turner (the company’s majority owner), shared additional insights into the growth of esports. iStreamPlanet delivered 98 million live streams during the 2017 March Madness series of games, a major increase over last year.

He also spoke about the importance of leveraging social media in promoting viewership. When the North Carolina Tar Heels had just tied the NCAA championship game, iStreamPlanet sent out a message to all the fans in its database and doubled its audience within the next few minutes.

In Babic’s mind, the results showed people were connecting to the games — and messages — on their phones, no longer reliant on a set-top box to watch the games in one location. “Having that relationship with a consumer is very different than what we’ve had in the past.”

Following The Money

According to SuperData’s van Dreunen, media companies aren’t the only ones looking to capitalize on esports’ growing popularity. Brands and advertisers are starting to realize that interactive entertainment is reaching an increasingly large audience. In addition, audiences have a higher degree of “agency” — a greater ability to make decisions as part of their video game experiences.

Among the many brands testing the gaming waters are Exxon Mobile, Taco Bell, Ford, Visa, AT&T and Coca-Cola, according to The Next Level. The video game news site reports that advertisers and sponsors spent $600 million on ads and sponsorships aimed at esports enthusiasts last year.

The Digital Dimes Phenomenon

Of course, $600 million isn’t a lot of money when compared to the total advertisers spend on sports programming. As conference presenter Mark Mondello, managing director and global leader in the entertainment sector at Duff & Phelps, pointed out: “Video game advertising is growing, but it’s still a pretty minor portion of overall revenues. It’s not something that’s become a driver yet.” That said, Mondello says the genre has already become mainstream in places like South Korea, which had about 10 channels dedicated to esports when he visited the country some time ago.

Of course, those so-called digital dimes can grow into significant portions of a media company’s total revenue. That’s the reason esports is on the agenda for MFM’s Media Outlook 2018 Seminar, which will be held in New York on Sept. 12.

The half-day event will also include an opening keynote speech from Paul T. Sweeney, U.S. Director of Research, Senior Analyst-Media & Internet for Bloomberg Industries. Qualified attendees will be able to earn up to four CPE (continuing professional education) credits.

Next Steps

In the meantime, you can learn more about what Joost van Dreunen, Mio Babic and our other conference presenters had to say about the esports market in the July-August issue of MFM’s The Financial Manager magazine, which is currently available on our website.

Of particular interest is an article prepared by TFM Editor Janet Stilson, a longtime industry journalist and TVNewsCheck contributor. Aptly entitled “Tense or Excited?” Stilson’s piece addresses how video games, streaming platforms, and new forms of content are expanding opportunities and the competitive landscape for media providers.

The field of esports is becoming an integral part of American culture. In addition to accepting scholarships, college students are creating potentially lucrative esports startups and at least one doctoral candidate is advocating that it be considered a major sport. With so many signs of esports’ market potential, it’s not too soon to consider local TV’s role. Whether or not your station has already begun that exploration, we’d love to hear your thoughts.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at[email protected] and via the association’s LinkedIn, Twitter, or Facebook sites.