"Boss Mei" really becomes "boss", will e-sports clubs be a good business?
Every reporter: Shi Puning Every editor: Tang Yuan
How hot is esports? Traditional sports superstars are not willing to be players, and if they want to be, they will directly become bosses.
After winning the Ballon d'Or eight times, Messi has recently transformed into a veritable "Boss May", joining his old teammate Sergio Aguero to become the owner of the KRÜ Esports Club.
Messi is not alone in choosing to invest in an esports club, as sports stars, including David Beckham, have chosen this track long ago. At the same time, after the e-sports clubs went public, some clubs also chose to withdraw, which also reflects the twists and turns on the road to commercialization of e-sports clubs and the e-sports industry.
It should be pointed out that compared to the gaming industry, the "cake" of the esports industry is not big, but it is attractive enough.
Maybe this scene is familiar to you. In China, Gen Z people often have the experience of every time an important e-sports competition starts, the entire dormitory and even the campus are filled with a sense of sports competition, and some emotional students will start shouting in the dormitory or other places at the critical moment of the game. Esports has become an indispensable part of the lives of Gen Z, and its consumption potential should not be underestimated.
Looking at Messi's entry into the game, on the one hand, it has brought a huge wave of traffic to esports clubs, and perhaps another key discussion worth paying attention to: when esports events have begun to surpass some traditional sports in terms of audience and influence, what new business opportunities will the addition of sports stars bring to this dynamic industry? At the same time, in the context of the gradual integration of esports and sports events, what can esports clubs learn from traditional sports clubs?
Image source: Weibo @MessiLeoMessi10
"Boss Mei" really becomes "boss"
"Now we're two people." In the last 30 seconds of a nearly three-minute video, football legend Sergio Aguero grinned, swept away the foreshadowing as if he was stepping down as owner of KRÜ Esports Club, and announced the big news that the other owner was Lionel Messi.
Image source: Video screenshot
In October 2020, Sergio Aguero announced the creation of the KRÜ Esports Club, which celebrated its third anniversary last month.
Messi, who won the eighth Ballon d'Or not long ago, although he only appeared in the video for less than 5 seconds, was full of "shocking power". The tweet on which the video was posted was rightfully the most trafficked in the club's history.
As of press time, there have been 24.72 million views, 173,000 likes, 20,000 reposts, and 11,000 citations.
Of course, Ronaldo, who has always been "walking together" with Messi, also passively appeared in it. De Gea, a former Manchester United goalkeeper and owner of an esports club, joked in the comment section, "I'm going to call Cristiano Ronaldo." ”
Speaking of Messi, he first chose the North American and even international markets, joined Miami International of the American Professional League, and then became the owner of an e-sports club. In fact, this path is similar to that of Miami International's boss - David Beckham.
In fact, in 2020, when Miami International entered the MLS, Beckham also began to get involved in the esports industry. However, due to the pandemic, Inter Miami and the entire MLS came to a standstill after ending a two-game losing streak. Beckham did not sit idle, but together with other capital, he chose to invest in an esports club called Guild Esports, which was listed on the London Stock Exchange in October of the same year.
Image source: Weibo @DavidBeckham
However, judging from the esports clubs that have been listed, losing money is the norm.
Guild Esports reported a total loss of £8.75 million in the year ended 30 September 2022, according to financial results released by Guild Esports in January this year. In the same period last year, it was a loss of £8.82 million.
In August this year, Astralis, the world's first e-sports club concept stock (officially listed in December 2019), held an extraordinary general meeting of shareholders and passed a resolution to delist from the Nasdaq Danish market. Earlier in March, its financial report showed that even after successfully reducing costs and increasing efficiency while maintaining revenue growth, Astralis' annual loss still reached 9.668 million Danish kronor (about $1.393 million), and it did not achieve profitability.
A good business?
Judging from the financial report alone, investing in esports clubs is not a "cost-effective" business, but why are sports stars and even stars from all walks of life vying to enter?
A general but direct answer is that the "cake" of the esports industry does not look big, but it has a lot of potential. If you can be one of the first people to "eat crabs", the rewards will be extraordinarily rich.
From the perspective of the entire industry, the "2022 Global E-sports and Live Streaming Market Report" by Newzoo, a game industry research agency, shows that the revenue of the global e-sports market in 2022 is estimated to be $1.38 billion, and the global e-sports revenue is expected to reach $1.866 billion in 2025.
In addition, there is another feature of e-sports clubs, which is a relatively simple way to make profits. At present, it seems that the main source of income for esports clubs comes from sponsorships and prize money from competitions. Taking Astralis as an example, the 2022 financial report shows that sponsorship and event-related revenue accounted for 48.21% and 42.28% of its total revenue for the year, respectively.
Although various clubs are also trying to broaden their income through various means, such as IP co-branding, launching derivatives and even establishing e-sports academies, the results are still average.
If you have to choose a reason why people are determined to invest in the esports industry, it may fall on its huge audience, which is young and has a lot of spending potential.
A typical example is that on the sports event platform Hupu, under the "rating" function, the relevant popularity of e-sports events has been much higher than the most popular "two balls" on the platform. In the recent S13 series of events, every time there is an event, the barrage on major live broadcast platforms such as Bilibili will float by. While various "god reviews" are out of the circle, they also show the social influence of e-sports.
However, the current problem is also obvious, the audience just watched it, but they were not very willing, or there were no extra channels to spend money. According to NewZoo, about 261 million people around the world watch an esports event at least once a month, but only generate $5.30 in related expenses per person per year.
Image source: Xinhua News Agency
From the perspective of the expansion of income channels, copyright income may become the first breakthrough. Compared with big sports such as football and basketball, the copyright price of e-sports is not eye-catching, but it still shows potential. Taking China's LPL as an example, Huya spent 2 billion yuan in 2021 to buy the live broadcast rights of the LPL for the next five years, setting a standard for top events.
The PwC Global Entertainment & Media Outlook predicts that by 2027, the U.S. esports market will reach $230 million in rights revenue, surpassing $216 million in sponsorship revenue. According to the report, copyright is also the sector with the fastest compound annual growth rate in the U.S. esports market in recent years, reaching 12.7%.
At the same time, the 2022 Global Esports & Live Streaming Market Report shows that there is room for improvement in publisher revenue, merchandise and ticket sales, digital revenue, streaming revenue and other aspects.
After the influx of traffic
For esports clubs, the influx of traffic from behind a large number of stars, including sports stars, is exponential. In all kinds of e-sports clubs like marquees, the traffic brought by celebrities is undoubtedly a "shot in the arm" to attract the attention of the audience.
However, if it only chases traffic, then the consequence may be a "big rollover". In this regard, the esports club Faze Clan is the perfect antithesis. In September, Faze, which was on the verge of delisting, officially announced the termination of its contract with its former CEO Trinck.
During Trinck's tenure, the entire e-sports club played entirely around traffic, intending to use various momentum to create a "myth" to occupy the minds of Gen Z. For example, after ringing the bell for the listing, Tlink spent $1.7 million to invite the well-known rapper Travis Scott to sing for 15 minutes at the celebration party... The list goes on.
Under the heavy purchase volume, the traffic may be there, but the conversion ability is really worrying. According to Forbes, even though the Faze brand has more than 100 million followers on Youtube, each fan only brings Faze 36 cents, and many of those 36 cents go to streamers.
In the latest development, Faze is now being acquired by Texas-based esports company GameSquare in an all-stock deal with NFL team Dallas Cowboys. This also shows a possible path to run an esports club like a traditional sports club, and there is still a lot of room for operation behind it.
Typical example is regionalization. Take football as an example, when it comes to Barcelona, everyone thinks of FC Barcelona; When you think of Paris, you think of Paris Saint-Germain; When you think of Manchester City, you think of Manchester United and Manchester City. Further, the huge fame of some clubs has, in turn, further promoted the presence of the host city.
And when it comes to esports clubs, perhaps no other club has reached such a level of recognition.
The road is still long. At the very least, e-sports clubs still have a lot of experience to learn from established sports clubs in terms of brand building and promotion, sponsorship and cooperation, fan interaction and community building, broadcast rights management, player management and training, etc.
National Business Daily