Merchandising in the world of EsportsThe advent of esports is sweeping the world.
The eSports phenomenon is now growing steadily and certainly doesn’t seem to be slowing down or finding rocks on which to break. And for brand sponsors, the sector has proved to be a godsend. Apparently we are facing a perfect system that is still far from being saturated on a global scale. The unpredictability of such a young market and a society of tech millennials grappling with ever new technologies and devices will be the real pitfalls of eSports, which is bound to remain among the most talked-about trends for many years to come.
In the meantime, another business has arisen from the growth of Esports, namely giving teams competing in these gaming events the opportunity to create their own t-shirts or mausepads, or mugs, in short, to customise these merchandising items. Customisation, in the vast majority of cases, is complete, this in order to offer a service that satisfies all team members.
But let’s take a look at the two macros individually, Esports and Merchandiser.
What is merchandising?
In its most common meaning, it is a set of sales support activities aimed at optimising the display, presentation and rotation of products in a point of sale.
The term merchandising has two substantially different meanings:
Merchandising as a contract: trademark merchandising
Merchandising as a sales promotion activity: visual merchandising
The merchandising contract
In its first meaning, the term is used with reference to the economic and legal relationship whereby the owner (licensor) of the exclusive rights to exploit a distinctive sign that enjoys wide renown (a well-known trade mark or the name and image of a famous person, whether real or fictitious), grants a second party (licensee) the right to exploit for commercial purposes the highly reputed and well-known value of the trade mark or famous person in sectors other than those in which the trade mark or famous person has acquired renown. See Licensing.
It should be noted that the merchandising agreement is not the only form of agreement that may have as its object the exploitation for commercial purposes of a distinctive sign endowed with attractive value. See Testimonial, Endorsement and Sponsorship.
Trademark Merchandising.
The commercial exploitation of an established trademark or the image of a well-known product or a famous person (be it a real or fictitious person), for the marketing of other products of a nature significantly different from those for which the trademark was previously registered and used. This is the case with Disney, which has licensed the production of many products, including t-shirts, clothing and accessories, under its well-known brand name.
Co-branding of merchandising.
Two or more well-known brands are combined in the production of a single product or marketed together in pursuit of common or autonomous but compatible goals (see Co-branding).
Merchandising as a sales promotion activity
In a different sense, in the context of point-of-sale issues, merchandising is understood as the activity of designing, realising and managing point-of-sale spaces, the purpose of which is to attract and build the loyalty of consumers-users by making shopping easier and more enjoyable.
Merchandising aims to optimise the display and presentation of goods by operating at the level of both the structure and organisation of the various departments of the point of sale (layout) and the actual placement and display of the product (display). Visual merchandising, in particular, makes extensive use of visual and sensory communication techniques (inside and outside the shop) to give products in the store an active selling role. It is involved in decisions concerning commercial architecture, signage, window displays, entrance, room design, signage, and all Point of Purchase (POP) communication.
In the specific context of large-scale retail trade, merchandising is most frequently understood as a set of techniques and tactics aimed at promoting sales of a product at the point of sale and, by extension, the advertising and display material produced for this purpose.
The objectives of merchandising.
Merchandising pursues short- and long-term objectives. According to the short-term perspective, it aims at optimising the display space in order to maximise the yield of the sales area. Display choices are generally oriented towards improving the visibility – and thus stimulating sales – of categories, brands and references with a higher unit margin. In the medium to long term, on the other hand, the objective of the retailer is to influence the choice of the point of sale and build consumer loyalty to the brand. In this way, the profitability of the outlet can be maintained and developed, while reducing the level of dependence on the industry. In other words, retailers try to ensure that the choice of shop becomes a priority over the choice of industrial product, i.e. that store loyalty prevails over brand loyalty.
Merchandising levers.
Merchandising aims to increase product rotation and, more generally, shop profitability by acting on several operational levers. The latter consist of various activities related to display space management, the main ones being: equipment layout; merchandise layout; display and display space allocation. In brief:
– Equipment layout concerns the overall layout of the shop, the choice and arrangement of display equipment and the consequent organisation of customer traffic flow. It influences both the purchasing process and the image of the shop and signage.
– The merchandise layout concerns the way in which products are grouped together and their location in the shop. It establishes the sequence of sectors (e.g. food and non-food), and departments (e.g. for food: beverages, fruit and vegetables and fresh food; for non-food: personal care, home care and pet care) along the route that the customer can take within the shop.
– Finally, the display defines the criteria for the arrangement of products in the different display sectors, determining their visibility and comparability. It therefore concerns the decisions relating to the management of the linear, which are aimed at defining the quantity and quality of display space to be allocated to individual products or brands.
Finally, it should be noted that the scope of merchandising has expanded considerably over time to include other important levers such as pricing, promotions and shop assortment. Please refer to Retail marketing for more details.
After this brief description of what merchandising is and why it is so important in the world of business, let’s move on to explain why it is important in the world of esports.
Let us begin by first explaining what Esports is.
The advent of eSports
eSports, or e-sports, is the activity of playing video games on a competitive level, organised as a tournament, with direct confrontations between individuals or teams, is defined as ‘any competitive activity related to a video game, organised between several video gamers and practised in physical environments’, such as at championships or offline and online exhibition events.
Competitions cover many different genres, and therefore disciplines, of video games, in different consoles and platforms where eGamers can hone their skills and characteristics: the most widely used remains the PC, although in recent years practices on PS4 or Xbox and in the mobile world with so-called Touch eSports are growing.
Nielsen Sports has released a report analysing this emerging business and identifying the typical profile not only of the eGamer (the practitioner) but above all of the fan gamer. Identifying the identikit of video game followers is of considerable importance for companies, which are eager to enter the world of eSports with targeted, high-impact partnerships and sponsorships.
In addition, an important data point concerns the ‘pink quotas’, the phenomenon does not only concern the male gender but also the female one, with about three out of ten girls practising and following a video game activity. In addition to the demographic data, eSports supporters have, on average, a full-time job and a higher income than the average user who spends time online. They also like to spend on digital media and game-related products, going so far as to have more digital subscriptions. For example? Netflix, Apple Music and Spotify.
We can therefore define eSports enthusiasts as ‘Cross-Platform Players’, i.e. users of numerous different consoles, from the classic computer to smartphones. Thus, a very interesting group in the eyes of mobile device developers.
Esport in the world and in Italy
All the preliminary phases of eSport tournaments are followed via streaming, while the finals are also watched live with referees and specialised commentators. Their evolution, which began in the 1980s, has now reached global prize pools approaching 500 million dollars (forecasts for 2018 indicate almost 2 billion dollars) with an audience of around 150 million people, including finals and qualifying events followed on Twitch, live or through other channels.
In Italy too, the start of this sector was seen in the 1980s but, due to bureaucracy, lack of important sponsorships, inadequate internet lines and an unsuitable culture, eSports have not yet reached the levels we find abroad. Starting with Atari games, we soon moved on to Quake, Starcraft, Counter-Strike, FIFA, COD, Street Fighter 4, League of Legends, Heroes of Warcraft or Overwatch. In 2014, something finally happened, as Competitive Electronic Games, the sports sector of ASI, a CONI-recognised body, began to create regulations in the sector, supporting the nascent ASDs, Amateur Sports Associations. Recently, training schools have even sprung up for the roles of eSports referees, coaches, analysts and commentators.
Sponsorships
The most famous travelling tournaments, which do not yet embrace Italy, are the DreamHack and the Intel Extreme Masters. By now, the finals of these tournaments occupy Medison Square Garden or entire football stadiums. Such dimensions, still a chimera for Italy, are able to generate a decidedly interesting inducement of tickets and sponsorships. Intel, MSI, Razer, ACER, ASUS, Logitech and HyperX were the first to invest, receiving considerable image returns in return. Even in the extra sector, brands such as Coca Cola, Monster, and Red Bull have now decided to invest increasingly significant shares.
In Italy we do not have a gaming culture like in Korea, China or the Nordic European countries. In these countries, there are traditions rooted in PC games that have evolved over time. In Italy, we have not had the same path and gaming is often seen merely as a child playing. To move from this view to the pro-gamer, it is necessary to wait for things to evolve. There is no shortage of opportunities now, just as there is no shortage of talented players in Italy capable of putting themselves on the map. Electronic Sports, with MSP, Competitive Electronic Games with ASI, the numerous ASDs and tournaments are now reducing the gap that divides us with foreign countries. Tournaments are becoming more and more popular and participated in, even though there is still a lack of meeting places where young people meet, not only to play but also to study. LAN rooms are not enough, even if they are growing in number, in an Italy that still sees video games as a hobby if not worse.
Esports: Why and how to start an online business with Print on Demand?
eSports are sustained by a complex business model comprising several sources of revenue: sponsorship, advertising, media rights, ticket sales, merchandising and direct offers from spectators.
The expansion of a still virgin market not yet colonised by brands has attracted new brands to enter the market in various guises, as sponsors of teams, events, tournaments and broadcast platforms. Many of these are video game and consumer electronics brands, but so-called ‘non-endemic sponsors’ are also on the rise, as they are interested in exploring the sector and looking at possible future expansion into programmes specifically dedicated to eSports year after year. In particular, teams, leagues and tournaments have partnered with companies from sectors seemingly distant from the interests of video game fans such as automotive, food and beverage, personal care, finance and insurance.
Brands entering the eSports space, in whatever capacity, must necessarily analyse their potential, threats and opportunities in order to understand not only their goals but also their audience, their habits and preferences. Some groups of gamers have started a print-on-demand business, selling merchandise for their own niche, i.e. video game fans and all colours that compete.
Enthusiasts, but especially those who compete because they offer a necessity, are attracted to t-shirts, mausepads, mugs and many other customisable products. These can be used for competitions, thus offering a customisation, production and shipping service, to other gamers, but can also be of interest to young people who approach this world just for passion and as a hobby to share with other people in the digital world.
Companies that manage to enter this market in a timely manner, either through sponsorship or classic advertising, gain a considerable competitive advantage, because the spectator will pay more attention to the only brand present in the event advertisements, managing to reach a high number of potential buyers with a maximum share of voice (the ‘share of voice’ is the percentage measure of the advertising presence of a brand for a given target compared to its competitors).
Understanding the complexities of the sports market is the big challenge facing sponsorship companies: there are a multitude of teams, tournaments, titles, players and business models within an industry that develops and matures. Many famous brands, as we will see later in the article, make the most of the opportunities and generate significant returns on their investments in virtual sports. Consider that more than 600 sponsorship agreements have been signed since the beginning of 2016, the majority of which are related to brands in Internet services, consumer electronics and video games, but not only.
Create additional business with Print on Demand. You have the opportunity to create customised apparel and merchandising products and sell them on a completely customisable and free site.
Give other video game fans the chance to have a collection of Gamer t-shirts to compete with!