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May 2, 2019

Intergame - Esports: things are about to get real

Colossus Bets chief commercial officer Eva Karagianni-Goel considers the burgeoning esports betting scene and concludes that a half-hearted approach isn’t nearly enough

If something can be said with certainty of eSports, it is that eSports is on the rise. In 2018, it is estimated that nearly 400 million people watched other people play video games, half of whom were classified as “eSports enthusiasts” as opposed to just “occasional viewers”. By another measure, it is expected that by 2020 10% of all sports viewing will be eSports - that’s a whopping 3 billion hours out of a total 30 billion. To put this into perspective, in the US, eSports is expected to come only second in viewership after the NFL (having already eclipsed the NHL). For some it is a scene straight out of futuristic (and dystopian) Black Mirror, for others it is a legitimate form of entertainment, even a form of professional athletic achievement, for the era of mass broadband internet and online streaming.

Regardless of how you feel about it, eSports is the new market you cannot ignore. And if the relatively modest global eSports revenues of $700m, which make up less than 1% of the total video game market as things stand, are not enough to convince you, the audience description is simply mouth-watering: eSports enthusiasts are younger, wealthier and, somewhat surprisingly, more likely to have a full time job compared to the average online population. No wonder this demographic has been so elusive for advertisers to reach - they have been sitting in front of a video game screen all along.

What about betting on eSports then, is that really a thing? You were perhaps right to maintain a healthy scepticism while several gambling executives paraded their “highest growth segment” in front of you in the past couple of years. After all, it is easier to achieve impressive growth figures from a low baseline. The trickier question is whether you can sustain that performance over time. But evidence from the latest gambling participation survey published by the UK Gambling Commission is harder to refute: 5% of UK online gamblers have bet on eSports in the past 12 months, the figure rises to 7% if we include betting with items and it gets into the double digits in the 18-34 year old age group.

So time to settle the argument and focus on how betting on eSports can achieve product/market fit in the long term.

It’s a gamers’ game (so stop chasing the bettors)

Risking a generalisation, sportsbook operators’ first reaction to eSports can be summarised to “let’s throw some fixed odds at it". This approach probably comes down to ease of execution on the one hand, i.e. let’s quickly replicate what we know best, and fast thinking on the other, i.e. it worked before, it will work again. After all, expanding the market range with new sports or bet types has historically served two main objectives. First, it was about offering your current customer base another thing to bet on, the what-so-called cross-sell opportunity. Second, it was about growing your customer base by appealing to a new sports fan segment or bettor niche. eSports, however, is not just another sports content segment. For starters, the target audience overlaps far less with sportsbooks’ current customer base. What is more, there is an already established gaming experience among the eSports audience, which serves as a reference point and does not resemble traditional betting. So the current approach is not just unimaginative, it simply won’t cut it.

If your target audience is not a sports bettor looking for a bit more variety, who are they and what do they want? They are the people who spend billions of dollars on in-game microtransactions (MTX) for virtual goods, plus some change on ‘cheering’ currency to support their favourite streamers (the streaming platform Twitch allows viewers to reward streamers with Bits, the Twitch ‘cheering’ currency). They see themselves as belonging to a global community of gamers - yours truly never ceases to be amazed at the fact that her eighteen-year old brother declares his best friends to be people he has never met in person, but with whom he has nonetheless shared endless hours of online video gaming over the years. And they fanatically follow pro gamers and eSports tournaments, perhaps with the same fervour that previous generations followed rock stars and their iconic music tours, albeit the digital nature of the eSports spectacle has elevated the worship to a much grander scale and global reach. By extension, the betting products that are likely to appeal to this audience are products that are not only gamified to match their learned UX/UI expectation, but can also amplify that sense of being part of the eSports community and competition experience.  

Looking at these two elements, product and ecosystem, as the pillars of an eSports betting strategy, a gamified eSports betting product is probably the easier one to control but also, because there is no justice in the world, the harder one to achieve lasting differentiation on. So, without downplaying the importance of delivering on product, the main focus of operators should be on how to best leverage and ingrain themselves in the eSports ecosystem. Here, they will have to navigate what is an evolving and still very fragmented value chain of game publishers, eSports organisers, pro teams and content distributors. The options range from forming ties with publishers and organisers to sponsoring leagues or pro teams and partnering with the online streaming or other data providers. Or ideally, but rather aspirationally, all of the above. As always, marketing budgets will drive a lot of the discussion around what can be achieved, especially how ambitious (or even exclusive) sponsorships get. But it will be content aggregation and distribution that will have the final word, which leaves room for ecosystem innovators to get ahead with smart, early partnerships. Game on.

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