Since taking the first legal wager on an esports match in Las Vegas back in 2016, the casino industry continues to explore best practices to integrate the esports market effectively to the casino floor. Reviewing multiple data points, this piece will serve as a general introduction to propose methods to capture this audience in the North American casino market. A major component of that success lies in a normalization process of the traditional video game industry.
As projections of esports audiences continue to show impressive growth globally, North American events and activations have paled in comparison to those held in other markets. According to Newzoo, global esports viewers will total 453.8M in 2019 as the market surpasses $1B annually. While experts agree that esports can compete with traditional sports, proper steps must be taken to capture the excitement of North American audiences to ensure success with casino partners.
Today Asia dominates the esports industry accounting for 57% of esports enthusiasts. With PC gamers in China projected to total more than the entire population of the United States by 2023, it’s easy to see how esports as a global industry will continue to expand. The reality however is North American markets have a significant amount of ground to gain to live up to the hype over recent years.
A challenge presented today is the lack-of and sometimes inaccurate data reported in the esports space. Streaming data littered with potential bots and inconsistent metrics (total hours watched, average concurrent viewers, etc) along with API data kept under wraps by video game publishers are common. With a North American esports audience that represents only 12% of the total market, the need for a more structured strategy is necessary as today's esports investments require long term financial commitments into this space.
Neilsen ratings for traditional sports and streaming platform data from escharts.com, with Chinese audiences removed, tell a story contrary to popular headlines about the rise of American esports. Adding the viewership of Chinese audiences sees the $2.5M League of Legends Worlds 2018 boast an astounding peak viewership of 205M. DOTA 2’s The International 2018 peaked at nearly 15M total viewers. Take that audience out of the equation however, and viewers fall to 2M and 1.2M respectively. Thankfully, the esports community has veteran experts who have pointed out the many occasions of exaggerated headlines and misleading statistics. With publishers like Riot Games partnering with Nielsen to offer more transparency in their viewership, we look forward to more publishers following this trend and a more responsible and realistic approach to the industry.
With esports representing a niche segment of the overall video game industry, it’s worth noting the opportunity presenting itself with a video game market that increased 18% year over year and generated $43B in consumer software sales alone. Eclipsing both the music and film industry, video gaming should be a focused entertainment option for any casino organization. With titles like Call of Duty and Red Dead Redemption 2 moving up to 18M units and the free-to-play Battle Royale shooter, Fortnite earning $2.4B in just one year, to build a successful esports strategy is to build a foundation off the popularity of the video game industry as a whole. While the history of esports is rich, to develop the narrative of esports to casino audiences through more relatable gaming experiences can be an effective bridge to the full potential of esports.
Today, more Americans than ever own video game devices. With that audience in mind, a five part strategy can be explored to properly integrate this under-served audience:
1. Specialized gaming entertainment venues
2. Data collection
3. Marketing execution utilizing streaming platforms, content creation, and social media
4. Proper IP licensing with casino gaming equipment manufacturers
5. Innovations in skill-based gaming and new casino gaming technology: utilization of mobile and social gaming
To ensure a win-win opportunity for both esports and the traditional gaming industry is to create environments that allow for ‘lift” as casino organizations have coined, by way of creating environments, venues, and experiences for the video game community as a whole to enjoy. This is no different than the current strategies in place today as Las Vegas casinos prepare for a more sports-oriented population. With the success of the Las Vegas Golden Knights and the upcoming arrival of the Oakland Raiders, the introduction of more mid-level price points for restaurants and the upcoming lounge scene (a shift away from mega-nightclub business model) is evident. Through this roadmap, the casino industry can ensure preparedness as esports continues to grow, and North American audiences are more familiar with video game entertainment in social settings. With a commitment over the course of 2-4 years, the landscape of the casino floor will be better suited for hundreds of millions of self-described gamers and esports fans around the world.
SPECIALIZED GAMING ENTERTAINMENT VENUES
The arcades of 30 years ago have evolved into elaborate entertainment centers for families visiting any casino hotel on the Strip. But that piece of video game history isn’t forgotten with the success of retro arcade bars throughout the country. Successful brands like Barcade, 1UP, and Kung Fu Saloon have opened in a number of states showcasing the average age of a gamer is well into their twenties and thirties. In addition to capitalizing on the classics, newer concepts have made an impact featuring interactive exhibits, VR/AR, along with modern console amenities like Two Bit Circus. In addition to entertainment options, Two Bit Circus is supporting the video game community by offering up space for developers to showcase new technology. A similar model could be adopted by casino operators as video game-centric venues can be used to playtest new technologies as we look forward to the future of the casino gaming floor. Combining elements of carefully curated art, music, video game culture, VR/AR, and streaming capabilities, the specialized gaming venue will tap into multiple demographics in the role of a traditional lounge and serve as a space to educate new audiences about esports.
The Esports Angle
While the OVERWATCH LEAGUE continues its strategy to enter a mainstream market, the OWL 2019 Stage 2 Finals between the San Francisco Shock and Vancouver Titans enjoyed a record high viewership of 545,000 AMA on ABC according to new Neilsen ratings. Compare that to the last X Games event broadcast in 2018 that averaged 623,000 viewers and you see strong competition with a similar niche sports audience. For an esports title outside of the Big 3 (League of Legends, DOTA2, or CS:GO) OWL is finding its fanbase, but surely not at the level that has been promised since its inception.
Today we see Baccarat and Poker sectioned off from the rest of the casino floor. The same should be done for your video game and esports audiences. While this audience continues to grow, to showcase these gaming events in the sportsbook today is not entirely premature, but will be better suited in a dedicated gaming venue, sports bar, or pop-up activation. On any given weekend, major gaming events and tournaments covering as many as a dozen video game titles are an opportunity to grow a casino brand's audience with the proper utilization of TWITCH. As it stands today, the immense financial backing of the Overwatch League and the upcoming Call of Duty World League has created a high end production and noteworthy experience. To support these efforts will prove effective for all parties in the long run with grounded expectations.
Casino loyalty programs collect massive amounts of data but how many are identifying their video game consumer? After the explosion of gaming consoles in American homes with the PlayStation 2, the next generation of consoles would ensure people were coming back for more playing time with Xbox achievements, virtual awards for completing tasks, beating games outright, or performing an inconsequential action altogether. What started out as the XBOX Gamerscore has transformed into a culture of daily challenges in just about every free-to-play game available today. A similar system could be utilized for casino loyalty systems via rewards for actions taken, whether it's certain casino game played, a selfie at points of interest within properties, or incentivizing partnered brands. Creative ways to reward your clients will require out of the box thinking, but can satisfy all parties when video game culture has become so ingrained in today’s society.
The Esports Angle
As regulations are developed for betting on esports and competitive gaming events, the depth of potential outcomes in a single video game match will allow sportsbooks to offer a significant amount of prop bets outside the traditional straight bet. With historic data being compiled and technologies improving daily, best to identify the esports fan today. Utilizing an achievements points system earned outside of casino floor play will bring younger demographics to sign up for Loyalty Programs, and if you can have your guests categorize their interests to include video games, you will be able to properly communicate through customer management systems esports events for today’s audience versus messaging that will be unknown to traditional audiences.
With Twitch and YouTube dominated by video game content, it's important to take note of the perfect storm of opportunity that has been created to integrate esports into the casino markets of North America. As we continue to see the cord cutting of traditional terrestrial television, and the movement towards monthly online services and streaming platforms like Twitch, YouTube, Netflix, and Amazon, new strategies need to be put into place to effectively speak to young markets.
Contrary to popular belief, starting a successful new Twitch channel doesn't happen overnight, NINJA included. However, with the importance of that social media platform for normalization and marketing opportunities, the time to begin is now. Multiple industries outside of gaming (BBC, Disney, Bloomberg, and the NFL to name a few) are utilizing the space to connect to millions of active and engaged digital audience members. Once a casino organization executes on original content creation and streaming strategies covering the many gaming, entertainment, and food & beverage amenities they have to offer, the strength of the brand will be significantly affected.
It’s also important to understand the close knit fabric of the video game community. When your casino organization taps into these markets, you’ve created ambassadors whose reach to digital consumers are unmatched. Promoting esports and video game events on marquees, partnering with TWITCH to support your local philanthropic efforts, and promoting video game events with the same vigor as nightclubs and festival events will prove your goodwill to the gaming community at large and further enforce the normalization of gaming to new audiences.
The Esports Angle
The esports athlete will find more lucrative opportunities when they combine content creation with competitive gaming skills. This approach proved successful with a number of esports organizations, with individual players engaged with over 6M subscribers on their team YouTube channel. When one competitive gamer enjoys a social media presence with 10.8M subscribers on YouTube, 1.6M followers on Twitter, 5.5M followers on Instagram, and 6M followers on TWITCH, the influencer business takes on new heights. It’s no wonder companies like Electronic Arts, Activision Blizzard, Ubisoft, and Take Two Interactive are spending as high as $50,000 an hour for celebrity streaming talent. As more Triple A title video games are released with a streaming strategy, the opportunity for the traditional gaming industry will present itself via venue activations, branding opportunities, and integration into new gaming technologies with the right esports personality.
INTELLECTUAL PROPERTY LICENSING
With the average Las Vegas visitor at 45 years old in 2018, one can start properly identifying video game IP for slot machine partnerships similar in nature to Ellen, The Dark Knight or Game of Thrones and popular gaming mechanics that should be explored and featured in new casino technology. In the past companies took on licensing deals like Sega's CRAZI TAXI in 2012. A popular title in its own right, the game was originally featured on the Sega Dreamcast representing only 4% market share of the 6th generation of game consoles. One year later, IGT took on the Atari title Centipede which also didn't find success. In 2013, a better option would have been to focus on more relevant video games of the '90s as that industry was starting to see sales double from previous generations of hardware. Each game console generation after would see significant improvements in video game sales year over year opening the market to new audiences and an understanding of new video game IP.
The Esports Angle
As the esports space becomes more accepted to North American audiences the relationship with your gaming equipment partners become more vital. Esports fans seeing slot machines based on game titles from publishers like Bandai Namco, Sega, Capcom, and Konami will prove more effective than ever as the market is groomed for this new casino customer and esports events trickle onto the casino gaming floor.
CASINO GAMING INNOVATION
With 51% of the market playing games on their mobile device and growing, there’s a good chance today’s casino guest has played a social casino game. Using this same platform to develop free-to-play games outside the casino experience can prove impactful. What was once overlooked by a hardcore gaming audience, the success of a games like Fortnite and PUBG on mobile showcase the ability for the hardware to provide quality video games. Creating or licensing certain classic games for mobile play will engage this audience through leaderboards and social media shares. And mobile isn't the only option.
The growth of the indie game development scene showcases the many opportunities to add casino game mechanics to create new experiences for the mobile gaming audience. The success of indie game developers over the past few years show a mature market looking for more casual gameplay with less complex input design while still offering a challenge. Creating a game that emulates popular game mechanics and tropes will lead to new customer adoption. Games like Celeste, SuperHot, and Minit highlight recognizable but innovative game design that will translate well to casino operators and their audiences.
And innovation should not be limited to traditional casino gaming models or antiquated pay table philosophies. With loot-boxes and pay-to-win microtransactions being labeled as gambling from regulatory bodies, what better transition than onto the casino floor where the industry has developed precautionary measures to look out for problem gambling and secure a 21+ adult environment?
While skill-based gaming has seen its challenges, the continued decline of interaction with younger audiences on the casino floor requires a new perspective on metrics like win rates, player values, and floor optimization. With casino equipment and video game companies developing new technology that looks less like a slot machine, the next big casino attraction is just around the corner.
The Esports Angle
While not in the same phase of esports development as DOTA2 or CSGO, mobile games like Clash Royale, Arena of Valor, and VainGlory enjoy a customer base of up to 50M daily active users each. The competitive nature of this demographic will ensure their appearance on the casino floor when creating new gaming options with a touch of traditional gambling rules. Also, instead of just limiting the casino floor for gambling action, the development of new original gambling products to play on mobile devices will bring the casino floor to the nightclub, the restaurant, and the casino guest's own weekend suite. Meanwhile, the older esports fans will enjoy the option of playing a more traditional gambling experience with video game mechanics where a video poker bartop once stood. Innovation begins now.
The global esports industry clearly shows no signs of slowing down. With high school and college athletic departments developing esports programs, and organizations continuing to invest and expand esports operations, the growth of North American audiences is inevitable. The opportunity for the casino industry today is to embrace the larger audience of video game players as a whole and develop venues, technology, experiences, and communication channels becoming a significant partner in the growth of the gaming industry as a whole.
According to the ESA, 65% of American adults are playing videogames with an average ago of 33 and has been playing games at least 13 years. With only 22% of the gamer population under the age of 18, protecting this vulnerable segment of the population from overexposure to gambling advertising is a priority. With recent government scrutiny over the video game industry’s “loot-boxes,” which offer a selection of randomized in-game products for a price, self-imposed regulation is still possible and technology continues to be developed for identity verification and KYC (Know Your Customer).
The most successful esports operations today developed over a span of 10-20 years and only recently are we seeing the entrance into a mainstream North American audience. With the introduction of Black Fire Innovation, a technology hub where new gaming and hospitality concepts will be studied through a partnership with UNLV and Caesars Entertainment, we will continue to pool resources to further research this industry. In addition to this roadmap for esports integration, a focus on topics like loot boxes, skin gambling, integrity measures, youth gambing protections, royalty fees for esports orgs, as well as case studies on popular video game communities and esports activations is paramount. Through partnerships with NVEA, ESIC, and trusted research teams and consultants we will continue to work alongside our casino and video game partners to ensure a long term vision is properly executed, dialogue remains transparent and adaptable, and the promise of esports success is fulfilled.