Big brands like K-Swiss and Nike are jumping on the esports bandwagon

Key Points
  • K-Swiss launched a limited-edition sneaker this week designed specifically for esports players.
  • It comes after big brands including Nike and Adidas signed sponsorship deals with global esports teams. 
  • Goldman Sachs estimates monetization opportunities from esports will be worth nearly $2.7 billion by 2022.
K-Swiss' One-Tap sneaker

K-Swiss has launched a limited-edition sneaker designed specifically for esports players, with the brand claiming the $125 shoe is the first of its kind.

Created in collaboration with esports firm Immortals Gaming Club (IGC), the "One-Tap" shoe promises to enhance esports players' performance.

Esports – or electronic sports – is a form of gaming where individuals or professional teams compete at multiplayer video games. The competitions are gaining traction as spectator sports around the world, with experts estimating esports will generate more than $1 billion in revenue this year.

K-Swiss' slip-on sneaker features lightweight, flexible material with an elasticated closure for a "snug fit," as well as a venting unit to make it breathable in warmer climates, and a wool-lined insole that can be inserted to make the shoes feel warmer. Gamers can also fold down the sneakers' heels for a "slipper-like feel for the long hours during a match or practice."

One-Tap shoes are styled in black and silver, the colors of Made in Brazil – an IGC team that competes professionally in the online game "Counter-Strike: Global Offensive." A Brazilian crest also features on the foldable heel.

Barney Waters, president of K-Swiss, told CNBC via email on Wednesday that half of the One-Tap stock was sold within the first hour of the product launch on Wednesday.

"Gaming content on (livestreaming platform) Twitch has more viewers than HBO, Netflix, Hulu and ESPN combined, and the viewership of some of the big esports tournaments are double the viewing audience of the NBA Finals," he said. "There is a massive reach, and it's among young men, the hardest to reach demographic."

That view was backed up by Eric Haggstrom, forecasting analyst at eMarketer, who told CNBC Wednesday that esports was becoming increasingly attractive to advertisers because of its audience.

"Viewers typically have a very high income and often don't consume other digital media that's supported by advertising, or they use ad blockers. They're difficult to reach in other ways," he said in a phone call.

"We're seeing a lot of growth in advertising on these events and it's becoming more diverse – big companies like Coca-Cola and Verizon (have got involved). It's really beginning to mirror actual sports in terms of who's advertising."

However, Jodie Fullagar, managing director of M&C Saatchi Sport and Entertainment, said Thursday many brands were still ignoring the "potential audience gold mine."

"Marketers above the age of 35 are unfamiliar with esports – it post-dates their youth and they are skeptical of its influence," she said. "The eSports industry needs to do a better job of convincing brands to invest by mining and packaging data in the way that is familiar and compelling to traditional marketers."

Billion-dollar industry

According to a 2018 report by Goldman Sachs, 167 million people watched esports last year, and its audience is predicted to grow to 276 million by 2022. The report estimated that monetization opportunities from esports would be worth nearly $2.7 billion in three years' time, with 40% of that revenue being generated by media rights and 35% through sponsorship deals.

Peter Warman, CEO and co-founder of gaming and esports research firm Newzoo, told CNBC the global esports audience will reach 453.8 million people this year, generating $1.1 billion in revenue — a year-on-year increase of 26.7%.

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"As a business, esports is now entering a new and critical phase toward maturity," he said in an email. "Big investments have been made, new league structures have been launched, sponsorship budgets have moved from experimental to continuous, and international media rights trade is starting to heat up."

However, he noted that esports player salaries had "soared" and viewership still relied on a select number of teams and franchises, making profitability and return on investment a challenge for the industry.

Big brand backing

Although K-Swiss claimed its One-Tap is the first-ever esports shoe, big brands are increasingly homing in on clothing and merchandise opportunities in competitive gaming.

Earlier this month, Brazilian esports organization Furia announced a sponsorship deal with Nike. The deal, which includes a new uniform for Furia's "Counter-Strike: Global Offensive" team, will be a multi-year contract.

Nike also has a sponsorship deal with TJ Sports – a joint venture between Chinese videogames firms Tencent and Riot Games – that will see the firm's League of Legends Pro League team exclusively compete in Nike clothing until 2022.

Athleticwear brand Champion has also entered the online gaming scene, introducing its first ever esports line in May. The company worked with esports firm Ntwrk to design jerseys, hoodies and T-shirts complete with team branding, all of which are being sold by Footlocker.

In Europe, soccer team Paris Saint-Germain (PSG) offers merchandise specifically for esports fans, including jerseys worn by its own professional esports players. The club also sells branded gaming chairs that were "conceived to fit the needs of the professional players from the PSG esports team during their long gaming sessions."

Meanwhile, Adidas signed a sponsorship deal with Danish esports firm North last year.

As well as being able to invest in K-Swiss' One-Tap, esports fans can purchase a range of quirky products to make gameplay more comfortable.

Japanese consumers can buy a neck stand for their Nintendo Switch to enable hands-free gaming, while Danish company Envavo sells a "Heatbuff" designed to prevent cold hands from hampering performance in "critical moments" of gameplay.

Esports players can also buy gaming gloves for $35 on Amazon that are designed to "eliminate slippage" caused by sweaty palms.

There's also a big market for gaming chairs, with some of the most expensive options available on Amazon for more than $1,275.