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eSports Betting: The Millennial Marketing Challenge – (EEGReport – Magazine – Issue3 – June – September 2016)

eSports Betting: The Millennial Marketing Challenge – (EEGReport – Magazine – Issue3 – June – September 2016)

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Mainstream gambling operators are in a race for the first mover market advantage by adding eSports betting services to their 24-hour betting options menu. Shall the addition of eSports to their platforms convince the digitally connected millennial audience to sign-up? Industry eSports and digital betting consultant Mark McGuinness explains some of the marketing challenges.

Back to the future

Before the eSports moniker arrived, the origins of video gaming are entwined in Asia way back to the early 80’s with the Taito Corporation and the iconic Space Invaders. To games console manufacturers and publishers such as Sony and its PlayStation; the mighty Nintendo and the Gameboy and, of course, the Wii; to Namco Bandai, Capcom. Competitive video gaming and tournaments isn’t a new industry either. It’s been around for more than 30 years with Space Invaders and the 1st large-scale video game competition for 10,000 players in North America using their skills to secure the top prize. So for all the Millennials reading or sharing this article, it was the ‘older’ generation that invented the industry and current trends!

Market characteristics

Esports attracts a predominately male audience, within the median age range of 18-25. However, a significant percentage of the overall eSports audience are under the legally required age for mainstream gambling services in regulated markets.  The male basis is no real surprise when you consider that most of the popular eSports massively multiplayer online game franchises such as Call of Duty (CoD), League of Legends (LoL) and StarCraft II involve shooter, battle arena style war games – boys and their toys-springs to mind.  From a marketing standpoint, this is an extremely sought after demographic by many brands both within the eSports ecosystem and outside, including gambling companies.

Behavioral and technology drivers

Several factors have aligned to make the current incarnation of eSports a runaway train. The first is the technology that allows for massively online multi-player gameplay. Back in the early 90’s online video gaming only accommodated up to 16 players, now you have the real multi-player capability with tens of thousands of players connected at one time.  The numbers are colossal; 67 million players play the world’s most popular game, League of Legends every month. In Asia arguably the biggest gambling region, market research firm Statisa estimated 282 million massively multiplayer online (MMO) gamers in the Asia Pacific region.

The second factor, the continued adoption and usage of social media and video broadcasting.  In particular YouTube and the live video streaming platform Twitch (launched 2011). Before Twitch even allowing for the multi-player capabilities, the playing of video games was solitary, until video broadcasting of yourself to millions of potential like-minded participants became a reality.  It is this socialization factor, which is so much part of the Facebook and Twitter smartphone connected generation that desires on-demand entertainment that has propelled eSports to its current stellar growth.

The third factor is that previously video gamers, where akin or labelled computer nerds or teenage hackers playing in their basements/bedrooms in unlicensed video tournaments. Now through using their skills, they can escape the poverty trap and embark on a lifestyle that not only earns those professional players vast amounts of money but untold adulation from millions of fans.

The marketing proclivity 

If we look at the psychographics such as aspirations, interests, attitudes, opinions, lifestyle, behaviour, etc. In broad terms, the eSports audience is ostensibly built around vast communities of shared experiences, with social sharing, social learning, social giving causes such as volunteering their time for unpaid work are central to the activity.

They are also the first truly digitally connected on-demand generation that is driving the decentralised internet and disruptive services.  In short, this connected generation wish instant gratification via the multitude of discovery and recommendation apps and on-demand services that inhabit their desktop, tablet or smartphone. For the eSports connected generation, everything is on-demand and almost immediate. Don’t feel like hailing a taxi in the rain in London’s West End? No problem. Use the Uber app and it’s there in minutes. Need a companion of the opposite sex, then open Tinder!

The demand curve for eSports betting

Before we assess this, betting services already exist for the eSports demographic, long before mainstream gambling companies considered looking at the sector.

eSports fans and players use digital and virtual currencies for consumption of gaming products.  They trade and bet on huge eBay style marketplaces whereby they purchase virtual items or skins to assist with their gameplay with Counter Strike Global Offensive on betting platforms such as CS: GO Lounge.  This has grown into a relatively new craze where betting of these skins you own on live eSports matches and raffle betting has erupted for further financial gain.  The concept is that if you win, you gain more skins or a skin of a higher quality and price all of which is based on a pool or pari-mutuel wagering system.

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In terms of the money flow and economics, its supply and demand. The majority of these skin platforms accept and cash-out daily using Bitcoin as the digital currency of choice to facilitate the trading activities taking place on the platform.

Regarding the skin, the rarer the skin, the more players compete for it via bids. You can get skins from opening what to what is known as ‘crates.’ They are similar to a potluck or lucky dip whereby you receive a skin of varying value. You can also get a crate at the end of playing a game or randomly, or you can buy one (usually cost around $2 each). The crate, however, needs to be opened and to do that you’ll need a key!

The ‘key’ costs money, usually around a few dollars for the keys to crates. You’ve got no idea what the skin’s value is you’re going to get. Once the skin is revealed, you can check at a glance what the going rate for your skin is. You can do this by checking out the skin, in the game marketplace such as OPSkins. By doing this, it will help you to gauge what the value is at this current time as it fluctuates as more skins come into circulation in the marketplace.

These providers within the eSports Skin Trading vertical have amassed communities in the hundreds of thousands of players, wagering millions of dollars a day. They have been developed from within the eSports ecosystems by developers, with the community at the heart of the betting or digital betting experience.

The actual market size is difficult to determine as most of the skins trading platforms are unregulated, but some industry observers including Bloomberg suggested that the skins market in 2015 was worth $2.3billion with some 3million plus active players. The stats are significant and growing. If we take OPSkins a leading provider of skin trading, of which their website publishes user data, they had 1,363,140 players total to date and 9,026 players active in the last 48 hour period. You can visit the site to see the real-time stats yourself, the skins listed, of which over 350k skins being sold each week. Skins can go for a couple of dollars to thousands of dollars, with thousands of transactions a day and OPSkins is just one of hundreds of similar sites.

Everybody talks about how big fixed odds eSports betting could become for mainstream sportsbooks and yes that is a growing vertical. But yet skin trading as it stands today has gone largely unrecognised or ignored by sportsbooks with demand being serviced from within the existing eSports ecosystem. If you do a Google search for ‘skin gambling’ you get 19,700,000 results returned; compared to eSports gambling at only 300,000! So that’s a bit of a giveaway to where the actual demand curve lies.

The community or hub is central for optimal conversion

We have already witnessed new pure play eSports-centric start-ups and existing gambling brands offering eSports to various degrees of immersion. Some merely offer eSports as a betting option accessible from the main gambling navigation menu. To others such as Betway, who have introduced their eSports Betting Hub to create a sense of community around the betting product combined with a range of eSports specific markets such as ‘First Blood’ and ‘Map Winner’.  Other operators have elected to follow or replicate traditional above-the-line marketing and branding methods that are used in traditional football sponsorship to acquire customers and top-of-the-mind brand awareness and recall.  Asian behemoth Dafabet recently signed a sponsorship deal with UK-based pro eSports organization Fnatic, arguably one of the world’s top eSports team.

It is still early days to say which marketing strategy would work best for customer acquisition, but certainly a ‘rinse and repeat’ of existing marketing programs does need careful reconsideration for the eSports market. For example Unikrn, a pure-play eSports betting site that partnered with Australia’s Tabcorp and which hasn’t even been trading for a year has amassed 7 million players.

Another called eSportspools; a fantasy eSports pools platform that is showcasing at the up and coming EiG Start-up launch pad has acquired over 80,000 players just in its beta phase. From a marketing standpoint, these businesses have focussed heavily on building products that solve problems for the community interested in betting on eSports as against the traditional above-the-line marketing favoured by other entrants and existing mainstream betting companies. Certainly at this early stage, you would have to say in video game speak, they have made the ‘first kill’ when it comes to understanding the power of a community-based gambling entertainment offering around eSports.

Marketing Challenge

Perhaps the greatest challenge is therefore not some much about the digital channels to advertise on to acquire eSports bettors such as Twitch, Celebrity endorsement of YouTube Shout casters or eSports team sponsorship and so forth.

The major marketing challenge for existing or traditional sportsbooks to acquire new customers within eSports is that the current product offering presents the polar opposition experience.  In short a passive, solitary; non-community based betting experience for players or fans within eSports who are used to community-based and active participation betting with forms of digital currencies such as Bitcoin.

Who shall win the eSports customer acquisition battle?

The outcome has still to be determined. However as a betting man and avid gamer myself, it’s fair to say the new dedicated eSports betting franchises are winning the first few rounds. Why perhaps as the eSports nascent customer base appears to be anti-establishment in their behaviour and has the community is an important part of their beliefs. They may just not wish to offer their custom to established betting brands that they have never heard of. Instead, they may elect to give their social patronage to eSports brand franchises that understand their needs and give back to the community – something that mainstream sportsbooks have been lambasted for over the years – not giving back to the sport, the organizations or more importantly the fans. Furthermore, connected gamers have probably never seen a traditional betting interface nor placed a standard sports bet.

The proclivity for the eSports digital betting marketing funnel is in need of education, simplification and product innovation of the betting options around the eSports online or land-based events, but not for the potential eSports consumers per say, but for the operators themselves.  Let the video games wars commence!

 

 

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About the author

Mark McGuinness has more than 17 years’ experience in digital marketing director roles within the iGaming industry. He is the co-founder of esportsbet a consultancy and resource for gamers and sports bettors who wish to start betting on eSports.

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