Activision Blizzard has announced Kellogg Company as a new multi-year partner of its esports Overwatch League (OWL).
The deal will last through 2021 and includes co-marketing initiatives with the company’s Pringles and Cheez-It brands, which will be the presenting sponsors of the halftime show and the highlights segments during this year’s OWL finals.
Analysis and Comments
The deal is a further sign of the growth on eSports monetisation, showcasing the rapidly increasing number of non-endemic brands that are willing to put marketing dollars into eSports.
eSports, while still under-monetised, continues to be one the most high profile platforms for games companies to advertise and broaden their audiences, enabling key beneficiaries such as Activision Blizzard, Ubisoft, EA etc. to increase engagement and publicity for their games.
Given recent structural changes within high-profile eSports such as League of Legends and Overwatch (franchising, home and away games, regular season play etc.), we think we could see eSports becoming a profit generator for the games developers (rather than just a marketing tool) sooner than expected.
Notably, MTG Esports, one of the largest US based businesses, recently reported huge growth in its eSports league (ESL). Over the course of the first seven months of 2019, ESL’s data shows that unique users (+90%), hours watched (+190%) and video views (+55%) all significantly increased as a result of fans tuning into properties such as ESL One, Intel Extreme Masters and ESL Pro League tournaments, shattering the numbers recorded in 2018.
It is possible that we could see an professional (multi-game) eSports teams/organisations become sufficiently profitable that they could look to go public, which could materially change industry dynamics.
A House of Commons committee has advised that loot boxes should be regulatedas gamblingand banned for children.
The recommendation features as part of the DCMSreport on immersive and addictive technologies and states that games featuring loot boxes that are paid for with real money (as opposed to earned as in-game rewards) should be marked as containing gambling and age-rated accordingly.
The report also touched on the concerning rise of deepfake videos, urging the government to include them as part of the duty of care principles for social media firms laid out in the online harms white paper.
Analysis and Comments
The most obviously impacted franchise would be EA’s FIFA, as Ultimate Team would presumably be captured by this proposal.
While not a helpful line for the broader industry, the regulatory overhang regarding loot boxes is not really news. Loot boxes are already banned in Belgium, which has resulted in several games being pulled from the market (as the only alternative would have been to obtain a gambling license).
In this case, the effectiveness of the measures will presumably be determined by their enforcement, as the rules could be easily flouted if parents or other adults allow their bank details to be used for under 18 year olds to purchase these type of features.
The country’s gaming trade body (UK Interactive Entertainment) said they would review the recommendations and “consult with the industry on how we demonstrate further our commitment to player safety – especially concerning minors and vulnerable people”. The government said it “will consider the committee’s report carefully before responding”.
After entering a deal in April 2018, Activision Blizzard and Nielsen have now released viewership figures (average-minute-audience) on the Overwatch League (OWL) for the first time.
The data compares digital streams last year vs. digital streams and linear broadcast this year, showing that the OWL averaged 313k viewers globally and 95k in the US, an annual increase of 18% and 34% increase, respectively.
Notably, the median age of OWL is 24, which according to Nielsen data is far younger than the other leagues (NFL, NBA, MLB, NHL, MLS, the PGA Tour, and college football and basketball) which underscores the reach/impact esports have with younger demographics.
Analysis and Comments
The viewership figures are the most important metric when assessing an esport’s success; however, because companies and the media often provide different types of viewership figures with poor context, it is often unclear what thesenumbers actually mean.
As a result, streaming viewership is still often difficult to compare with traditional TV ratings, and previous attempts to do so have inflated the success of esports in problematic ways.
Activision Blizzard’s partnership with Nielsen is a big step in the right direction in establishing more usable and consistent metrics that will help better inform investors’ decisions (and will give them more confidence in the data).
Nielsen has been steadily growing its presence in the space and signed a deal with Riot Games earlier this year to measure League of Legends’ esports viewership – something we view as an exciting development as League is the world’s largest esport and has recently started introducing the franchise model to its national leagues as well.
According to Twitter, more than500m gaming-related tweets were sent in H1 2019, a 20% increase yoy. In 2018, gaming topics topped 1bn tweets for the first time.
While the US seems to be tweeting the most about gaming, Japan hastaken the top spot in the past year as the topic is becoming more global.
Following last week’s mass shootings and President Trump’s condemning remarks about video games, several supportive hashtags such as #VideoGamesAreNottoBlame and #GamersAreGood started trending on the platform.
Analysis and Comments
Given the recent series of high-profile gaming-related news (the political debate, but also a number of milestones and records achieved across esports events such as the Fortnite and Dota 2 World Championships), the uptick in tweets does not seem surprising.
In a way, it is yet another sign that playing video gaming and watching esports is becoming more socially accepted/”mainstream”.
With the steady increase in esports viewership numbers and the continued strong demand for video games, we expect this trend to continue.
On a side note, Chinese video gaming giant Tencent and Chinese livestreaming platform Huya reported Q2 figures this week, both showing continued growth in mobile revenues and mobile users, respectively.
