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The Business of Gaming

Panellists

 

Chris Smith

Founder & Director, BIG Esports
BIG Esports is a PR, marketing, including Influencer Marketing, and management agency, that specialises in Esports and Gaming. They have worked with clients such as Fox Sports, Gemba, JB HIFI, NVIDIA and more. Chris can be found on the BIG Esports podcast and YouTube channel where he profiles the biggest names in the industry to knowledge-share and educate audiences.

Eayl Machlis

Co-Founder, Thunder Insurance
Thunder Insurance is an entity that focuses on the Millennial market with a core interest in Gaming. Since 2017, Thunder Insurance has grown to be a leader in the cyber and Gaming insurance sectors. They have created unique products to specifically service this audience and use their expert knowledge to work with clients to protect their interests within the Gaming Industry.

The following excerpt is transcribed from the Zoom event that took place on 9 April.

Question: Can you tell us about your background in Gaming, and share how Gaming has impacted your career?

Chris: If you were to have run or attended a large Esports event. I would have been there in every single capacity across my career in the Gaming and Esports industry, such as:

  • Played top-level in three different first-person shooter games; one of which was semi-professional. 
  • I was a commentator for a long period of time.
  • I managed one of Australia’s first professional players back in 2011-2012. A Starcraft 2 player who’s now a commentator, and a worldwide celebrity in that region.
  • I ran a $30,000 Counter Strike tournament back in 2010. 
  • I’ve done six years of combined marketing for two different companies. One Taiwanese, the other from the US. Both were PC component manufacturing companies. One of which we chose the first marketing employee for the US when I was the first physical employee. 
  • I was a journalist for a year and a half while having a bit of time off from the industry to study Social Work. 

Which brings me to today. A lot of that for me was discovering where I wanted to work in the industry. Every time I did one job I was like, yeah, this is where I want to be. Whether I wanted to be the best player, the best commentator, the Global Head of PR and marketing, etc. But what I’ve come to realise from my journey of eight to 10 years, is that I really want to be a part of the industry. 

Right now, what I’ve got a great passion for and what we’re doing here at BIG Esports is focusing on bringing new ideas and new money into the industry. In the past, the problem we were addressing was how to onboard new companies into Esports? For example, with Fox Sports back in 2017, we were partnering with them to produce an Esports entry strategy across multiple different verticals. The same with Gemba, again helping them to understand how to get into the market.

What we are seeing is that there is a lot of supply as well as a lot of demand for Influencers. It makes sense that if a company is going to have a ‘softer entry’ into the Gaming market, Influencers are a common entry-point. If they’re a brand like Coca Cola, it’s very likely they already work with celebrity Influencers. So it’s very easy for them to understand the one degree of separation from a celebrity Influencer or Gaming Influencer, especially if they’re both on Instagram to then start to softly push them more and more into the Gaming market. After that, they might want to buy an Esports team or opt for sponsorship.

Question: Eayl, share with us how did you find you’re calling in the Gaming industry?

Eayl: In regards to my journey, we decided to concentrate on a niche that has been either under-insured or uninsured. With this knowledge, we looked at things like Software Developers, IT Consultants, Cyber Experts, etc. What we saw was a massive gap in the industry. It’s something that was only really serviced I would say at best at an ad-hoc level. Without the correct level of expertise to be able to insure new types of emerging risks associated with Gaming, especially in Esports. 

From the generosity of good people like Chris Smith, and others from the Gaming community we developed a very strong affinity, both here in Australia and also overseas. We used the knowledge we gathered to build Thunder’s insurance products. We built two insurance products from scratch. The first one being Thunder Electronic Device Insurance, which is available online through our website. This gives Gamers an opportunity to insure their electronic devices outside of home contents. This is important as those items are quite expensive to protect. Our approach allows us to strip out a lot of the expensive elements of the risk by going direct to the consumer. 

The second product that we’ve developed is the corporate Esports travel product. Esports teams come directly to us to be insured for travel. Prior to COVID-19 we had some of the top Esports teams in the countries come to us to insure them correctly. Because there were once again gaps in regards to their activities, versus how the traditional insurance market was insuring them. 

How would you describe Gaming to the layman?

Chris: To explain the difference between Gaming and Esports is like the difference between sport and just a leisure activity. For example, if you’re kicking a footy with your mates down at the beach, that’s not a sport, that’s more of a leisure activity, you’re having just a bit of fun. The same way that if you’re playing Need For Speed Underground on your PlayStation 2, or  Candy Crush on your mobile, or Animal Crossing on your Nintendo Switch, that’s not Esports that’s just Gaming. It’s fun, you know, it’s exciting and generally, it’s single-player.

Whereas on the other hand a team sport, like volleyball where you play regularly on a Wednesday night, is a sport. You’re a team of six versus another team of six and trying to win at all times on the court for a first-place prize. It’s a sport the same way that in Gaming if you’re playing against other people in a competition, even if it’s free to enter, it becomes Esports.

From a business perspective, how do you treat each side differently in terms of Gaming and Esports?

Eayl: In regards to Esports, which here in the Australian market is very much an emerging market. It isn’t as structured as Chris will attest to. The nature of how we identify the risks in Esports is probably a little bit different than in Gaming. It’s tailored in regards to the position of the particular Esports team. How that team is made up will dictate the level of risk that’s associated with it, eg. a grassroots team versus a team backed by venture capitalists.

In Gaming, the systems are a lot more formalised. They have to be, and the processes are a lot more formalised. So the identification of the risks is probably a lot more evident, a lot more clearer in that regard. There are some similarities between Gaming and Esports. Software development here in Australia will be done by either the individuals themselves who are building the game or by angel investment. This will depend on the game, and on the name of that publisher, all the way through to venture capitalists as well. 

As an aside, at this time there aren’t any venture capital firms based in Australia that are funding games or gaming technology? In the States there are specific venture capital firms who only invest in Gaming and Esports, Bit Kraft being one of the most well-known. What I find fascinating here is that Gaming is trading in a very similar vein to that of a standard hedge fund.

What do you believe the tipping point has been to bring Gaming or Esports into the mainstream, is it an entity, title, a personality?

Chris: I think one of the key milestones was Fortnite. The great equaliser when it comes to bringing Gaming to the general public. There are personalities leading the charge like Ninja and such that have been massive. If you look at what Ninja has achieved; sponsorship from Uber Eats, a line of Bonds undies, merchandise such as a headband that’s available from Walmart, streaming with the pop star Drake; they recorded 660,000 concurrent viewers during the stream. 660,000 people watching him at one time! That was him on a $5,000 computer out of his bedroom! Personalities such as Ninja are bringing lots of attention to the industry. 

People from my generation don’t read magazines, don’t pay attention to Facebook Ads, or are even barely on Facebook. There was a company we met with and they had this marketing guy. The guy didn’t talk during the meeting, he was like an undercover agent. When he spoke he corrected his team who were talking about allocating budget on what I refer to as ‘old-world media’ –

I watch 40 hours of streams per week. I’ve been following Counter Strike for four years. I deactivated my Facebook account three years ago, you’re not reaching me whatsoever. So this isn’t even just a retargeting market. These are people that we’re not even talking to, they don’t even know who we are anymore.

If you think about the typecast of a ‘Gamer’. A lot of the time they’re consuming all of their content on YouTube or for social media, Twitch, They don’t have a TV plugged into an antenna, they don’t have a Foxtel subscription, and they don’t watch a lot of live sports necessarily anymore as well. They don’t read magazines or newspapers. They’re consuming everything online. I’m in that category. So if you’re advertising on Channel 10, you’re also advertising in the newspaper and you’re advertising on radio and on billboards. I see zero. You aren’t reaching me. I don’t listen to the radio because I don’t commute. When I walk the dog, I listen to podcasts. So I’m not consuming any of those ‘mainstream’ mediums that you would have relied on to reach my audience in the past (and still today!)

How do you see games like Fortnite impacting the Gaming industry as a whole?

Eayl: What’s really fascinating, for example, is when you used to buy a Mario Kart cartridge for the Nintendo there was no opportunity to buy different skins or different levels. The investment in the original game was just that as that’s where the buck stopped. Now because of the internet and new gaming platforms, gamers can continue the enhancement of gameplay on titles. 

There was a story in the media of an ex-NBA player, Kindle Perkins, who was having a whinge that his children had spent, and I’m glad you’re sitting down for this, 16 and a half thousand US dollars on Fortnite! This is the result of children being able to take their parents credit card, and then just going ahead and spending freely. Indicative of the seamless purchasing experience that is built into the fabric of games.

 

Chris: These days, most games have gone to a bi-weekly update model. Instead of the older model of releasing a new title every year, like some games still do (Call of Duty), they’ll do smaller updates every couple of weeks. This allows the game to maintain its freshness and stay interesting. However, every now and then they do reinvent. Fortnite, put a black hole in the sky, and sucked the game into it, then spat it back out. They called this Chapter Two.

Do you believe different industries and mass-market verticals will need to bring their product services to the forefront of Esports?

Chris: One way to interpret that question, I would say is, are your products suitable for the market you’re trying to advertise to? ‘Logo slapping’ never works. Facebook is a great case study. They tried to get into Esports through Facebook Gaming. They launched too early when their stream wasn’t ready. It really hurt them as a result. They bought the rights to a tournament. The viewership dropped by about 70% when it moved from Twitch to Facebook because the features weren’t there. 

When you’re on Twitch, you don’t need an account to watch, whereas you need an account on Facebook. On Twitch, you can broadcast or you could watch it at 1080p, on Facebook, it was limited to a 720p resolution. On Twitch you could watch it at 60 hertz or 45 framerate FPS frame rate, which is so much smoother, where Facebook was only at 30. Twitch, you can hide the chat, Facebook you couldn’t etc. So while the intentions were there, and while it was awesome to have, I don’t know how much money they paid for it because it wasn’t as much of a success.

One of the best success stories in Australia, in my opinion, is the eCommerce website for PC Case Gear. My friends and I always went to that website over every other one because it just looked so much better. You could understand all of the breakdowns of all of the tech products and us as those little nodes at 15 years old would always go there. Their website was leaps and bounds ahead of their competitors. 

Nowadays companies still don’t have websites that are anywhere near as good. So yes, while these companies have products and services that are targeted to a specific market, they’re not delivering it in the right way. If you’re entering into this market look at your product or service experience? You must question whether it makes sense to the market. Our audience has a technical understanding and really responds to organisations that demonstrate authenticity.

What’s the appetite of organisations to actually be involved in this sector?

Eayl: I think the one thing that’s important to raise is that there’s a whole lot of micro-segmentation that needs to be really thoroughly understood around Gaming, Esports being a subset of Gaming. I think that a lot of your general brands will find it difficult. At the moment, and still very much within Australia, it’s very much within its infancy. There’s still a long way to go in the Australian market for various reasons.

How are Influencers thinking outside the box to generate revenue? Can you give us some examples of people and what they’re doing?

Chris: The real tactic right now is ‘buy the dip’, like investing. Which is doubling down on your content.  A lot of these (Gaming) Influencers, what they need to do is understand that their audience wants to be engaged. They should be streaming more than ever before. They need to be creating more engaging clips posted on social media. Let’s say you are in a Gamers group and you’re seeing a 50% increase, eg. you go from 100 viewers to 150. Post-Corona maybe out of those 50 extra 20 will stick around and you’ve retained a certain percentage of those people. You can use insights from this new group when the dollars are turned back on for the ad revenue. You can monetise them in various ways. 

However, no one really knows at that moment what is going to happen. Many people are being quite conservative. What everybody should be doing is making more content.

Where do you see the future of Esports and Gaming, especially in light of where we’re at now with COVID-19?

Eayl: Unfortunately, it looks like every indication that there’s a long-haul element. What I believe will happen, and certainly, we’ve been privy to is that companies will have no choice but to start being a lot more innovative in regards to the manner in how they connect and communicate with their clients. For example, we have a strategic alliance with a company that is just unbelievable. They do third-party advertising in Gaming. A big difference, real-time third-party advertising in Gaming. What this means theoretically is that if you want to play Grand Theft Auto and you burst into one of the shops, which is a Domino’s for example, you can include the ability to order a Pepperoni Pizza. A real large Pepperoni Pizza delivered to your house without actually having to leave the game or interrupt gameplay! There are positive implications for us at Thunder Insurance. I think of getting car insurance through a game? 

I’d like to think that the more innovative progressive companies are starting to table these types of ideas because Chris is 100% right. I remember having screaming matches with the executives in insurance companies saying if you really believe in spending $10 million in TV advertising campaign why don’t you give me 5 million? I’ll go to the closest drain, and I’ll put that down the drain because you’re not going to get any benefit.

 

Chris: Some of the content I did with AJ aka Dr. Doom from Liv. I think that he hits the nail on the head with that. If you look up our BIG Esports podcast episode you can hear how he and his team have created a platform that essentially allows people to broadcast themselves playing virtual reality games by placing them physically looking like they’re inside the game as they’re broadcasting.

 AJ’s aim is to change the way we consume content. It’s all about becoming as entwined and as knowledgeable of the people you’re watching as possible. For example, an Influencer like Ninja. When he was on the rise he was streaming eight to 12 hours a day, seven days a week. People want to see that, plus they want to see a weekly recap on YouTube, him posting TikTok’s, and Instagram stories. They want to see him Tweeting and replying to people and all of this kind of stuff. He needs to be as accessible as possible. 

That’s only part of it. It is also how you as a consumer interact and watch live streams. Liv has this awesome thing where people play a game called Beat Sabre, these little blocks come at you to the beat of the music. You’re holding virtual lightsabers and you chop the blocks to the beat of the music. It’s also an awesome workout and looks great. They’ve given viewers the ability to be part of the game. By donating a certain amount of money it’ll change what the game looks like, eg. it’ll put your face or your name in there. It’ll make all these other awesome effects happen. It’ll say ‘Thanks, Dan, you donated’ then the other potential 30,000+ people watching at any one time can be like, Dan is awesome he’s donated to this.

From a business perspective, marketing side and a more of an organisational side, how do you get started in the industry?

Eayl: If I can share some insights in regards to my journey. I think probably some of the similarities between us and other startups/ entrepreneurs is the fact that you have to start from the bottom-up. Fortunately, we’ve had opportunities to be invested in by venture capitalists. We opted against it. The reason being either crazy or not crazily because we wanted to maintain control. We understood that if we did have investment that the brand and the nature of our value proposition would change in some way, shape or form. 

The good thing is, especially about the Australian market, in particular, there’s a lot of local Esports tournaments that people can volunteer and participate in to start getting to know some of the players in that market. On the other side, in Gaming, I’m proud to say that even during COVID-19 it’s still quite an active recruitment market. The good thing being that a lot of work can be done remotely, eg. coding, depending on the nature of the requirement. 

However, be prepared to take the hard yards or take the ‘hard knocks’ along the way. It’s one of those industries where you have to start from the bottom-up, irrespective of networking and things like that. It is worth noting that the Australian market embraces people showing a genuine interest. As a result, you’ll meet a lot of great people along the way that will want to help. 

 

Chris: I think Eayl explained it really well. He’s the perfect person because he has come from being an outsider. Learning through his experience is the best way to do it. A lot of what I saw both him and Paul, his Co-Founder doing is just embedding themselves in the industry. Learning by asking people lots of questions. Everyone wants to share. 

I get a lot of my news and information from Twitter, from a journalist called Slasher. I also moderate a Facebook group, Oceania Esports and Gaming Business Facebook group. It’s a very collaborative and productive group. People are sharing industry information insights and asking questions. We’ve made sure to keep this as a group where people don’t just say, ‘hey, I’m live on Twitch’ or ‘hey, come and join this tournament’. It’s a very business-centric and discussion-based place where people post requests such as; ‘Can someone get me in contact with a team owner?’ or ‘can someone recommend a lawyer, or an accountant or an insurance industry’. People will jump in there and give their two-cents.

 



About the Future Of Now series

Our goal at More Space For Light with the Future of Now (FON) series is to build a community of like-minded passionate professionals. Initially this series was created as a small in-person gathering to provide a knowledge share for our and our event sponsors community of clients and partners. However, by switching our operations to remote it has allowed us to raise the bar, and include our global network.

Our vision is the same, regardless of the potential scale of remote FON events. We intend to bring together like minded professionals to share, inspire, and explore new opportunities for growth. So you can discover new ways of working, and hopefully bring them back into your organisation.

Relevant links

BIG Esports
Thunder Insurance
Future of Now series

If you wish to connect with the broader community please connect with me on LinkedIn at https://www.linkedin.com/in/danlevy1979/ with the message ‘#futureofnow and we’ll add you to the group.

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