Traditional Big Brands Are All Sponsoring Esports Now, Because They Hear It's "All Young People" In There

The hunt for tomorrow's customers has spread into esports.

Tang Ming, who got hooked on the game as a college sophomore, did not miss the League of Legends 2017 World Championship (S7 for short), which ended last weekend.

Over a little more than a month, S7 drew a peak live-stream audience of 162 million. Apart from the game itself, Tang Ming said, what stuck with him most this year was the giant Mercedes-Benz logo.

Mercedes-Benz was S7's chief partner. The other four sponsors — Yili Gulidou, L'Oréal Men Expert, Logitech and Intel — came from cars, food, cosmetics, peripherals and hardware.

Esports tournaments used to be sponsored almost entirely by makers of peripherals and electronics. This time S7 toured four Chinese cities, held its final at Beijing's Bird's Nest, and lined up big brands like Mercedes-Benz and L'Oréal, which made the whole thing look like a "mini Olympics."

It is nowhere near the Olympics in scale, of course. But over the past two years esports has grown hotter and pushed further into mainstream view. The size of its core audience, the sponsorship value of its tournaments, projected ad spending — research reports of every kind are now dissecting the industry's commercial worth.

The latest news: the International Olympic Committee has recognized esports as a sport; and PwC, in a new report, told clients it expects China's esports industry to bring in $182 million in revenue by 2021.

Of that, esports ads placed through streaming media will be worth $84 million, brand sponsorship $54 million, direct payments from consumers $31 million and ticket sales $12 million.

By revenue structure, esports now looks no different from any other sport. Riot Games, which makes League of Legends, has found that running its tournaments on the model of traditional sports can stretch out a game's life. Ye Qiangsheng, who runs Riot Games China, says sponsorship money this year came in at least "tens of millions of dollars" above S6. At ChinaJoy 2017, Ye began mentioning League of Legends' LPL professional league in the same breath as the Chinese Super League and the NBA.

In December 2015, Riot Games became a wholly owned subsidiary of Tencent.

This February, S7 was confirmed for China, the first time. Of the six previous World Championships, three had been held in the United States and the other three in Sweden, Germany and South Korea — even though more than half of League of Legends' players are Chinese.

When the news broke, Chinese players were not the only ones excited. Sponsors were itching to get in.

That was when Wang Bolin went to L'Oréal and Yili: "S6 was in the US last year, and we flew over to watch. The reach, the competition, the production quality — it's a world-class event. Once they announced it would be in China, we started pitching brands on it hard."

Wang Bolin is general manager of innovative content marketing at Mindshare China, a media agency owned by GroupM; L'Oréal Men Expert and Yili are both his clients. Over three years his department has turned out a long list of game-marketing campaigns, bringing KFC, Pizza Hut, Master Kong Iced Tea and L'Oréal Men Expert into the games business.

In our interviews, one year kept coming up as the moment brands started watching esports: 2015.

That year L'Oréal Men Expert began working with Cool Run Everyday (《天天酷跑》); Honor of Kings landed its first brand tie-in, a KFC themed meal with collectible cards; the head of Uni-President Iced Tea's brand department said the company decided at the end of 2015 that it wanted into esports and signed with the IGL tournament early the next year; and Want Want Group set up a "cross-industry partnership section" in 2015. The section's head, Jiang Wenhan, told QDaily: "Our VP — the boss's son, who runs our department directly — was quite supportive of doing esports deals. He really wanted us to try something new." Want Want went on to sponsor the HPL Hero League and struck a deal with the livestreaming platform Zhanqi.

Livestreaming caught fire in those same two years. In February 2016, a Honor of Kings streamer on Huajiao who went by "Killer Loli" met a big-spending viewer called "Cixi Scorpio." In eight hours she ran off 17 straight wins and carried him to "King," the top rank in the game's ranked ladder. "Cixi Scorpio" tipped her gifts worth 200,000 yuan.

The livestreaming boom, plus a phenomenon like Honor of Kings, was exactly the catalyst that turned more mass-market brands toward games and esports. Even Wang Bolin had not expected Mercedes-Benz to sponsor S7. Looking back, he said, "Mercedes-Benz had no long-term channel for talking to young people."

What Mercedes-Benz was pushing this time was the new-generation GLA SUV, with the tagline "Born Fearless." During the closing leg in Beijing, staff dressed as League of Legends characters handed out free gas to Mercedes owners at designated stations; on the day of the final, the Mercedes-Benz experience store in Sanlitun threw a viewing party; and a college student who could not get a final ticket borrowed the family Mercedes to enter a brand-run S7 owners' competition, finishing second and winning a ticket. All of it is plainly more interesting than the usual car ad.

Want Want's interest in esports was also about young people. "We don't want to be stuck as a childhood brand. We want the post-80s and post-90s generations to keep buying from us as they grow up," Jiang Wenhan said. "Esports circles are all young people."

"For L'Oréal Men Expert, esports is one of the things our potential customers care most about," said Zong Guoning, brand general manager of L'Oréal China's mass cosmetics division, answering QDaily's questions by email. The brand has spent steadily on games for three years, and it has become a routine way to talk to customers. "Depending on the year, we do two or three rounds of game-related partnerships."

But sponsoring S7 was the first time L'Oréal Men Expert had gone deep into a global esports tournament at scale. The spending was "close to what the brand puts behind a major campaign." Preparation ran about six months and covered, on top of the basic sponsorship rights, tie-in e-commerce sales, game-exclusive packaging and extra ad shoots with team players.

Of the short videos that ran between matches, the series "L'Oréal Men Expert: A Plan Within a Plan," the episode with PDD and Ruofeng drew the most views on its own: 90,000.

Data from Esports Charts shows the peak live audience of S7 came in the semifinal between South Korea's SKT and China's RNG — about 105 million viewers in China and 1.52 million abroad. By the final, the live audience had fallen to 75.56 million.

"That's no accident," Wang Bolin said. "The best a Chinese team has managed these past two years is the semifinal, so everyone predicts how it'll go, and some brands put more resources into the semifinal than the final. A lot of this takes forecasting and fine-tuning."

He likes to compare sponsoring esports with sponsoring variety shows or films. "Esports gives you an ecosystem to work with; a variety show just gives you exposure." And: "Brands ask whether esports is growing, whether it can grow their business, how often the brand gets to interact with fans. A film runs three weeks at the outside and then it's out of theaters. League of Legends' domestic tournaments run 580 matches and never take a week off. Tie yourself to that and you can build exposure over the long haul."

As for price — "It's not that expensive, tens of millions of yuan. Nothing next to a hit web variety show."

Even so, not every brand can afford that price, or wants to. Want Want once thought about sponsoring S7 under its Lang Wei Xian snack brand — they liked that lang, the word in the name, is one gamers throw around — but the deal fell through for various reasons. And organizers have their own views on which sponsors to take. Xu Lichao, president of VSPN, which runs Honor of Kings' KPL league, has told reporters he would like to work with more fast-moving consumer goods brands and "traditional industries that feel more upscale to the public." In March 2017, Honor of Kings and Sprite released a billion "hero bottles"; two months later vivo became the game's officially designated phone, reportedly for a fee in the "high eight figures."

A person responsible for Honor of Kings' KPL said the partners they want should have "deep roots in lower-tier markets, so that pooling promotional resources gets twice the result for half the work." The financial bar for entry, the person added, differs by industry.

On November 1, the sponsorship plan for League of Legends' LPL league and the S8 World Championship was announced: eight industry partners, drawn from cars, beverages, dairy, snacks, household and personal care, IT, peripherals and other categories.

Li Kaiping, an editor at E-Sports magazine, describes the gap between esports and traditional sports this way. The traditional sports ecosystem is a web: upstream and downstream connect through many channels, and attention gathers around many top teams and star athletes. In the esports ecosystem, the game publisher is the master valve. Whoever holds the key to that valve can push its influence through the whole chain with ease.

Yang Tianjun puts it more plainly: "The biggest difference between games and basketball or soccer is what we call it — games have a dad."

Yang Tianjun is general manager of Kuanghui Agency, a wholly owned subsidiary of Hupu. He came up through sports media; his job now is handling business deals for the esports teams his company represents. For Harbin Beer, a client Hupu knows well, sponsoring a team is the other option besides sponsoring a tournament.

In July 2016, Harbin Beer announced title sponsorship of LGD Gaming's Dota 2 squad, backing them at TI6 in the United States. The favored team then went out in a single round. That should have cost the sponsorship its value; instead, being mocked online as an "esports jinx" turned into a running joke in the Dota community, which only raised Harbin Beer's confidence in esports marketing. One Zhihu comment called Harbin Beer "the biggest winner of TI6."

Worth noting: LGD already carried sponsorship from Guizhou Lao Gan Die Food Co. In 2009 the team, then called FTD, renamed itself after the initials of "Lao Gan Die."

This year, for Dota 2's TI7 international, Harbin Beer sponsored five teams at once as the "Harbin Esports Corps" and printed lines like "Sorry, I'm winning this one," "My head's hard, sir" and "TP together, drink Harbin together" on limited-edition "attitude cans," 350,000 cases of them. Every line was the catchphrase of a Dota streamer with hundreds of thousands of subscribers on the major platforms.

In signing and running the Harbin Esports Corps deal, Yang Tianjun's team handled two of the "hardest teams to deal with," both under Invictus Gaming. Their owner, Wang Sicong, was not short of money and "only wanted results." And "back then, when you sat down with these clubs, a lot of what they said made no sense." Yang said he once came across a sponsorship he thought was worth 1 million yuan; the other side asked for 10 million.

This is the same thing Wang Bolin means when he says, "You can't call esports' commercialization immature — it's growing." Working with a publisher means more professional operations and a higher price; working with a team can mean the reverse. "In business terms, sponsoring a big tournament suits companies that want to push into lower-tier markets, while sponsoring a team lets you use the fan effect better — you get noticed easily, but not as often and not for as long."

Clubs abroad are run far more professionally than Chinese ones, and it is ordinary for Audi or Nike to sponsor a team. South Korea most of all, where the owners and sponsors behind clubs tend to be companies like Samsung, South Korean news agencies and telecom carriers. Take this year's S7 champion, South Korea's SSG: what stayed with people was not only the comeback that beat three-time winner SKT, but the team name the commentators shouted over and over — Samsung Galaxy.

"Is esports cheap? Not really. It has plenty of commercial pull inside its own world, but it hasn't become mass communication yet," Wang Bolin said. "Is it especially good value? I'm not sure it is. It isn't U Can U Bibi, which has already crossed over to a mass audience. While esports is still rough, you have to do a lot of the work yourself. A brand has to build its own esports ecosystem, and if you don't go deep enough, plenty of what you do won't turn out well."

Want Want's Jiang Wenhan said they don't measure esports sponsorship against variety shows; what counts is exposure, product placement and whether it turns into sales. But he voiced the same worry: "Esports has more variables than traditional sports, and it's still behind on recognition and on the size of the audience it reaches." Jiang, who had considered sponsoring Honor of Kings, also asked his partner Google China, and was told the sponsorship carried risk: "As a mobile game, Honor of Kings has a relatively short life, and its own league system isn't well established yet."

By combined iOS and Google Play revenue, Honor of Kings has become the highest-grossing mobile game in the world. But a hedge fund analyst who follows the games industry told QDaily earlier that he believes the current growth of the mobile games market rests on Honor of Kings' sudden rise: "If the next hit doesn't show up, the mobile games market will shrink fast."

There is no question, though, that most brands putting money into games or esports today sound satisfied — results "met expectations," "drove sales," and in some cases were "immediate."

So even with his reservations, Jiang Wenhan told QDaily: "If League of Legends stops being hot, we'll go look at the next thing. PUBG, for instance."

On October 16, with S7 only half over, Wang Bolin gathered his client Zong Guoning, his boss Lin Hongxia, representatives from Riot Games and the WE club, and U Can U Bibi debater Ali for a panel called "Games Change the World" at the Jintoushang advertising festival. When the talk turned to "future variables," Zong Guoning got worked up enough to switch to English: "What's the game now? Naming rights matter, of course, but they're never the most important piece. It's everyone thinking together about what the right scenario is, blending the game props and the gear together — whoever sets up the best experience and the most seamless scenario wins."

Wang Bolin guesses that Honor of Kings' KPL will cost more than League of Legends next year, because phone makers are fighting so hard over naming rights that the price will go up. "Phone-maker daddies have too much money."

Yang Tianjun, for his part, said that if you want to see brands "seeming to flood in" to Honor of Kings — "you really do have to wait until next year."

For now, all you can see is the enthusiasm.

Cover image from League of Legends.