E-sports, video and computer games are usually a part of the gaming world from the action and strategy area, in which several players compete against each other at the same time. The peculiarity is that in recent years, successful games like “League of Legends”, “Counter-Strike: Global Offensive” or “Starcraft 2” have successfully established worldwide tournament and league operations between professional teams.
A spectator sport, both with live presence in arenas and with millions of spectators online. With audience groups that are considered young, tech-savvy, educated and eager to consume, also as “nerds”. In the current situation, this has advantages, but also special challenges.
Although the scene in Germany does not receive the recognition of the DOSB as a sport, the competitions are often treated as such – especially by sponsors. Companies like IntelDHL Daimler, SAP and Vodafone are part of it, some with their own investments in teams.
Accordingly, there is also the potential to be further recommended as a sponsorship alternative in a crisis that brings classic sports to a standstill. In the middle of the global corona crisis, which also forces e-sports, which is characterized by live events and direct team contact, to be converted, the Munich-based carmaker is now also announcing BMW its comprehensive entry.
The group announced on Thursday a partnership with five top international teams, including the “G2” based in Germany. BMW provides team teams for all teams, but the focus should be on technology and knowledge transfer.
This is also a clear sign in the crisis. “Our commitment is motivated by our commitment to be a sustainable, global partner who supports the teams and the industry itself before, during and after these uncertain times,” says BMW brand boss Jens Thiemer.
Team partnership logos
BMW joins five teams; together, synergies are to be leveraged.
As is customary in e-sports, no concrete sums are mentioned. However, it is clear that total sales in the sponsoring market still represent a niche, especially in comparison to football. However, market participants report in unison, double-digit growth rates. “We consider e-sports to be a promising and growing addition to our marketing activities,” explains Thiemer.
More viewers online
The Achilles heel of the industry in crisis is the live events. They have become more important in recent years and have been expanded into tournaments with tens of thousands of spectators. These events are now being canceled or are taking place without an audience, such as the Intel Extreme Masters in Katowice, to which tens of thousands of fans traveled and were no longer allowed to enter the arena at short notice.
Important industry meetings such as the Cologne Gamescom must be canceled, at least in physical presence. The follow-up costs are likely to result in the cancellation and compensation clauses being examined in various insurance policies and contracts.
The US company Riot Games, which organizes the league operation of its hit game “League of Legends” in Europe from its Berlin production studio, had to wait several game days before the game operations could be completely shifted to online platforms.
“Having fans close to the action is what makes e-sports so special,” explains Alberto Guerrero, head of the e-sports division at Riot Games Europe. “Keeping our community connected, even though they can’t physically be there and celebrate, is a task that concerns us every day.” Riot recently recorded a ten percent digital audience increase in league operations. “People want and need entertainment, new content and a feeling of connectedness more than ever before,” said Guerrero.
57 percent of gamers play more than before
In fact, there had been technical challenges, such as the implementation of several livestreams simultaneously from different locations or simply making the same computer set-up available to the team members as in the studio. Due to the nature of e-sports, the joint efforts of the production team put it in a unique position to maintain the entertainment program and digital community experiences in this situation as well.
The world’s largest independent league operator ESL also relies on this. “We can also hold the tournaments online without anyone having to travel. We are currently doing this and are achieving record numbers of viewers, ”said the Cologne-based company on request. The product does not suffer as a result: “It comes very close to what we do otherwise – without on-site spectators, but in the same quality of sport that can be followed online.”
In fact, several game manufacturers and competition organizers recently announced record audience numbers. This affects gaming in general, reported Valve, provider of the gaming platform Steam, recently almost 25 million users who were online at the same time, of which eight million also played at the same time.
But this also applies to e-sports in particular, where, for example, “CS: GO” recorded more than one million players online at the weekend for the first time since the title was released in 2012. “Surveys by the Nielsen subsidiary SuperData not only show that the number of downloads for game apps is increasing,” explains Michael Heina, Head of E-Sports Europe at the research and consulting company Nielsen. “57 percent of German video gamers state that they spend significantly more time playing video games than they did before Corona.”
And more: “Current SuperData data show that the purchase of digital items and objects as well as further in-game purchases have increased,” says Heina. People use the time that is currently available to them more, i.e. for games as a pastime – and the willingness to spend increases.
“Virtual sports” are catching up in the crisis
The winners of the development are currently difficult to identify. According to Nielsen, it is clear that video platforms such as Twitch and Youtube are benefiting from increasing user numbers. The former reported 1.1 billion hours of viewed material on their service on a monthly basis. TV broadcasts hardly play a role. “In the current situation, it would be possible that there is a kind of ‘baby boom’ in e-sports, as the group of gamers is currently growing,” explains Heina.
That means: People interested in video games are increasingly interested in watching video games as live entertainment in competition format as a spectator. A corresponding development can already be seen in the “virtual sports”, the sports simulations. The US racing series “Nascar” achieved great audience success with virtual races – demographically identical to the regular motorsport fans.
This also raises hopes for football, which is represented as a niche in e-sports. “E-sport is currently enjoying a completely new level of attention and is being noticed by large sections of the population,” said Alexander Jobst, Marketing Director of FC Schalke 04. The Bundesliga team maintains alongside the “League of Legends” team, which is part of the LEC Europaliga Riot Games, like many other football clubs, also participates in a “Fifa” team.
Jobst is certain that the current increase in the number of viewers will also be borne by people who have not had any contact with electronic sports before. The “Bundesliga Home Challenge” is the “perfect example”, says Jobst: “The showcase initiated by the DFL was able to entertain more than two million viewers on the first weekend.” Football professionals and even referees play the sports simulation “FIFA 20 “.
However, there is no shift of viewers from classic sports towards e-sports. According to Nielsen, even with sponsorship deals, a look at the approximately 300,000 transaction-wide database “Sponsorglobe” shows no increased activity, either with inflows or outflows. It could be different behind the scenes.
Sponsors get creative – and demand solutions
“Basically, with the lockdown, you can focus on what made the industry grow in the first place,” explains Carl Kuhn, who is responsible for e-sports at the JvM / Sports advertising agency. The industry is now adjusting to the situation accordingly well. “For e-sports, I can say that we are seeing more interest,” says Kuhn.
Many stakeholders considered how and where they could spend the sponsorship budget for activations. “It’s less about shifting budgets,” he continues. Rather, it is about considering which concrete measures can be taken in the current situation.
Because they want to remain visible to the public, even if the production circumstances change. “For some sponsors, the logo presence on the jersey is in the foreground,” says Anna Baumann, managing director of the “Rogue” e-sports team from Berlin. “Due to the changed production situation, we currently have hardly any cameras on our shirts, there is no livestream just for the players,” she explains. This is also due to the lack of bandwidth for transmission, that is: the bad Internet.
Baumann does not assume that deals will be canceled now, but delays in the specific fulfillment of the contracts are possible. Rogue itself recently launched a large advertising campaign with its new partner, the Korean automotive group Kia. “Successful”, as Baumann says, because of the corona virus, the only thing you can’t do now is turn further. Overall, it can be heard in all areas of the industry, companies have now shown themselves to be very open and understanding – and loyal.
Not everything can be done online. And there is a lack of audience revenue, which is a pillar, but not load-bearing: “Ticketing is not yet so important for sales in e-sports that it now leaves the economy with dangerous gaps for the players,” explains Kuhn. It was a blow anyway.
The German computer game industry association Game had recently expressed fears that the loss of viewer revenue would result in economic burdens for the organizers. In fact, the Swedish does the math Modern Times Group (MTG), now majority owner of the German ESL, with a decline in sales of up to 45 percent in the first half of 2020.
Event arena in the middle of Berlin opens
However, MTG would like to continue to switch the portfolio completely to e-sports. The traditional gaming division, which also includes the Hamburg game manufacturer Innogames, is to be sold to investors or to be listed on the stock exchange. All in all, the failures in live events are to be compensated for by ticketing as well as savings in the use of goods and fixed costs. MTG has high cash reserves; overall, the division has been in deficit for a long time with increasing sales.
The corona crisis was also a blow for a prestige project in the heart of Berlin. The “LVL World of Gaming” should open directly at Checkpoint Charlie at the end of March, a 2500 square meter event location around the subject of gaming, including an arena with 200 seats, cinema, café and exhibition space.
The “G2” team should also find a new home in the technically well-equipped building. With the LVL, you want to “move away from small cellars, bars or oversized arenas, towards community spaces in the heart of large metropolises that are effective for the public,” explains Dorian Gorr, managing director of the operator Veritas Entertainment.
Entrance area of the LVL
The gaming location at Mauerpark is supposed to shape the standard for this new type of event center.
(Photo: LVL Berlin / Veritas Entertainment)
Berlin is a blueprint for other locations of this kind. Even before the lockdown, the decision was made to postpone the opening with due regard to the health of the guests, teams and employees. “At the moment we are all in the starting blocks and are waiting to finally open, but we are aware that it may take some time until then,” says Gorr.
As a company, you now have to react flexibly, the focus is on the digital production of content: “More than ever, there is currently a strong interest in e-sports content – and we have the opportunity to deliver this content.”
Here, too, partners and sponsors were understanding, and now there is a concrete discussion of what can be done without physically opening the LVL. The federal government’s comprehensive economic programs have not yet reached this point in the industry. “The ‘unlimited credit programs’ announced by Federal Minister of Economics Altmaier are unfortunately not applicable to us and all other start-ups, which have invested a lot of capital and have a resilient business plan in place,” states Gorr. “We currently have to wait for politicians to readjust it and in particular to design programs for start-ups, which are now a significant economic factor in Berlin.” Gorr expects this very soon.
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