How to Transform eSports Hype into Revenue

Dimitar Serafimov | Tue Jan 24 2017 | Industry insights

Final Fantasy fan fest in Frankfurt 2017

In the world of OTT and SVOD, there's no hotter topic than eSportsWith so many developments over the past two years, and a large, engaged target audience, there are more money-making opportunities than ever before.

According to the Amsterdam-based, market intelligence company Newzoo, with $99.6 billion-plus in revenues in 2016 (an increase 8.5% year over year) the gaming industry is likely to see a solid immediate future as technologies and strategies collide to offer further opportunities to relieve consumers of money - both virtually, and in person.

eSports yearly revenues

The bigger picture

As technologies continue to evolve, so does the scope for integrating products and features to create more active engagement with content.

Speaking to Forbes, Ryan Chaply, eSports Program Manager, Twitch, states that new types of engagement are coming:

"Reward mechanics and dynamic social integrations (as seen in SUPERFIGHT) are evolving the potential to tell deeper stories that engage viewers and encourage new types of play. We will continue to see redefined expectations on how people interact with content because of this. Twitch Prime is a great example of this, and we look to build more on this in the future."

And as consumers become smarter, savvier, and more demanding, content providers are bringing their strategic efforts in-house.

This year and beyond, audience diversification we will prompt smarter business efforts from brand and developers:

As opposed to a pure marketing play, it’s expected that will brands create a dedicated strategy and retain control over their revenue models rather than conjure up simple plans and badging exercises. We will start to see developers and brands create self-sustaining strategies to operate and run effective eSports programmes both locally and on a global scale - an excellent example of this is would be the growth of formula eSports around physical races.

Another potential method of monetization comes in the form of first time churners.

Traditionally, games companies look at three main segments; new, active, and churn.  Churn is often lower down in the pecking order,  but 18% of first-time churners, on average, can be reactivated, which means multi-time churners - thanks to the zig-zag phenomenon (where active users leave and then continue to come back repeatedly) - can be identified and incentivised differently.

And our final insight comes is inspired by a statement from Pro Gaming VP Simon Sunden on the infancy of competitive gaming and its monetization opportunities:

One company that has figured it out the magic formula for monetizing eSports is Valve with the game DOTA 2.

The annual DOTA 2 tournament broke international records in 2016 with a grand prize pool of nearly $21 million - generated by a system in which 25% of revenue from purchasable 'battle passes' are added to the prize fund.

What's lesser known about DOTA 2 is the fact that they made $77 million - the most a developer has ever made from one single tournament. Quite incredible and a clear indication of the potential of eSports in the modern world.

Cleeng’s take on eSports

Besides being a great example for sports broadcasters, eSports has the potential to be the undisputed champion of live sports OTT and be the biggest revenue earner from OTT activities. With an audience that is more online, on multiple devices, loyal, engaged, the opportunities to monetize online video content are tremendous.

The primary challenge is to translate all the hype and fan engagement into revenues. With our partner IBM, we have helped Square-Enix organize the Final Fantasy XV fan fests and move some it's video content from Free to Paid with great results.

At Cleeng, we help sports federations, broadcasters and rights owners monetize their online video content and grow their bottom line.

Here's what the brand director at Square-Enix had to say about their collaboration with us:

“Cleeng are accommodating and proactive in their service offering for our events.  Clearly understanding the client requirements and offering excellent support, we look forward to a continued relationship with them.”

The world of eSports is expanding at an incredible rate and those who are able to jump on the trends and create money-making opportunities from the hype will be the ones in poll position.

Cleeng is attending one big eSports conference next week, where we'll share our experiences and vision. Esports BAR, a 3-day gathering in Cannes,FR where the eSports industry decision makers will gather and network.

If you are in Cannes for the eSports BAR 2017, let us know. We'd love to connect:

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