What game publishers can learn from sports broadcasting

An near-endless bounty of content creation, avid fans who share their experiences, an established industry dealing with new content creation and distribution technologies — sound familiar? Today’s sports franchises have a lot in common with the world of gamer videos and esports. From a financial perspective, the data about why gaming should take a page from sports is compelling. According to report by AT Kearney, the sporting event business has been growing at a healthy 7 percent per year, and it’s projected to reach $90 billion by 2017. Even more impressive, the global sports industry is now close to $700 billion, with spending on sports worldwide growing several times faster than global GDP.

What can game publishers learn from the sustained growth of the global sports industry? Here’s a look at some of the most successful aspects of the sports broadcast business model to offer some answers.

Generate exclusive content

At the heart of the sports industry revenues are broadcast rights for major events. In 2014, the IOC announced a deal to sell NBC broadcast rights for all future Olympics through 2032 for a whopping $7.6 billion. As the exclusive owner of the event rights, IOC was able to negotiate an arrangement that brought financial predictability to the entire Olympic system. Similar epic deals include broadcast rights for the NFL over nine years with an estimated value of $27 billion, and broadcast rights for the top three soccer leagues in Europe, which generated over $2.2 billion in revenues in 2014.

For game publishers who are willing to take the reins and produce events from beginning to end, selling rights to the live broadcast, and subsequent re-broadcasts can borrow from this model.

What’s key, and what needs to be claimed aggressively, are the format and eligibility rules that govern the events, as this forms the basis for exclusive design. Mega game publisher Blizzard is following this path with its announcement in October of its Call of Duty World League, which will establish tiers of play and a global structure for competition.

Nothing beats live

When it comes to high content value, nothing beats live events. The top 10 Super Bowls collectively generated over $1.7 billion in ad revenues. Major League Baseball’s World Series and the NCAA Final Four aren’t far behind. But live events require detailed planning and execution—even on a small scale; they generate a unique kind of buzz and numerous opportunities for re-sharing.

Growing signs forecast that gaming has the potential to support huge live events and that publishers are using events more strategically. Forty-thousand fans attended the 2014 League of Legends’ World final in South Korea. DreamHack, a series of competitions that started in Sweden, has grown to 20,000 people per event. Super Evil Megacorp, a well-funded start-up, made a live tournament part of the initial launch of its mobile game, Vainglory this past summer. It all comes down to controlling the content end-to-end.

Build for epic showdowns

In its analysis of Europe’s most profitable soccer leagues, AT Kearney noted the league with the largest number of premier matches had the highest revenue from broadcasting rights—over €1 billion in 2015. Perhaps the best example of an epic showdown maximizing revenue is the boxing match between Floyd Mayweather and Manny Pacquaio, which is estimated to have generated $500 million in one night.

Stability and steady growth of competitive gaming leagues at multiple levels is key to building the kind of tension that fuels an epic showdown. Working across national, regional, and global levels is also key to tapping into bigger advertising budgets. Can we ever envision a time when MOBA publishers come together to create an epic cross-game tournament? For companies that start building a global competitive infrastructure now, the rewards could be huge.

Provide a place for people to come together

How do you improve NFL viewership ratings by as much as 14 percent? Simple—you count people who watch from their local bar or pub. The fact that a sizable portion of the audiences is not watching from home has long been known in the sports industry. Pub viewing adds social value and an important local connection missing at home, and even from the live game.

By contrast, gamers usually come together virtually—in team-ups with multiple players on the same screen. A big exception is South Korea, where students are familiar with “PC Bangs,” actual places where gamers can go to play together. The estimated 25,000 PC Bangs in South Korea have played a significant role in establishing the country’s massive numbers of avid gamers. As the gaming industry continues to boom, it should consider gaming-specific venues as part of local and regional strategies.

Make your stars rich

Why is making your stars rich important? One answer is that oversized personalities and their attendant wealth create audience draw no matter what the form of entertainment. But another answer is even simpler—gaming will eventually compete for sponsorship resources outside of the industry, and it needs to draw the best talent.

Success in gaming can’t be a fluke, like winning the lottery. There needs to be a clearer path, albeit a difficult one, to making an outsized living in gaming. Right now, windfalls are reserved for the people who create games and gaming companies. But ultimately this wealth must be shared with players if the industry is going to grow the way sports has.

The charts below show the top ten sports earners, based on salary alone, according to Forbes magazine. Right now, gaming’s most visible players earn less than 7 percent of the top earners in sports.

Use technology to build unique experiences

Fans watching football on TV benefit from hundreds of millions of dollars invested in replay technology, big data analytics, and state of the art camera technology. Stadium fans benefit from intensive Wi-Fi coverage that helps them connect with folks back home, and giant screen walls that bring them closer to the action.

Twitch founder Kevin Lin attributes [minute 24] its early success to simply asking video streamers this: “What do we need to build for you?” By focusing its technology investment on what would enhance the video sharing experience, Twitch carved out both a business and market share from YouTube.

Adapt to your audience

Game publishers can profit from studying how sports franchises and broadcasters have fine-tuned their business models to maximize revenue over the years. The sports industry has proven adept at developing large audiences outside of dedicated players and fans – a direction which is increasingly relevant to the gaming industry as it rapidly moves into mainstream entertainment.