How brands are tapping into millions of esports fansFREE NEWZOO REPORT | MARCH 2019FEATURING4 MARKET INTELLIGENCE SOLUTIONSFOR CONSUMER BRANDS© Newzoo 2019Opportunities & solutions for consumer brands2This year marks our sixth year of modelling, researching, and reporting on esports. After pinpointing esports as a gaming trend, it has been quite the experience to see it evolve into a fully fledged business of its ownall while remaining embedded in gaming as a whole. Since then, Newzoo has been hard at work answering several press inquires a day, helping game publishers shape their strategy, andincreasinglyeducating companies outside the esports sphere about this exciting market.Fast forward to 2019, and more than 30 of the worlds most-respected brands are subscribed to our services. Many of these companies successfully entered the esports business and can be found as examples in this very report. These brands simply could not pass up on leveraging the worlds favourite pastime.The worlds biggest companies are starting to discover the wealth of opportunities in gaming and esports, and are giving these markets the respect they deserve. Still, many consumer brands are struggling to navigate these uncharted waters, trying to discover if, why, and how they can get involved. Thats where Newzoo comes in. Over the years, we have built up a suite of solutions for any brand, regardless which phase they are in. Although there are constant developments happening in esports, brands neednt fret: our years of experience and ever-expanding range of market intelligence take care of the hard work for you. Peter Warman CEOCandice Mudrick Head of Market AnalysisIs the rumored amount to have been spent by Nike on a four year jersey and footwear deal with the Chinese League of Legends Pro League (LPL)EXPLORE: GLOBAL ESPORTS MARKET REPORTTRIPLE-JUMP: LAND YOUR BRAND IN ESPORTSPULSE: DONT MISS A BEAT IN GAMING AND ESPORTSBRAND TRACKING: MONITOR IMPACT OF YOUR EFFORT1.2.3.4.NEWZOOS ESPORTS SOLUTIONS FOR CONSUMER BRANDS1. Why sponsor leagues?2. League sponsor overview3. LoL European Championship (LEC)4. LoL Championship Series (LCS)5. Overwatch League (OWL)6. LoL Pro League (LPL)7. King Pro League (KPL)8. Market Intelligence Solutions for Brands0405070911131518CONTENT© Newzoo 2019Brands are sponsoring leagues to reach millions of esports fans across individual teams4Sponsorship activity in esports is rapidly increasing. Already, 2019 has seen more sponsorship deals than the entirety of Q1 2018. Companies from several new categories have partnered with five recently franchised leagues: the LPL, LEC, LCS, OWL, and KPL. This means there are fewer opportunities for brands in some categories, leading to increased competition.The benefits for sponsors are clear. The five leagues mentioned above attract millions of viewers, a number that is continuously growing. Together, the LEC, LCS, and OWL have generated more than 33.9 million live viewership hours in 2019 so far, with publishers official Twitch channels generating 26.4 million hours. These top channels attract a significant number of viewers at any given time during broadcast. The OWL Twitch channel, for example, had 155,000 live average concurrent viewers (accv) in its first two weeks of matches.Meanwhile, the LEC and LCS grew their average live viewership numbers on Riot Games official Twitch channel by 35% and 20% year on year, respectively.Not only are these high viewership numbers attractive to brands, but the audience itself is a valuable demographic. For example, 39% of Esports Enthusiasts are between the ages of 21 and 35, and 43% have a high household income. With the number of Esports Enthusiasts forecast to grow with a +13% CAGR (2018-2022) to 297 million by 2022, now is the ideal time for brands to establish themselves in the community and build strong ties with league fans. In this report, we analyze sponsorship possibilities within these five franchised leagues across several categories. We also include activations that have resonated with esports fans. On the following page, we show existing opportunities for each category per league.Increase in average viewers in the LEC from the same period in 2018.More sponsorship deals so far in 2019 compared to entirety of Q1 2018.FOCUS LEAGUESEsports Enthusiasts by 2022© Newzoo 2019OpenOpen OpenOpenOpen OpenOpen Open Open Open Open Open Open Open OpenOpen OpenOpen OpenOpenOpenOpenOpenOpenOpen OpenOpenOpenOpen OpenOpenOpenOpenOpenOpenOpenOpenTaken and available categories per league | LPL, LEC, LCS, OWL, KPL | Per 15 March 20195Apparel & Retail Hardware Peripheral Automotive TelecomFinance & Payment ProviderFood & BeverageGaming Furniture Music Oil & Gas Electronics CosmeticsSocialMedia FMCG© Newzoo 2019SPONSORSHIP OPPORTUNITIES & ACTIVATIONSPER LEAGUE6© Newzoo 2019 7League of LegendsEurope2013 (2019 rebrand)10Current SponsorsThe LEC has an array of league-level sponsors spread across many different categories. Recently, Red Bull partnered with the LEC, becoming the only brand in the food and drink category to do so. The league also has hardware, gaming furniture, and peripheral partnerships with Alienware, DXRacer, and Logitech G, respectively. There is plenty of team-level LEC sponsorship in all these categories, with brands benefitting from team endorsements and training sponsorship while league-level sponsors supply equipment for official events. Notable non-endemic league sponsors include Foot Locker, KIA, MasterCardwhich are part of categories that also have active team-level sponsorsand Shell, whose category has no presence on the team level.OpportunitiesWhile many categories are well-represented in the LEC, music, cosmetics, FMCG, ecommerce, and social media have no league- or team-level sponsors, meaning there are plenty of opportunities for brands. While Red Bull has secured a partnership with the league as the only food and beverage brand, other brands in the same category still have an opportunity, as long as their product offering is different. As Red Bull is an energy drink brand, a confectionery or fast-food brand can still enter at the league level. Additionally, there are no league-level sponsors in the telecom and electronic categories. However, there are a few sponsorship deals in those categories with LEC teams. Depending on the agreement, league-wide sponsorship can also create issues for teams. For example, if a telecom brand becomes a shirt sponsor at the league level, other telecom sponsorships at the team level may cause confusion for consumers.Hours watched so far 2019Average viewers on Riot Games Twitch ChannelCosmetics Social Media eCommerceSponsors on board:Top category opportunities:© Newzoo 20198The “Baron Power Play”, powered by Shell V-Power, is a live in-game occurrence in League of Legends that gives players a temporary power boost. While an energy sponsorship would seem a stretch in esports, the link to such an in-game event relates to the audience and shows an understanding of the gameplay. Additionally, Shell will be giving away free cosmetics, XP bonuses, and additional in-game items to members of Shell loyalty programs.Start Date: January 18th, 2019Shell powers the Baron Power Play with Shell V-PowerOil & Gas© Newzoo 2019 9League of LegendsNorth America2013 (2019 rebrand)10Current SponsorsThe LCS has league sponsorships in just five categories. Just like the LEC, Alienware is the hardware sponsor for the LCS. Secret Lab is another endemic sponsor as the LCS official gaming chair. Notable non-endemic sponsorships include MasterCard, State Farm, and Jersey Mikes. We Are Nations is the official apparel sponsor for the league. OpportunitiesAlthough there are few LCS sponsors at the league level, team-level sponsorships are abundant in apparel, hardware, peripheral, finance and payment providers, and food and beverage. Despite ample sponsorship opportunities for brands in these categories, there are still plenty of challenges. There may be confusion around the team-level sponsors from these categories, for example, if other companies within the categories sponsor the league. This is especially a problem for peripheral, apparel, and hardware sponsors, where the team must use the product as part of the sponsorship. This means that league-level sponsorships can conflict with existing contracts. There are also many opportunities for brands in music, oil and gas, electronics, cosmetics, social media, FMCG, betting, and ecommercecategories from which there are no sponsors at the league or team level.Hours watched live so far 2019Average viewers on Riot Games Twitch ChannelMusic Oil & Gas ElectronicsSponsors on board:Top category opportunities:© Newzoo 201910An example of a successful activation in the LCS is the “State Farm Analyst Desk”, a physical desk at live events where presenters gather for post-match discussions. Guests, such as former members and experts, make appearances to share their thoughts on strategies being used and current events in the esports world. This activation positions State Farm as a knowledgeable brand in the eyes of fans, putting the brand at the center of an insightful piece of shoulder content. This helped State Farm form a connection with Esports Enthusiasts. Start Date: January 20th, 2018State Farm explains in-game events and strategies with their Analyst DeskFinance & Payment Provider