January 21st, 2019
Via Ozy, an interesting look at the power of eSports to build the NBA sport and brand overseas:
The NBA has come up with a game plan for building robust fan bases in places like Berlin and Shanghai without having to fly any players across any oceans or find suitable arenas to host games — and resources are being devoted to the strategy like a basketball team pressing its man advantage in a fast break.
This endeavor doesn’t actually involve shipping the NBA’s primary product — basketball games — overseas at all. Instead, the NBA is looking to broaden the horizons of its newest product, the NBA 2K League. On the heels of its inaugural season, the professional esports venture built around Take-Two Interactive’s NBA 2K video game series has already seen some growth.
The NBA’s Atlanta Hawks, Brooklyn Nets, Los Angeles Lakers and Minnesota Timberwolves recently joined the 17 initial NBA teams to sponsor NBA 2K League franchises. Getting a 2K League franchise in Los Angeles is huge for the league, giving it a presence in the second-biggest market in North America. There is still work to be done on this continent, however.
Nine NBA franchises are still holdouts in terms of sponsoring an esports franchise, at least through the second season, which is slated to begin this spring. NBA 2K League managing director Brendan Donohue expects the remaining NBA teams to join the fray soon. Donohue explained that all 30 teams have been “bullish” on the league since its inception, but some have had other priorities that have taken precedence.
It’s important for the NBA 2K League to encompass the entire NBA, for more than just the perception of the brand. Newzoo’s 2018 report shows that North America is the biggest cash cow in the esports industry, producing a projected $345 million in revenue. A presence in all of the NBA’s markets will let the 2K League garner as much of that revenue as possible.
It’s that potential that has Atlanta Hawks CEO Steve Koonin excited about the league. Koonin says the NBA 2K League allows the Hawks to fill in the gap between NBA seasons, and to connect to younger fans. Koonin also says the Hawks have already had discussions with new sponsors, which are aiming to reach esports’ young male demographic through its 2K affiliate Hawks Talon GC.
Those sponsorships are key. Newzoo estimates 40 percent of global esports revenues will be sponsorship dollars, with advertising coming in at 19 percent and media rights accounting for another 18 percent.North America may be where the largest pile of cash can be found, but the actual reach is dwarfed elsewhere. Of the 380 million esports fans around the world, 53 percent reside in Asia and the Pacific, with another 18 percent in Europe. If the NBA 2K League remains confined to North America, it will miss out on huge opportunities elsewhere.
Esports fans are different from fans of traditional sports in that they are used to leagues that cross geographical and political borders. The most robust professional esports leagues, such as those engaged in Riot’s League of Legends and Ubisoft’s Rainbow Six Siege, host competitions on multiple continents every year. Those investments are paying off, as revenues from Western Europe were expected to reach $169 million and China was pegged at $164 million for 2018.
Donohue makes it clear that the NBA 2K League wants to emulate the trend of international competitions, but adds that the league needs to be selective about franchise ownership groups. Koonin sees the barrier to establishing international 2K League franchises as much lower than the one for international NBA franchises.
Koonin is correct. The process of finding the best talent for the NBA 2K League is much more cost-effective than for basketball players, as it’s all electronic. Additionally, you’d save money because no travel would be necessary for competitions. The biggest obstacle, Donohue says, is finding potential overseas owners with enough money and interest in the league.
There’s no timetable yet for when fans should expect to see an NBA 2K League franchise in China or Western Europe, but it appears to be inevitable, as the league’s fast break rumbles toward the basket.
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