eSports in Latin America is Far From Being a Sport in Brands’ Minds
By Gabriela Gutiérrez M.
What: While the United States, Europe and Asia have positioned themselves as highly profitable markets for eSports, brands in Mexico and Latin America still do not think of it as sports.
Why it matters: From its roots in geek culture to its growing popularity, gamers and eSports fans have created a community that embraces authenticity and quickly rejects relationships with brands that do not offer a clear value, warns MEC’s "Spotlight on eSports" report.
There are 2.2 billion gamers worldwide, of which about half - 47% - spend $108.9 billion while gaming, offering a great opportunity for brand exposure.
"Brands have been trying to get into video games for decades. eSports now provides the ideal entry into the favorite hobby of digital natives and Millennials. Long-term investments are being made by companies within the sports landscape," said Peter Warman, CEO of Newzoo, a consulting firm specialized in the video game market, in a statement.
Although the market in Latin America is still emerging compared to Asia or the United States, it is getting stronger year after year. "Mexico has a bad history of people who have not given brands what they are looking for. There are teams that promise a lot and have no reach," said Alejandro Leyva, an eSports influencer known by the alias Alk4pon3.
However, that is not the case with Lyon Gaming, the League of Legends' northern Latin American champion, and one of the games with the largest worldwide eSports audience. Its team jerseys are emblazoned with various sponsor logos such as Kultec, Supermex, Intel, Asus, and Arena (Cinemex). At the same time, the game promotes HyperX products on its Facebook page, which has more than 110,000 followers.
Bringing sports brands to eSports is very difficult in Mexico, because it is not considered a sport here, nor seen as profitable.
"We are still a very small sector. Bringing sports brands to eSports is very difficult in Mexico, because it is not considered a sport here, nor seen as profitable," said Jorge Valencia, in charge of securing sponsorships for Lyon Gaming. "Under Armour told me that what we do has nothing to do with what they do; and that it wasn’t even related to exercise. The detail they forget is that people who play video games also exercise."
For Valencia, Lyon Gaming’s biggest plus for attracting brands is its status as regional multi-champion and its social network reach, which garners up to 300,000 people for each post on Facebook. "Our reach is not limited to Latin America. When we participate in tournaments, the brands are broadcast on five continents."
In 2016, global profits for eSports grew to $696 million, a 41.3% increase over 2015. The largest portion of those profits - $517 million - comes from brands: $151 million from advertising, $266 million from sponsorships, and $95 million from media rights.
Consumer spending this year on merchandise and tickets will amount to $64 million. The remaining $116 million will come from the total investment made by game publishers in eSports.
The eSports economy is still far from mature and is still an investment area for many companies, particularly for game publishers. Although revenues are rapidly increasing each year for eSports teams, this money is often reinvested, leaving little or no profit.
We are as confident as we were in 2013, when we began researching, reporting and shaping the eSports space, that eSports will become a multimillion-dollar business.
"We are as confident as we were in 2013, when we began researching, reporting and shaping the eSports space, that eSports will become a multimillion-dollar business in the future—entertaining hundreds of millions of fans every week," Warman added.