The Upcoming War for Esports Broadcast Rights

By Chris Sutcliffe on at

Esports' time has come. The combination of high-profile events like the Overwatch League and the increased professionalism of annual events like EVO has meant mainstream brands are throwing money at the industry. The growth of Twitch as a platform means that even games like Fortnite and PUBG that don’t lend themselves to stadium-based events are available to the casual viewer, helped by celebrities like Drake and even Roseanne Barr publicising their achievements in-game.

That increased prominence is drawing in more and more advertising money, enough that PwC predicts growth in esports advertising will outpace that of overall digital video advertising, according to its Global Entertainment and Media Outlook 2017-2021 report. That in turn is likely to attract the attention of ad-money hungry broadcasters and platforms, who have vast amounts of legacy funds they’re looking to invest in growth industries.

Gfinity, the UK-based esports company, had a one-season deal with both BBC3 and BT Sport to broadcast its Elite series, and is now working with Facebook as a partner. Its chief strategy officer Bryan Healy told me that while Gfinity approached the companies with a bespoke broadcast that fit into their scheduling, broadcasters in general are looking at esports:

“[BBC3] were looking at the esports market as well, for sure. To be honest, they all are actively looking. We approached them with the launch of the Elite series, and we had a bespoke product that we thought would be a better fit for the linear platforms... so it was a meeting in the middle.”

As a result platforms, broadcasters and publishers — all of whom want the broadcast rights to a growth industry like esports — are positioning themselves to take advantage of the entry of mainstream advertisers into the space. While a full-scale bidding war is still something for the future, invisible battlelines are already being drawn beneath individual matches of Overwatch, CS:GO, LoL and all the rest.

Broadcasters’ fading fortunes

Traditional broadcasters have typically been in a position of absolute power when it comes to bidding wars; the vast amounts of ad money they command ensure that their only competition when it comes to securing rights is each another. Sports channels, which bring huge audiences in for events and sell advertising for silly amounts of money during the broadcast, were historically the primary reason why subscribers chose one cable or satellite company over one another.

Recently, however, with digital Over-The-Top (OTT) video in the ascendancy and unbundling of cable channels removing the valuable sports channels from the equation, their position looks less secure. In the US, the total number of pay TV subscribers dropped 3.4% from a year earlier in the last quarter of 2017, and Fortune notes that that figure doesn’t include the ‘cable-nevers’, who didn’t have a bundle in the first place.

Media analysts Magna note that, in the US at least, the television industry has entered ‘permanent ad recession’. Consequently those broadcasters are looking for areas of high growth in both ad spend and audience — and esports fits the bill. The same is true in the UK, even for state-funded broadcasters, as shown by the BBC3 and BT Sport deal with Gfinity.

But the growth in digital video ad-spend has drawn newer, non-traditional bidders to the table. Facebook, which has consistently prioritised video and especially live video as being central to its growth, last year entered into an agreement with the Philadelphia 76ers owned Team Dignitas to stream its matches on its Facebook Live platform.

Twitter, too, sees esports as a boon to its mission of being the destination for live news and coverage. Its vice president for Europe, the Middle East and Africa Bruce Daisley told me:

“Live video of big events has been doing really well for us. Probably if you’d said five years ago, what you saw when you opened the Twitter app was you saw a lot of people Vining TV screens to show football goals. We’ve tried to avoid being in big bidding wars for things, but the esports stuff we’ve done has shown a fantastic audience, [a] big active audience for those things.”

In addition to the linear broadcasters and social platforms, streaming services themselves recognise the value in having those high-profile leagues remain on the platforms they own. Twitch’s reported $90 million two-year deal for the broadcast rights to half the matches of the Overwatch League, for instance, is peanuts compared to the amount spent on traditional sports leagues. But it is also the largest spend to date on the rights to esports broadcasting, and has been made primarily in service of cementing Twitch as the esports streaming destination for a particular audience.

Image: Overwatch League

Competition

Why all the competition? After all, there are no shortage of Let’s Plays and streamers across Twitch, YouTube and Facebook already. In fact, that’s exactly why the bidding war for rights to tournaments will get so hot. The huge amount of gaming content out there means that the value attached to each broadcast is relatively low. That’s why YouTube and Twitch deal specifically in huge stocks of content, specialising in low-value bulk.

Huge esports events, then, have the same advantage as events like the Superbowl. In a time when there is a surplus of advertising inventory, events that offer a huge audience for a limited period of time reinvent scarcity for digital advertising. That appeals to the old-school mentality of linear broadcasters, but it’s a point that’s not lost on the other entrants into esports broadcasting.

From the perspective of the esports industry, those huge valuations and competition over rights add some much-valued legitimacy, and increase the visibility of brands, teams and players in a positive fashion. That last point has been previously singled out by UK team owners as being vital for the growth of the industry, with MnM’s owner Daniel Chung telling me:

“The BBC has only just caught up, from spinning esports to a negative viewpoint to a positive viewpoint. In 2016, all their articles received a huge negative backlash from the scene, just from the way that they portrayed it. In Sweden, they had documentaries covering NiP even a few years ago, so that support is there already, the support that connects eSports to the general public. That’s one aspect that’s lacking: that connection to the general public.”

As the money starts really flowing into esports, with primary tournament sponsors and more ads being run to take advantage of that scarcity, it’s likely that tournament organisers will start to raise prices. We’re not there yet: Most tournaments are still free-to-watch, which limits the amount third parties will pay for exclusive broadcast rights. Bryan Healy explains that even Facebook, which is ploughing money into live video, isn’t yet demanding exclusive rights, though they are keenly aware of the potential for competition in the space:

“It's funny, when we had conversations with Facebook, we still have the rights to broadcast with linear partners. Facebook is our official digital streaming platform, and they even said as they continue to develop their offering cross live content in general, they are seeing the linear guys as potential.”

As money flows into esports then, both on- and off-screen, the competition is only going to get more intense. Big moves are coming, from the kind of players that you won't see on a stage.