As the summer rolls into the fall, each of the two new permanent partner leagues (since this isn’t a legal document, let’s just call them “franchises” for ease of reference), created by two of the world’s biggest game publishers, will soon formally reveal which organizations will participate starting in 2018.  Coincident with these announcements, more specifics seemingly must emerge around the calendar of events for the leagues’ inaugural season, including important information regarding dates, times, location for playoffs, media distribution plans and other pertinent details.

I believe that specifics around these items will be a condition precedent to driving non-endemic sponsorship into esports.  It’s difficult for marketers to make long-term plans around activation, media buys and entitlements if they can’t readily predict the where, when and who about each property.  For the past few years, marketers had to spend and pray that the event/league/team they invested in would be around long-term and also had to worry about the hazard of lending the sponsor’s brand equity to a party that may not exist a year hence.  These dynamics necessarily made it difficult for non-endemics to make forward-looking investments.

With the franchise system upon us, much of the structural impediments for increased non-endemic sponsorships should be eliminated or mitigated.  Therefore, it’s reasonable to expect 2018 will be the proverbial opening of the flood gates for non-endemic sponsorship into esports.  With the calendar year winding down and budgets for 2018 in their final planning processes for most advertisers, we may see a tempered first season, direct non-endemic spend into OWL and LCS.   In lieu of league entitlements, I expect to see gravitational pull of sponsor dollars flow towards those franchises participating in OWL and LCS, with LCS seemingly the safer bet of the two, at least in 2018.

One of the most reliable bellwethers to indicate a property has finally hit mainstream from an advertising perspective is the appearance of automotive sponsors.   While some autos have dabbled in the space (Audi into Astralis, MBZ with ESL), those spends have not been driven by North America budgets.  Once the NA auto budgets get directed into LCS, OWL and their participating franchises (what auto doesn’t want the young, male customer?), the sponsor revenue reality around esports will start finally catching up to the promise.

Anyone slightly familiar with Twitch knows that YouTube “Sponsorships” is a direct counter to subscribing on Twitch and offers subs a very similar set of perks.

Sponsorships offer streamers an additional revenue stream on top of Google’s robust advertising network and SuperChat, where users pay for highlighted mentions and call outs from streamers. Next, I expect YouTube to relaunch a donation feature to further compete with Twitch in offering a diversified set of revenue streams. YouTube previously launched “Fan Funding” in 2014 that never reached the necessary level of adoption and was phased out with the launch of SuperChat in early 2017. However with the success of outside platform Patreon (who just raised $60M in Series C funding today at a $450M valuation) which allows fans to donate to their favorite artists and creators, I believe YouTube will find a way to relaunch donations in a way that is seamlessly integrated with the current YouTube UX as compared to Patreon which has to take users outside of the YouTube/Google ecosystem. While the margins on these donation businesses are slim (Patreon takes 5%), YouTube is most concerned with providing the best and most expansive monetization opportunities for their creators.

For streamers and the overall esports community, YouTube’s announcement of “sponsorships” should promote higher quality content as streamers (with these additional monetization opportunities) can focus more on streaming and creating high quality content full time and worry less about if this is a financially viable career path. This competition will push Twitch to further innovate to retain their position as the market leader but I’d expect a more fragmented streaming ecosystem to emerge as streamers are swayed by the financial incentives of other platforms.

The streaming space has rapidly changed in the last few years with 3 of the largest tech companies now battling for supremacy: Twitch (Amazon), YouTube (Google), and Facebook Live (Facebook). Twitch is the current leader in the space as the endemic platform with the established esports community but will YouTube and Facebook be able to leverage their massive user bases and advertising networks to make streaming on Twitch financially nonviable?

Hmmm… too soon? Following last summer’s CS:GO skin betting scandal which shed some incredibly worrying light on underage gambling within Counter Strike, ESL’s decision to take Betway on as an official partner begs a lot of questions.

While offering odds is one thing, highlighting them live on broadcast is another. The esports viewer tends to skew young and male and while that certainly provides a lucrative audience for Betway, broadcasters should take into account stream demographics before accepting partnerships which may promote gambling to underage viewers.

Additionally, the establishment of widespread gambling odds introduces new elements surrounding competitive integrity. The ESIC (Esports Integrity Council) estimates that the $250m legitimate betting market in 2015 is expected to grow to $23 billion in 2020. And while organizations like the ESIC (Disclosure: Catalyst EVP Bryce Blum is a board member) are taking aim at all forms of cheating, including match manipulation, the Counter Strike community has had issues with this in the past: five members of Team iBuyPower were given life-long bans by Valve after fixing a match in 2014.

As the esports industry grows, legal gambling is something publishers, tournament organizers, teams, and players will have to take into consideration. In 2014, NBA commissioner Adam Silver came out in favor of legalizing sports gambling nationwide in order to establish a framework surrounding wagering activities that can limit illicit activities, maintain basketball’s integrity, and protect fans. Silver’s position highlighted that gambling happens whether the public — or governments — want it to or not and that legitimizing a structure that ensures protections surrounding it safeguards all stakeholders. And while esports is certainly nowhere near where the NBA is, both in terms of viewership and wagering, it’s these sorts of frameworks that need to exist before broadcasters should feel comfortable promoting live, real time betting odds on major esport leagues.

A summary of the most impactful announcements:

• The league is now known as the NBA 2K League, not the NBA 2K eLeague
• The tryout for the league will be in February of 2018
• The draft will occur in Mid-March
• The players will be “in camp” in the second week in April in their local market
• The season would officially begin in May
• The tryouts will be played on a level playing field i.e. players will not be able to use VC (virtual currency) to give their players an unfair advantage
• Players will be using avatars that they can customize and control
• 8 teams will make the playoffs
• There will be a central studio (or two) where games will be played
• Players will have a “competitive” esports salary with performance bonuses and a team house
• Players can have marketing deals outside of the NBA 2K League sponsors

There are still some additional details for the NBA and 2K to reveal in the coming months but finally knowing this information will help many players decide if pursuing a career as a professional NBA 2K player is the right decision for them.