Today, BAMTech (a streaming technology company spun off from Major League Baseball) and Riot Games announced a $300M deal for exclusive streaming and monetization rights to competitive League of Legends. It's one of the biggest content licensing deals in esports history. Though $300M is a drop in the bucket as far as sports licensing goes, it's a sign of things to come. Esports are only getting bigger, and traditional media titans, beset by rising content costs and a quickening cord-cutting trend, are only getting more desperate for cheaper content that appeals to young people.
Sports Broadcasting Rights are Ludicrously Expensive
Everybody wants to broadcast live sports, because live sports are viewed as a bulwark against cord-cutting. As a result, ESPN and other networks have been engaged in a nonstop bidding war for sports broadcast rights for five years or more, and the prices just keep going up. ESPN pays $1.9B a year for Monday Night Football, $1.47B for NBA games, $700M for Major League Baseball, and a whole bunch more for the rights to college sports broadcasts. In total, they're on the hook for around $6B a year.
Compared to that, $300M looks positively cheap.
For Networks, Esports are a Bargain
League of Legends peaked at 14.7 million concurrent viewers during the 2016 World Championships. That's up from 11 million in 2014. If League keeps growing, $300M might end up being a bargain. Plus, more than half of esports viewers are between 21 and 35, making them a focused and valuable demographic for advertisers. More importantly, that "young adult" age bracket also happens to be the segment of the population cutting their TV cords fastest. Are you a Pay TV company trying to keep current customers and dredge up new ones? Esports might be the way to go.
That's certainly what Turner was thinking when they launched ELEAGUE earlier this year. Since then they've run events in Counter-Strike: Global Offensive and Overwatch. Likewise with ESPN broadcasting Heroes of the Storm and Street Fighter V (not to mention launching an online esports journalism wing). In 2017, expect more networks to follow their lead.
Will investing in esports be enough to save the linear media juggernauts? It might be too little, too late. But if esports audiences continue to grow, you can bet the ESPNs and Turners of the world will continue to invest. The BAMTech/Riot deal might look like an outlier now, but in a few years, it'll be downright commonplace.
What do you think of the Riot Games media deal?