In-Depth

TV plays the millennial game

ESL One New York, one of ESL's many global events

ESL One New York, one of ESL’s many global events

The meteoric rise of eSports has caught the attention of TV operators and broadcasters, both of which are investing in rights and dedicating airtime to gaming. But how likely is this to win back millennial viewers? Andy McDonald reports.

Online gaming has transformed in recent years from a pastime typically associated with young adult males into a multi-million dollar global industry. eSports has grown out of  bedrooms and into arenas, with the spectator element fuelled by the success of online viewing platforms.

Unsurprisingly, the TV industry has taken note of these trends and is looking to tap into the increasingly popular and lucrative world of gaming. Companies ranging from Modern Times Group (MTG) in the Nordics, Telefónica in Spain, and Sky in the UK have all made eSports investments, while increased broadcaster interest is making rights more competitive than ever.

But with the massive established reach of digital platforms like Twitch and YouTube, is there a place for eSports on TV and can broadcasters and operators lure millennial eyeballs away from online streaming and social media platforms?

Targeting the youth market

eSports exploded into the consciousness of many broadcast-industry watchers in August 2014, following Amazon’s US$970 million (€816 million) cash buyout of videogame streaming platform Twitch. The deal, and its associated price tag, highlighted not just the popularity of eSports in its then-current form, but also the vast growth potential of this market.

Today Twitch claims 2.2 million unique broadcasters each month and 10 million daily active visitors, who spend an average of 106 minutes per person, per day on the site. “Our core demographic is 18-34 year olds, roughly 70% male,” Twitch’s vice-president of sales for Europe, Steve Ford, tells Digital TV Europe. “This tends to be the same profile as the cord-cutters and cord-nevers in a lot of markets.”

The combination of a difficult-to-reach audience and a healthy market is arguably what is driving broadcasters and TV operators toward eSports in increasing numbers.

Earlier this year, eSports market intelligence company, Newzoo, estimated that the eSports economy will grow 41.3% year-on-year in 2017 to reach US$696 million. Its 2017 Global Esports Market Report estimated that brands would spend US$517 million this year on eSports advertising, sponsorship and media rights. This is expected to double by 2020, pushing the total market to US$1.5 billion.

While the opportunity is clear, the ways into the eSports market are not, and different players across the European broadcast space are taking different approaches – variously investing in eSports content rights, eSports broadcasters, and directly into the eSports organisations that run tournaments.

MTG was one of the first companies from a TV background to make a decisive move into eSports. In 2014 the Nordic firm launched its own eSports streaming platform, Viagame, with a mix of licensed content and content from regional eSports company Dreamhack. However, Arnd Benninghof, the head of MTG’s digital division MTGx, says that it soon became clear “it was not really a smart strategy to compete with Twitch. That was the point when we decided to invest in a league operator.”

In July 2015 MTG paid around US$87 million for a 74% stake in Cologne-based eSports specialist Turtle Entertainment, which owns and operates some of the world’s largest eSports brands under the name ESL. This gave MTG majority control over leagues like ESL Pro League and events such as ESL One and Intel Extreme Masters (IEM) and from today’s perspective looks to have been an extremely shrewd investment. This year’s IEM World Championship in Katowice, Poland attracted 173,000 fans to the Spodek Arena over the course of two weekends. It was also the most broadcast event in ESL’s history, reaching more than 46 million unique viewers online – up 35% compared to last year’s event.

Benninghof compares the ESL to a “Champions League brand” and Viagame now redirects to an ESL TV branded site, yet this is all still just one aspect of MTG’s eSports strategy. In 2015 the company fully acquired Sweden-based Dreamhack for some US$28.2 million and launched linear TV channel eSportsTV, and Benninghoff says more investments could follow. “We are prepared, over the next two-to-three years at least, to grow the business through further M&As, so there is a clear commitment,” he says. “This could be more technology-driven investments, or content creation, or just talent acquisition.”

Speaking on the phone from ESL’s UK’s base in Leicester, UK managing director James Dean says that MTG’s initial interest in ESL was likely down to “the fact that we’re reaching a digital, millennial audience”. However, he also puts it into the context of MTG’s broader digital portfolio and adds that “there’s obviously a synergy between eSports and sports products”.

Dean says that Twitch is still the number one platform for people to tune into ESL – despite a lot of short-form content going up on Facebook and Twitter, and despite YouTube’s efforts in the eSports space. A year after Amazon’s buyout of Twitch, YouTube went head-to-head with the service by rolling out its own dedicated YouTube Gaming service and earlier this year it agreed to exclusively broadcast the ECS Counter-Strike: Global Offensive league.

“YouTube has a lot of catching up to do with Twitch, so I guess one way you could approach that is to say ‘well let’s buy exclusivity for the largest CS Go League in the world, which creates a huge amount of viewership,” says Dean. “If it was streamed on Twitch as well, I think you would be hard-pushed to move those viewers across, despite the YouTube platform being very good. The community sticks around because they’re used to it.”

Discussing TV’s wider interest in eSports – with operators like Sky and BT all now getting in on the action – Dean says: “I personally think they had to try it; it had to be an experiment.” In relation to Sky and ITV’s involvement with Ginx, and many other examples across the world, he says: “I think really what we’re witnessing is the fact that they have to test the water. Until the ratings come out, we’re not going to know whether it works or not.”

Widening the appeal

Broadcasters and operators are hoping to replicate eSports’ online success on TV, both by attracting millennial viewers to television and by opening up eSports to a wider audience. But how big a challenge is it to succeed in either scenario?

In September 2016, Sky and ITV each pledged £1.55 million (€1.7 million) of investment into eSports broadcaster Ginx, which claims to be the biggest international eSports channel with a reach of 50 million households. Sky’s group director of business development and partnerships, Emma Lloyd, describes the investment as a response to “eSports market demand for linear coverage, to complete availability across all platforms”.

Lloyd says the Ginx investment gives Sky insights on the creation of eSports content “from the inside out” and claims there is value in bringing together eSports content across traditional platforms, as well as accessing it for use on TV, digital and social networks.

“It’s important to remember that Sky is a quad play provider, not just a television business, so the field of opportunity to bring eSports to audiences across platforms and devices is much wider for us than for some competitors,” says Lloyd.

Despite this, Lloyd sees a place for eSports as a televised sport – even if it doesn’t compare with the likes of football and rugby. “eSports caters for global, individual viewing across connected devices, while linear TV remains the most popular way to watch traditional sports,” she says. “But with demographic changes and the visual quality of live eSports streams constantly improving, we might see eSports become a communal viewing experience on TV similar to traditional sports.”

Last year Sky broadcast highlights from ESL’s Intel Extreme Masters tournament on Sky 2, showing footage of games like CS: Go and League of Legends on an entertainment channel that also plays host to drama and comedy. However, when Ginx launched on the Sky platform last summer, it took channel number 470 in the sports section of its electronic programme guide – between greyhound racing channel Front Runner 2 and Formula 1 channel Sky Sports F1.

Ginx CEO Michiel Bakker, says the sports team at Sky drove the investment in Ginx as a way to make a first move into eSports. “Ginx eSports TV is packaged in the sports section of the Sky EPG and the channel brings more millennials to that section, which is part of the rationale for investing.”

For Bakker there is a clear opportunity for eSports on television. He says there are roughly 200 million eSports enthusiasts around the world and another 200 million eSports ‘viewers’ – with both groups having grown by “meaningful double-digit numbers” in the past five years. “Roughly 70% of those two groups are millennials and they consume vast amounts of content across multiple touch-points,” he says. “In the US, eSports viewing has overtaken traditional sports like ice hockey. Now Television is bringing in a new mainstream audience to help fuel that growth. I’d say it’s a hugely significant part of millennial media consumption.”

Ginx is UK-based but the channel, which broadcasts 24/7, is available around the world, including much of Europe. Most of Ginx’s output is exclusive for TV, but Bakker describes it as ‘leaky’ with some shows simulcast across Twitch and other digital platforms and some content produced only for the web. “In that way we try to build a bridge between the online and linear TV worlds. That audience flow is part of the attraction of the channel for cable, IPTV and satellite platforms.”

Eleven Sports is a linear broadcaster that has recently moved into eSports after striking a wide-ranging deal with eSports outfit Gfinity to air live, exclusive competition gaming from its Elite Series events. Gfinity’s Elite Series brings together eight professional teams competing in three games – Street Fighter V, Counter-Strike: Global Offensive, and Rocket League – and Eleven will show the coverage in all seven markets where it is active, which includes Poland, Belgium, Luxembourg and Italy in Europe.

“Why did we acquire it? Because first of all we believe that eSports is on the rise significantly and globally,” explains Eleven Sports’ group managing director, Danny Menken. “Gfinity has organised more than three million gaming sessions, which have achieved more than one million views to date. Those are quite significant numbers and it really shows that there is a market for it.”

Menken says another major factor in licensing eSports is that its cable and IPTV provider clients are “looking for millennial content” to appeal to cord cutters, or those that never had a cord to cut. “eSports is exactly the type of content which is attractive for this target group.”

A new type of storytelling

In Spain, Telefónica’s commercial brand Movistar earlier this year announced it was integrating electronic games into “the core of its strategy” after signing a deal with ESL. It now distributes eSports digitally through its Movistar+ platform, and on TV via a dedicated Movistar eSports channel, as well as on Movistar Deportes 1 and 2. Movistar also created Movistar Riders, an eSports club made up of various professional video game teams, which is headquartered in the Movistar Gaming Centre in Madrid.

In Telefónica’s eyes the coverage and quality of its fibre broadband has helped spur growth in the games sector in recent years. It is now tapping into that growth from an entertainment standpoint, adding eSports alongside its traditional sports offering of football, basketball, cycling, MotoGP and F1.

A spokesperson for Telefónica told DTVE that through its different platforms eSports is reaching both its young target audience and new viewers that previously weren’t familiar with eSports. “Television is a more ‘accessible’ means to reach new family audiences,” said the Telefónica representative, explaining it can play a ‘socialising’ role between parents, children and fans of eSports. “In order to reach new audiences we are committed to an editorial tone that helps to democratise and facilitate the understanding of eSports, its competitions, its rules, its jargon or expressions.”

MTG takes a similar view of its esports TV channel. MTGx boss Benninghoff accepts that for the avid gamer, TV is probably “less relevant” as they find their content and stories within the eSports world.  “Over recent years, eSports was very much driven by live streams from live events,” he says. “What we’re trying to do is add shoulder content – documentaries, background stories, analysis and so-forth, to make it more appealing to a broader audience.”

This idea of building on the popularity of eSports with content that can live on TV has also started to apply outside the strict confines of a dedicated eSports channels. Youth broadcaster The QYou has identified what it believes is a “fertile field” for content related to eSports, with co-founder and CEO Curt Marvis explaining that eSports is in the top four categories of programmes it is looking to create from now on. He says this opportunity lies around the lifestyle of eSports – “everything from fashion, through the ancillary interests of the gamers, to the personalities involved”.

“As a company, we’re not focused on the live event broadcasts for a number of reasons,” says Marvis. “That’s not really what we do as a company, that’s one reason. The second reason is frankly that the rights are becoming extremely expensive and being left to a different group of buyers and channels that are interested in that, some even being those that are typically showing Champions League [football] and those types of events.”

Bigger industry shifts

While eSports has grown up in recent years, at the same time there has been some debate about the abiding popularity of traditional sports among younger viewers. A study by Ampere Analysis last year claimed that interest in sport among young millennials is “on the decline” with many viewers lured away from sport by the wealth of other TV and online video content.

Of nearly 32,000 consumers interviewed in the US and Europe in the previous year, Ampere found that sports fans were under-indexing among those aged 18-24. According to the statistics, 10% overall chose sport as their favourite genre. Of these, just 11% were young millennials, compared to 13.5% of the surveyed population – 17% lower than would be expected.

ESL’s Dean does not recognise this trend. He claims there is huge crossover between live sports and eSports – something that is borne out both by data gleaned through its social media channels and anecdotally. “Our studio’s in Leicester,” says Dean. “When Leicester won the Premiership last year, the Twitch chat in our Counter Strike finals was filled with [Jamie] Vardy. Literally, every time someone mentioned Leicester, they just typed Vardy. So they obviously are aware, they watch, they understand.”

Dean says that he does not see eSports as a threat to normal broadcast TV. However, he does have some misgivings about broadcasters’ ability to reach new audiences with eSports content. He argues that while a TV viewer does not need a deep understanding of football to appreciate what is happening on the pitch, in eSports a viewer needs to know and experience the game themselves in order to understand the strategies and plays as they unfold.

“Unless you’re really interested in playing that game, you’re not going to understand it exactly the way in which it’s presented,” says Dean. “Even if it is explained, it would potentially become a massive advert for how to play that game. Is that interesting to a broadcast audience? Is my Dad going to be interested? He’s not. He really isn’t going to be interested.”

At Twitch, Steve Ford welcomes broadcast trials with eSports content. “Companies like Turner are working with Twitch to broadcast their ELEAGUE content. In the UK we have the BBC experimenting with their digital channel BBC3 and this is all positive for the ecosystem overall,” he says.

However, he claims that one of the foundational elements that made the Twitch platform so popular in the first place is missing from TV. “Traditional broadcasters share common challenges, particularly when thinking about the 18-34 audience,” says Ford. “Gaming and eSports content can appear like an attractive solution, but this audience already has expectations when it comes to this type of content, like the real-time interaction we see on Twitch through chat.” According to Twitch, some 14.2 billion chat messages were sent through the platform last year. Asked what makes Twitch so compelling, Ford says: “It is live social video, so they are more than viewers, they’re participants. The broadcaster is talking to the people in chat, who in turn are chatting with the broadcaster and other viewers.”

Jeff Nathenson, managing director of international at Whistle Sports – an entertainment network that specialises in youth-focused sports content for social and digital platforms, including YouTube – says that while he doesn’t think there is a decline in interest in traditional sport among young people, there is a change in how they consume content, including a lot more engagement with social influencers and content creators.

“For far too long we’ve looked at live as being the be-all and end-all,” says Nathenson. “Live still is ahead of everything else in terms of importance, but we are seeing the shrinkage in that, and therefore there needs to be a recognition and an adjustment in the industry to say ‘well there are other ways we can join, engage and participate in sports that does not involve sitting in front of a television and watching a live cricket test-match’.”

In terms of eSports, Nathenson claims that traditional broadcasters can play a key role in taking gaming mainstream – if it is done correctly. “Whenever I’ve seen a broadcaster get involved in eSports activities, it looks a lot like traditional sports on television, which is a model that has seen diminishing returns,” he says. “I’d like to see the kind of creativity that the media industry and traditional sports broadcasters can bring to eSports to really bring it to life and make it a lot more fun and acceptable, because that’s what they do extremely well.”

One thing that almost everyone does seem to agree on is the growth potential of eSports. “I see the eSports market growing at minimum five-fold over the next five to 10 years, in terms of viewership, participation and revenues and we will see a much greater integration of traditional sports organisations with eSports,” says Ginx’s Bakker.

At Twitch, Ford believes that the company, and eSports as an entertainment category, will each continue to grow – “especially as we see more accessible games enter the eSports industry”. By way of example, he says Twitch has been working with Psyonix for the Rocket League Championship Series and Namco Bandai for the Tekken World Tour, “both of which are based on easy-to-learn, but hard-to-master games.”

Predictably enough, Dean at ESL also believes that eSports will only grow in popularity as millennial fans get older. “I myself have got my first child on the way, so you’re going to have people who are naturally interested in videogames being a lot more open to viewing this stuff with their children. I think that will be a big shift, over time, that will continue the growth.”

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