An eSporting Chance For Affiliates
Published 4th October 2015
Will competitive video gaming, better known as eSports, soon be acknowledged as an Olympic sport – if not for Rio next year, then in time for Tokyo 2020? eSports athletes going for gold in Japan looks increasingly likely. In fact, this April the International Association of Athletics Federations, the global governing body for athletics, announced a broad partnership with the International eSports Federation. By 2020, betting on eSports will also be bigger than ever. Within five years the eSports wagering market could be worth as much as $3.3 billion, according to Eilers Research. This provides an opportunity for forward-looking iGaming affiliates to diversify their offering by promoting this rapidly expanding vertical.
Game on: eSports’ rise
Many affiliates will recall playing the Nintendo game Donkey Kong and Atari’s Pac-Man. While these classics may have proven instrumental in the foundational phase of competitive video gaming in the 1980s, the vertical came of age in the following decade. By the 1990s, eSports competitions went from being small, ad hoc meet-ups to major national events. The first Nintendo World Championship took place in 1990, touring 29 US cities, and was followed by a bigger tournament four years later, the Nintendo PowerFest ’94. In 1997, the founding of the Cyberathlete Professional League (CPL) in Dallas, Texas, helped take eSports competitions from the national to the international stage. Of course, the most important catalyst for eSports’ growth over the last 20 years has been the internet. Online multiplayer video games like Quake and StarCraft: Brood War allowed players to compete against each other in cyberspace without geographical boundaries. By the turn of the millennium, the stage was set for eSports’ global coronation. The CPL was joined by an array of other international tournaments, including Major League Gaming (MLG) in 2002, the European Gaming League in 2007, and, more recently, The International, which focuses on the game Dota 2. The latter battle arena title is just one of the hugely popular eSports games – along with League of Legends, Counter Strike, World of Tanks, and Hearthstone: Heroes of Warcraft – that have helped transform competitive video gaming into a spectator sport watched by millions. Using online live-streaming video service Twitch.tv, which was acquired by Amazon for $970 million in August 2014, and other online platforms, eSports enthusiasts can watch their favourite teams compete in global tournaments in real-time. Amazon’s acquisition looks unlikely to be overvalued, considering that today eSports spectatorship rivals that of conventional sports. This year 134 million people will watch a competitive video gaming event, according to SuperData Research. Unsurprisingly, eSports’ global popularity has translated into impressive revenue figures. SuperData Research reports that the market is today worth $612 million. While 61% of this total can be attributed to Asia, the US (23%) and Europe (12%) remain the second and third most important eSports markets.
Given the market’s growth, wagering on the outcome of major eSports tournaments was a logical progression. Perhaps the only surprise is how long it took for eSports to converge with online gambling. Europe-facing online sportsbook Pinnacle was one of the first operators to enter into the eSports space, allowing punters to bet on video gaming events from 2010. Other major European sports-betting brands such as William Hill and bet365 have since followed suit. European sportsbooks’ pioneering role in eSports betting was relatively predictable. In demographic terms, eSports enthusiasts and conventional sports bettors share much in common. In both verticals, men predominate and players trend younger. According to Newzoo, 69% of eSports fans in Western Europe and the US are male, and the majority (59%) are in the 21-35 age group. Europe’s liberal regulatory approach towards iGaming is another key reason that sportsbooks focusing on the market have been at the vanguard of eSports betting’s development. While there are more eSports viewers in the US market, wagering online on eSporting events is currently prohibited across the country until, that is, individual states begin enacting legislation to regulate it. However, given the market’s potential and New Jersey, Nevada and Delaware’s regulation of certain real-money iGaming verticals, some US-facing operators appear optimistic that states could soon adopt a similar approach towards eSports wagering. Seattle-based standalone eSports betting site Unikrn currently focuses on UK and Australian players, but plans to expand into the domestic market once regulation permits. Another legal alternative for the US market is the hybrid of daily fantasy sports (DFS) and eSports. Currently, DFS is permitted in all but five US states. Daily fantasy eSports (DFeS), whereby players assemble fantasy rosters of teams for games like League of Legends to win fixed prizes, follows a similar model and is therefore legal. Unsurprisingly, leading US-facing DFS brand DraftKings launched a DFeS offering in September. With eSports betting products diversifying, the amount wagered globally on eSports will total an unprecedented $315 million this year, according to Eilers Research. Going forward, the vertical is expected to grow exponentially. By 2020, Eilers Research predicts the eSports market to be worth up to $42.9 billion.
Affiliates’ eSports betting strategies
With eSports betting’s ongoing expansion, savvy affiliates are already preparing to diversify into this space. This move will mean an additional revenue stream and an opportunity to increase their conversions by cross-promoting sportsbooks with eSports. The similarities between eSports and conventional sports betting makes promoting the vertical a logical choice for sportsbook affiliates. As mentioned, there is a significant overlap between eSports and sports betting demographics. However, it is important to note that differences do exist. eSports enthusiasts tend to have higher average incomes than the general population and the average sports bettor. Indeed, 40% of eSports viewers surveyed by MLG have a household income in excess of $100,000 a year. This makes them high-value players for affiliates. Given that eSports fans trend younger, their lifetime values can also be projected higher. It is also interesting to consider the potential crossover between eSports viewers and sports bettors. For example, many video gaming fans may have never considered placing a bet on a traditional sports such as football, horse-racing, tennis or rugby. This represents a lucrative opportunity for affiliates to convert these eSports enthusiasts into eSports betters, and into conventional sports bettors. Affiliates can act as sites of convergence for eSports betting and traditional sports betting. By ensuring that their website content for both verticals is engaging, informative and educational, affiliates can convert traditional sports bettors into eSports bettors, and vice-versa. Affiliates can support their on-site content with email marketing campaigns to their existing player databases as well as social media content and engagement. Of course, the eSports betting opportunity is not just limited to sportsbetting affiliates.
The level of skill involved in forecasting the outcome of the fifth annual The International (Dota 2) tournament in August means that today’s eSports bettors have much in common with online poker players. As such, it’s a natural fit for affiliates whose main focus is promoting that vertical. So where is the best place to start for affiliates wanting to tap into the space? The optimal starting point is with currently partnered brands diversifying their product offering with the launch of an eSports product. As standalone eSports brands enter the market and solidify the niche, affiliates can then diversify their approach to promote these products. In the US market, it’s the daily fantasy eSports brands that affiliates should tackle first. By developing business relationships with DFeS operators today, affiliates can prepare for the possibility of individual states regulating eSports betting down the road. Of course, almost two-thirds of the eSports market’s global revenue can be attributed to Asia, and South Korea and China in particular. To cater to traffic from this region, affiliates can look to promote Asia-facing sportsbooks with an eSports offering. Brands such as 138.com are increasingly expanding into the vertical and using the affiliate channel to support their acquisition of eSports bettors. By promoting a diverse range of eSports betting brands, including the US-focused alternative of DFeS, affiliates will position themselves for the lucrative future of this rapidly growing vertical. With the possibility in 2020 of eSports bettors across the globe wagering on who will win the League of Legends Olympic gold medal in Tokyo, affiliates need to be ready.
“40% of eSports viewers surveyed by MLG have a household income in excess of $100,000 a year. This makes them high-value players for affiliates.”
“By developing business relationships with DFeS operators today, affiliates can prepare for the possibility of individual states regulating eSports betting down the road.”