written on behalf of Feigenbaum Law
ESports, the name commonly applied to professional video gaming, has continued to grow in popularity during the COVID-19 pandemic. Back in October, we blogged about how IBM was getting ready to enter the esports works. Recent sponsorship developments show that esports place within the mainstream entertainment market is not slowing down.
PSV Esports sponsorships show the potential of the market
As we mentioned in our October blog, esports have been garnering attention from major brands. In addition to IBM’s entry into the market, organizations such as the New York Yankees, Houston Rockers, New England Patriots’ owner Robert Kraft, and Magic Johnson, have all bought into franchises. On the other side of the Atlantic, traditional sports organizations have also become fixtures in the esports scene.
One example of this is PSV Esports, which is the competitive gaming division of the Dutch football club, PSC Eindhoven. Esportsinsider reported this week that the team has secured a partnership with Cooler Master, a Taiwanese PC component company and periphery supplier, including gaming chairs. The team’s marketing and media manager, Damian Bott, told Esportsinsider that the partnership is a natural one as “Many gamers, especially PC gamers, have an IT or technical study background. These are precisely the type of talent that various (tech companies) are looking for.”
The news comes just under a year after the same team announced a partnership with Pearle Opticiens, the Dutch brand of Pearle Vision. The sponsorships show that companies who make products associated or appealing to gaming are continuing to see value in partnering with professional esport outfits.
Lifestyle brands see value in esports
Some partnerships show how esports business relationships may exist more similar to other fringe sports, such as skateboarding, in which athletes can often be sponsored by drink companies and lifestyle brands in more ways than we see in traditional sports. For example, it was announced in February that North American esport team, XSET announced a partnership with the owner of hip hop record label, Quality Control Music. A press release coming from the announcement stated,
“The two companies will work together on high-profile music collaborations, joint recruitment and management of new gaming talent, integration of existing QC talent into the XSET roster, activation of exclusive music, gaming and lifestyle events, exciting merchandise collaborations, music related licensing deals with gaming publishers, and much more.”
In addition to music, clothing brands such as Adidas, Armani Exchange, Champion, Fila, Gucci, H&M, Louis Vuitton, New Era, Nike, Puma, and more have all formed partnerships with the esports world.
ESPN pulls out of Esports coverage
Despite the growth in the industry, ESPN decided to close down its esports coverage division in late 2020 as the COVID-19 pandemic continued to impact the live sports world. A story in the Washington Post states that the move sent shockwaves through the industry, and those involved on the sinside could not agree on whether it was a setback for the sport’s mainstream acceptance. The story states, “the decision appears to have stemmed from a variety of factors, including both the impact of the pandemic on the traditional sports normally broadcast on ESPN’s family of networks, as well as the esports group’s inability to generate an audience on par with the many other sports covered on ESPN.com.”
It may be that while consumers of esports coverage may be likely to buy products from brands that are involved in esports, they don’t want to necessarily consume coverage of their favourite games in the same ways that fans of traditional sports to.
Those involved in the entertainment and sports landscapes would be shortsighted to ignore the growing impact that e-sports is having. E-sports professionals will soon demand the same services and support that traditional sports professionals have required. At Feigenbaum Consulting, we are positioned to assist sports and entertainment clients across a broad range of areas, including taxes, endorsements, intellectual property, immigration, and real estate closings on both sides of the border.
We have a wealth of experience in international tax law, particularly when it comes to US/Canada issues. Contact us for assistance with your tax matters and learn how our knowledge of jurisdictional laws and regulations can help lower your overall tax risk and yield sizable tax benefits. We offer services to clients in the US, Canada and around the world. Contact us to learn more about how we can help or call us at (416) 777-8433 or toll-free at (877) 275-4792.