eSports betting: The new battleground for sportsbooks

The origins of video gaming

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 video game Space Invaders. From 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 tournaments aren’t a new industry as some may think. 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 ‘eSports’ industry and current trends!

eSports market characteristics

eSports attracts a predominately male audience, within the median age range of 18-25. However, a large percentage of the overall eSports audience are under the legally required age for mainstream real-money gambling services in regulated markets. The male bias is no real surprise when you consider that most of the popular eSports games are massively multiplayer online game franchises such as Call of Duty (CoD), League of Legends (LoL) and StarCraft II. These games 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.

The triquetra alignment

Three factors have aligned to make the current incarnation of eSports a runaway success. The first is the technology that allows for massively online multiplayer gameplay. Back in the early 90’s online video gaming only accommodated up to 16 players, now you have the true 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 real-money gambling region, market research firm Statisa estimated 282 million massively multiplayer online (MMO) gamers in the Asia Pacific region.

The second factor is the continued adoption and usage of social media and video broadcasting. In particular YouTube and the live video streaming platform Twitch (launched 2011) which is a platform for video gaming streams. 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 video socialization factor, which is so much part of the Facebook and Twitter smartphone connected generation who desire 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 these professional eSports players’ vast amounts of money but untold adulation from millions of fans both online and offline.

The betting proclivity for eSports

If we look at the psychographics such as aspirations, interests, attitudes, opinions, lifestyle, behavior, 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 their belief systems and daily digital or online activity.

They are also the first truly digitally connected on-demand generation that is driving the decentralised internet and disruptive services. Simply put 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 open Tinder! Everything is literally a tap, pinch and swipe away.

Is there a 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 trade virtual items, often referred to as skins or skin trading to assist with their gameplay linked to the game Counter Strike Global Offensive on CS: GO Lounge a known marketplace for this style of skin gambling. 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 a pari-mutuel wagering system.

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 community is a must for conversion

We have already witnessed new pure play eSports-centric start-ups and existing gambling brands offering eSports to various degrees of player immersion. Some merely offer eSports as a betting option accessible from the main gambling website 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 betting markets such as ‘First Blood’ and ‘Map Winner’ related to the actual games these potential players are interested in. Other operators have elected to follow or replicate traditional above-the-line marketing 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 betting market. For example Unikrn, a pure-play eSports betting site that partnered with Australia’s Tabcorp and which has being trading for a year has amassed more than 7 million players. Another called eSportspools; a fantasy eSports pools platform that showcased at last years’ 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 brand marketing tactics favoured by other entrants and existing mainstream betting companies.

Certainly at this early stage you would have to say in video game speak, these pure-play eSports betting specialists have made the ‘first kill’ when it comes to understanding the power of a community-based gambling entertainment offering around eSports content.

Marketing Challenge

Perhaps the major challenge is therefore not some much about the digital channels to advertise on to acquire customers 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 opposite 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 other 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 ‘game’ rounds. Why you may ask, perhaps the eSports nascent customer base appears to be anti-establishment in their behaviour and has the community as a major 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 therefor 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!