Esports viewership numbers are staggering. Some phrases have been repeated ad nauseam. “League of Legends has more viewers than (insert sport here).” While the validity of that statistic is up for debate, the fact that tons of people are watching esports is not.
Viewership is just one part of transforming esports into the multi-billion dollar industry that investors believe it can be. The follow-up is making esports a valuable place for brands and sponsors. FanAI recently secured a $2.5 million investment from a variety of investors led by Courtside Ventures and CRCM Ventures. They were joined by BITKRAFT Esports Ventures, BDS Capital, Catalyst Sports, Deep Space Ventures, Everblue Management, Greycroft GC Tracker Fund, M Ventures, Rosecliff Ventures, and Sterling VC in this Seed II round.
Deepen Parikh, a partner at Courtside Ventures, explained how FanAI is hoping to build the connection between an audience and sponsors.
“How do you bring together both parties?” Parikh asked. “On one hand you have the rights holders who want to turn their audience data into a monetizable asset. Then you have the sponsors who want to understand and target that audience. FanAI sits at the epicenter of that.”
Newzoo’s most recent estimate puts the esports industry on track to top $900 million in revenue in 2018. Esports has enjoyed constant growth in the past couple of years and it seemed like the floodgates opened in the last six months. Still, Parikh cautions that there is a ways to go.
“When you look at it, $900 million is a big industry but not a huge industry. When non-endemic brands start buying in, that’s when this becomes a really large industry,” Parikh said. “In terms of consumption and viewership it is already massive. In terms of monetization, I think FanAI has the opportunity to take esports to the next level.”
Cleveland Cavaliers owner Dan Gilbert backs Courtside Ventures. This the second investment in FanAI from Courtside Ventures, and with the NBA 2K League’s draft on the horizon, the Cavaliers’ entry, Cavs Legion GC, is using the platform. Matt O’Brien, the VP of Global Corporate Partnership Development for the Cavs, wrote that the partnership with FanAI is about “better identifying fitting partnerships.”
“Rather than simply finding the target market within our fan base for a brand partnership, FanAI is digging deeper into our fan base looking to specifically identify brand categories that will have a greater opportunity for success based on sociographics, purchase behavior and predictive analytics,” O’Brien wrote in an email.
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It all comes down to creating actionable data. If sponsors can target ads better, the ads become more valuable, and the esports industry reaps the rewards. According to the press release from FanAI, in 2017 the average esports fan was expected to spend $3.64, while basketball fans spend, on average, $15 each.
There are many possible reasons for that discrepancy. For starters, sports have the benefit of generational fans and the emotional connections that come with watching games with your parents growing up. A fan is more likely to buy hometown gear than merchandise from an international esports organization.
In addition, the audience is younger which could mean less purchasing power. Parikh argues that many esports fans have the disposable income; they just aren’t being compelled to spend it.
“You see the ability to donate to a streamer or attend events all over the globe,” Parikh said. “There is no incentive to donate but people do it because they are genuine fans. I don’t think it’s an issue with disposable income but an issue with determining where the audience is that is willing to pay.”