Business of Speed
The Money Behind the Motorsports Industry
By: Tim Frost
Date: February 3, 2017
WILMETTE, Ill. — One of the hottest entertainment trends is eSports. This month we will take a look at the business and how motorsports fits into this economic sector.
The evolution of gaming serves as the foundation for eSports. This trend originally started with video games being played in a single-location environment with friends. The movement toward the multi-player online battle arena created the modern eSports industry.
The community aspects of eSports are unique. There are players and those who like to watch them. There are an estimated 100 million active
users worldwide. Major events and competition are driving viewership consumption similar to traditional sports.
Since eSports is rapidly growing, mainstream sponsors are taking notice. Brands are expected to spend more than $500 million on marketing through
eSports with about 60 percent on sponsorship and the remaining on advertising. The viewership numbers are one of the most appealing aspects as almost four times or 400 million people worldwide watch them compete online. Viewership is expected to grow at almost 20 percent annually
over the next few years.
Major broadcasters are broadcasting tournaments live. Online streaming via Twitch is reaching numbers exceeding traditional media outlets and trailing only the ESPN networks. There are partnerships between broadcast and digital platforms as they try to define their positions in a
rapidly changing media landscape. The appeal for eSports is centered on its consumers — an engaged and valuable audience. Currently, eSports enthusiast per capita revenue is behind traditional sports. However, there is massive upside potential and eSports viewers are high earners
and big spenders.
The demographics are desirable with more than 50 percent falling in the 21 to 35 age demographic. Those that are getting harder to reach via traditional advertising because they spend less time watching television, listening to radio or reading printed media.
eSports aspects that appeal to this audience include cross-screen entertainment technology; video platforms and communities; consumers entertain
consumers; and live-chat functionality.
Historically, motorsports has maintained a presence at the gaming table. Games had players in a head-to-head online competition. Simulation changed the direction, allowing users to simulate real environments and advance in rankings.
One key to success has been the ability to expand beyond the game and evolve into a place for reality and skill enhancement.
The recent launch of “NASCAR Heat” will focus on a tournament-style competition during race weekends. Contests will be held in haulers, allowing
fans of every skill level to drive.
iRacing has been around for almost 15 years. Its focus was on creating a realistic experience with precise accuracy, bridging the gap between racer and
gamer. Enthusiasts and drivers are able to compete head to head and have results posted via an online ranking system. It has solid relationships with the top sanctioning bodies for open-wheel, stock car and sports car racing. Leading tracks (paved and dirt) are also featured on the iRacing platform.
Several series and manufacturers are developing their own platforms and hosting their own championships. These include Formula One, WEC, Formula E, Nissan and McLaren. Runoffs between eSports players and drivers are providing interesting results.
Motorsports is using eSports as another way to engage with its audience. Whether it be for driver development or fan outreach, it is important to
keep technology at the front of the pack.