Pandemic Increases Appetite for E-sports Merchandise

Brands such as Puma and Champion have embraced the market and created collections for professionals and their fans.

As fans and the media continue to adjust to a world without major — or even minor — league sports, e-sports is taking on a new reality.

ESPN featured 12 hours of gaming on April 5, including the first round of its NBA 2K tournament that featured as players only NBA athletes such as Kevin Durant, Trae Young, Zach LaVine, Rui Hachimura and eventual winner Devin Booker. (This isn’t to be confused with NBA 2K League, a professional e-sports league founded in 2018 by the NBA and Take-Two Interactive Softwear that features gamers who compete virtually.)

This week, ESPN also aired a tournament for Riot Games’ Valorant, a free-to-play PC game that was made available as a beta version on April 7, and in late March, it saw record ratings for its inaugural eNASCAR Pro Invitational iRacing Series.

Meanwhile, the League of Legends tournament and Overwatch and Call of Duty leagues moved their in-person match-ups to online competition, and gaming organizations such as FaZe Clan and 100 Thieves are engaging with their community through tournaments and content (However, League of Legends postponed its Mid-Season Invitational global tournament and canceled it on Thursday).

Long stereotyped as the domain of pimply youth locked in their darkened bedrooms or basements playing video games for hours, e-sports and gaming have actually been big business for year — proven last summer when teenager Kyle Giersdorf won $3 million for finishing first at the Fortnite tournament, which gave out a total of $30 million in prize money. With more and more consumers taking up the games even before the coronavirus forced everyone into lockdown, apparel brands have been eyeing the fast-growing market for some time.

Brands such as Champion, Puma, Adidas, Nike, K-Swiss, Mitchell & Ness and others have created apparel and footwear collections for both the players, many of whom have enormous followings, as well as their fan base. Sales of Champion’s limited-edition collection for gaming company HyperX, for example, sold out in one day last fall.

Jewelry lifestyle label GLD produced pieces with professional Fortnite player Mr. Savage as well as gaming organization FaZe Clan and its member FaZe Banks.

“I think it’s really going to get bigger honestly,” GLD founders Christian Johnston and Dan Folger said about gaming and e-sports. “I feel like fashion is going to follow at some point.”

Despite worldwide shutdowns due to the COVID-19 pandemic, many of the collections planned for spring for e-sports teams and fans have already been produced. And later drops are not seen being impacted by production delays that are impacting other industries. Plus, since e-sports players are used to being online anyway, and generally skew younger, buying these collections via e-commerce should come easily.

Targeting this audience can ultimately represent big bucks for brands. Newzoo, a games and e-sports analytics company, recently updated its projections for global and regional e-sports revenue in 2020, bringing the expected volume down slightly to $1.059 billion from $1.1 billion. But for 2023, the forecast is for sales to rise to $1.598 billion from $1.556 billion.

The firm stressed, however, that the slightly lower number this year “has nothing to do with decreased demand (the audience is not smaller) or decreased supply (the number of events organizers want to put on is not fewer). Rather, due to the ongoing COVID-19 outbreak, many events have been postponed, canceled, or moved to online formats.” This “temporary cease” in e-sport activity, or a transition to digital-only events, is what led to slightly lower projections, Newzoo said.

The impact of the coronavirus will also lead to lower sales of merchandise and tickets, which the company said are now expected to be $106.6 million, down from $121.7 million. But again, it doesn’t mean a drop in demand. Instead, most media rights and sponsorship are broadcast-driven so canceled in-person events, where merchandise would be sold, led to the lower numbers.

In February, Newzoo estimated that the total e-sports audience will grow to 495 million globally this year. E-sports fans account for 222.9 million of this number and are projected to grow at a compounded annual rate of 11.3 percent to 295.4 million by 2023.

YouTube introduced a separate gaming app in 2015 and integrated it into main site last year. According to RQ, YouTube’s partner agency that works on marketing and programming, the web site’s gaming content typically ranks in the top three of all forms of content. In 2019, more than 30 million channels uploaded gaming content and the channel itself has 84 million subscribers. Beginning in 2020, YouTube Gaming became the official streamer of the Call of Duty and Overwatch Leagues and Hearthstone Esports.

But while e-sports are about the only sports on TV right now (unless you count reruns of decades-old NBA playoff games), there are few indications that this sub-culture will ever move truly into the mainstream. A recent survey conducted by the research firm Piplsay found that only 20 percent of respondents said they have turned to e-sports with traditional sports on pause, while nearly 70 percent said they did not and 10 percent said they were already e-sports enthusiasts. Asked which sport they followed the most, the respondents still voted mainly for traditional sports, with 27 percent saying the NFL, 19 percent the NBA, 13 percent Major League Baseball and only 10 percent saying traditional e-sports such as DOTA 2 or Counter-Strike.

Additionally, when asked if they purchase e-sports-related apparel or footwear, over 61 percent of respondents said they did not, while 38 percent said they did.

Matt Powell, senior industry adviser of sports for the NPD Group, is far from bullish about the market. He said none of the product drops have been “material,” and he doesn’t expect these products to become “a commercially important part of the market.”

However, Powell admitted there is a strategic reason on entering the sector — to reach its core fans of teenagers and young adults. Launching apparel for gamers is more about “identifying with the interests of the core consumer,” he said.

David Robertson, director of brand marketing for Champion, said the brand had identified e-sports as an opportunity about 18 months ago as it sought to further solidify its standing with a “young, very digitally savvy consumer” for whom this was a “passion point.”

“This is a new way of connecting and engaging with them and what they wear when they’re competing and gaming. It makes a lot of sense.”

Tyler Lewison, general manager of Champion Teamwear, said the company’s goal was to come into the market “in an authentic way,” so it partnered with some of the major companies in the space. One of the first was with Activision Blizzard and its popular Overwatch League, where Champion created limited-edition product for its championship event in New York last year. The product sold out immediately.

Looks from the HyperX x Champion collaboration.

Since then the brand has also partnered with HyperX, the leading headset and keyboard company, to create a limited-edition capsule of T-shirts, hoodies and crewneck sweatshirts that was available mainly online as well as at some late fall events, and gear for both influencers and fans who participate in FaZe Clan.

Champion also outfits teams such as Dignitas with their official jerseys, and works with organized high school and college e-sports groups. It is also the official outfitter of the NBA 2K league where the players and their avatars are all outfitted in Champion, and the brand produces fan gear.

Last week, Robertson said, Champion dropped a new collection of NBA 2K collection with 10 styles of sweatshirts, T-shirts and shorts that is currently being sold on its web site.

Much of the merchandise would be available at events as well as Champion stores and other retailers such as Foot Locker, but in light of the store closures, it’s now being sold exclusively online. But that’s not hurting sales, they said.

Champion was an early adopter of the e-sports movement.

Lewison said Champion continues to expand its footprint in the e-sports space and is readying a number of limited-edition drops for later this year. They acknowledged that with so many factories around the world closed, Champion has had to pivot where it produces its collections temporarily. There is a teamwear facility in Manhattan, Kan., that is currently closed, but plants in Central America and Asia have picked up the slack, Lewison said. “The Hanes supply chain is all around the globe,” he said of Champion’s parent company.

That’s a good thing because with the pandemic, the appetite for e-sports today is even more robust.

“Everybody is at home and looking for ways to entertain themselves,” said Robertson. “And gaming is more popular than ever.” Lewison added: “Consumers are looking for something real-time that they can consume and engage with. There’s a tremendous amount of opportunity if you pick the right partners, and we see this as more than just a temporary uptick.”

Daniel Kelley, corporate marketing director for HyperX, said the “stigma of gaming is that it’s not a fashionable industry.” But its consumers still like to wear nice clothes that are comfortable and allow for movement, and the brand’s first apparel collection with Champion sold out in one day, he said. “We’re talking about doing more with them and others. The industry is ripe for doing really cool things both from the hardware side as well as in apparel.”

In January, the Overwatch League, a global professional e-sports organization created by Blizzard Entertainment, tapped streetwear designer Jeff Staple to create a kit for its players. The uniforms for Overwatch’s 20 teams feature elevated fabrics, graphic applications and side gussets for ease of motion. Staple described the kits as “not only specifically engineered to perform to players’ specifications, but they’re also designed to look great outside the arena.” The initial drop consisted of short- and long-sleeve jerseys, a jacket, hat, beanie and compression sleeves.

The Jeff Staple-designed kits for Overwatch League.

The merchandise is sold by Fanatics and a company spokesperson said sales on the Blizzard Gear Store were up 25 percent month-over-month from February to March.

Daniel Siegel, vice president of licensing for Activision Publishing and Activision Blizzard Esports, said the partnership with Staple has been successful because of his ability to intersect gaming and fashion. Staple created a silhouette that is “truly unique to e-sports,” similar to those offered by professional hockey, basketball or baseball organizations, allowing the players and their fans to have a distinct look.

“A lot of other merchandise is just a take-down of soccer jerseys, it’s not that special,” he said. “But Jeff was able to bring the style of the street into the e-sports world and the consumer is really interested.”

In addition to the Staple-designed Overwatch merchandise, the company works with other well-known apparel and accessories brands on product such as hats, socks, jerseys, jackets, mugs, pennants and other memorabilia. These include New Era, Stance, Starter and Mitchell & Ness.

“We’re always looking for the right partner and brands,” said Siegel, who stressed that even in light of the pandemic, there’s been no shortage of merchandise to sell. “All the companies we work with are used to the ups and downs of the sports world,” he said. “That’s why we picked the partners that we did.”

Puma recently inked a deal with Los Angeles-based e-sports group Cloud9 to provide the official game-day gear for players and to also produce replica gear for fans.

A look from Puma’s collection for Cloud9.  Flannery Underwood

Matt Shaw, senior strategist for e-sports and brand innovation for Puma, said the first collection of “lifestyle essentials” launched last November and included T-shirts, hoodies, leggings and joggers. “It went really well,” he said, adding that the spring line that dropped in March was even more successful. “It was the most well-received apparel collection in e-sports,” he claimed, without providing sales figures.

The plan is to offer a smaller collection in June and then a larger drop for fall.

He admitted that like other apparel brands, Puma is having some production issues as a result of the pandemic, but it is still moving ahead. “We got lucky, we’d already received shipments for March and so far there has been no disruption in supply.”

Shaw said Puma will continue to work with Cloud9 and its teams, which includes the popular League of Legends, and may expand its relationship with the e-sports community even further in future by possibly sponsoring leagues or events or adapting the successful apparel strategy it discovered in North America and expanding that internationally.

And there may be even more business potential in the gaming world.

“A lot of brands look at gaming as a hobby, but fundamentally, that’s wrong,” he said. “It’s a language, a medium in which people communicate. It’s more than just entertainment. It’s part of the fiber and fabric of their daily lives. Ignoring gaming is like ignoring the Internet.”

Nike, too, has been active in the e-sports world. The company sponsors organizations in China, Spain, Germany, South Korea and Brazil and in 2018 it inked a deal with the New York Excelsior team of the Overwatch League to outfit players. It has since expanded to include the New York Subliners, a local Call of Duty franchise, which it is also dressing. Players on both teams are working with Nike trainers to improve their fitness.

Nike’s LeBron 17 sneaker for NBA 2K.

Beyond that, the brand has begun offering gamer-related sneakers on its SNKRS app. So far, the $110 Nike PG 2.5 ‘PlayStation’ shoes for NBA athlete Paul George holds the record for most interest — six-figure “notify me’s” on the app. The brand declined to reveal how many were sold.

And last fall, Nike’s SNKRS app and the NBA 2K teamed up to offer Gamer Exclusives, limited-edition sneakers that are unlocked through play in the MyPlayer Nation game created by the two companies. The first was a purple LeBron 17 that was offered first as a digital option for a player’s online avatar and then offered for sale — for real — through the app. Other models including the Adapt BB 2.0, Giannis Zoom Freak 1, Kobe AD and KD 13 were also launched with three more to come, Nike said, including the PG 4 “Digi-Camo” GE, which is being offered starting Saturday, April 25.

“A few months ago, we built an experience with 2K that allowed a player in their game to link their account to the SNKRS app and unlock high-heat LeBrons when they reached a certain scoring level,” said Ron Faris, vice president of SNKRS digital product. “The experience was so authentic to both audiences that we couldn’t resist doing it again. There’s an organic overlap between passionate basketball e-gamers and our sneaker-obsessed audience in SNKRS. And oftentimes, it’s great to create an experience that blends the best of both worlds while inviting a new audience to join our membership offering on SNKRS.”

John Marcelo, director of strategy for B/R Kicks, the sneaker and lifestyle division of the digital sports media company Bleacher Report, said that with traditional sports on pause, “more athletes are taking to Instagram Live and online gaming platforms like Twitch to maintain that connection with their fans, audience, and fellow teammates.”

To capitalize on the popularity, brands are offering products both within the games themselves as well as through online product launches. “Nike has done an extraordinary job bridging the gap between virtual and real-life — they outfit their signature athletes in NBA 2K with their marquee sneakers, then take it a step further by making certain colorways available for purchase after players complete challenges within the game,” Marcelo said.

While this is still a new category, Nike as well as Adidas “have proven that there is synergy between the two worlds. Ninja’s [a popular professional gamer] first sneaker launch with Adidas sold out last December. For the 2019-2020 NBA season, Nike teamed up with NBA 2K to launch a collection of 10 sneakers, including a special LeBron 17 colorway that LeBron would’ve worn during the NBA Playoffs,” Marcelo said.

Louis Vuitton in 2019 unveiled a partnership with League of Legends and unveiled a trophy case for the Summoner’s Cup, the prize awarded to the winner of the League of Legends tournament. Nicolas Ghesquière, Louis Vuitton’s artistic director of women’s collections, designed a capsule collection inspired the game and skins — or outfits — for characters in the game.

Zenni, a direct-to-consumer optical brand, is also high on the e-sports community. Earlier this month the company became the official eyewear provider of the Houston Outlaws and Pittsburgh Knights teams and renewed a deal with the Golden Guardians that was established last year. As part of the deal, Zenni has launched its own social media gaming channels to promote upcoming events, giveaways and limited-edition product collaborations. It will also increase its activations at in-person events, when they resume. Zenni produces Blokz, a blue light blocking lens, that it is marketing to players for their eye health.

Sean Pate, brand communications officer for Zenni, said the company believes the “e-sports potential is exploding,” and its Blokz product is well suited for participants.

In the past, he said, most glasses were expensive and better suited for cyclists than gamers. “They were not adopted by the marketplace at all,” he said. But Zenni’s $25 model, offered in more than 3,000 style options, has proven to be popular.

Pate said that because Zenni is an online brand, sales haven’t been negatively impacted by the pandemic, and in fact, “we’ve seen a massive lift in sales in the last 10 days.”

And even though the glasses are made in China, Zenni hasn’t experienced any manufacturing or shipping delays. “Our factories shut down for 10 days in February but quickly reopened, so we’re in full production now.”

Pate added: “We’ve been extremely pleased with our initial foray into e-sports and are looking forward to collaborating more with the community to educate and reinforce the importance of eye protection when gaming. Whether you’re a pro player or casual gamer, Zenni Blokz protect your eyes from blue light and help reduce eye strain to improve performance.”

FaZe Clan has held pop-ups for product drops over the years, some of which had been shut down due to the large number of fans who turned up. E-sports organization 100 Thieves in January opened its first store in Los Angeles that is part of its Cash App Compound, a 15,000-square-foot facility where 100 Thieves players can practice their games and create content. The coronavirus may have slowed production down for the organizations, but business has been running well.

“We’ve been fortunate to see no issues with design and production in the last month,” said 100 Thieves president and chief operating officer John Robinson. “We work with a variety of designers and factories and haven’t been impacted to date. Our 2020 apparel program is proceeding as planned but we’re closely watching the news and the broader retail environment. We want to be thoughtful about releasing new collections to our community given everything that’s happening.”

Robinson said that one collection release slated for March was postponed, because “we felt it wasn’t the right time for an online sale,” but it was moved to early April and repurposed as a charity opportunity. A number of products were sold to raise funds for COVID-19 relief, including a unique colorway of the 100 Thieves jersey, and helped raise $114,000 for the CDC Foundation.

FaZe Clan, which recently struck a global direct-to-consumer product deal with Ntwrk, delayed one collaboration and a pop-up to support its collaboration with football club Manchester City, but chief executive officer Lee Trink said that most of its collaborations are still on track.

“Design hasn’t been impacted although production and fulfillment slowed down,” he said. “From a design standpoint, we’re still cranking. Production in Los Angeles is restricted so we’ve shifted to other parts of the country.”

Dre Hayes, cofounder of The Foundation and president of Kappa U.S.A., facilitated Kappa’s collaborations with FaZe Clan. He said “From a supply chain standpoint, e-sports product is made on blanks and printables, or on demand. Most e-sports business is done through e-commerce transactions. I don’t see how e-sports is going to suffer.”

In early March before the lockdown, e-sports organization Andbox launched collections for Thomas “ZooMaa” Paparatto and Dillon “Attach” Price, two players on its Call of Duty team, the New York Subliners, and said production has not been disrupted.

“We have been working as a team really closely and haven’t seen a lot of hiccups on the design and production side,” said Andbox vice president of consumer products and merchandising Collette Gangemi. “We have a pretty long calendar and have been working diligently to be able to launch our apparel.” She added that its production in Northern China was not disrupted in January and February.

New York Subliners player Thomas “ZooMaa” Paparatto in his Andbox collection.  Chris Ayala/Andbox

D-Cave, the lifestyle gaming brand from Stefano Rosso and Furio Giraldi, is launching its product through weekly contests and with partnered streamers. “This is very effective and creates traffic to our site and social media channels,” Rosso said.

However, further collections may be delayed. “We are facing some problems as in Italy most of our suppliers have been closed and will probably go back to a decent regime in a couple of weeks. That is the reason why we are thinking to postpone most of our new collection launches to Q3 and Q4.”

The organizations have been working remotely, with the Andbox team sharing samples via mail and having video calls for fittings, and they each separately shared how they’ve benefited from being digital-first companies. They each have players that have produced content independently and are well acclimated to competing online.

“We have a digital-first product, so we have something very compelling to fall back on and an audience that is very familiar with it,” said Andbox cofounder and president Farzam Kamel. “There’s a stark difference between this industry and different sports, because this ecosystem is on 24/7. Our athletes are on and directly communicating with fans and audiences. You’re seeing as much of them now as before the season was halted.”

Hayes added, “What makes e-sports different is you don’t even have to leave your house. You’ll never be able to play against [pro sports athletes], especially in something competitive, but in e-sports you can. What I think is going to happen with e-commerce merchandise and brands is that they’re actually going to get bigger.”

Carl Stevens of RQ said the same of fans of gaming streamers. “One of the coolest things about YouTube is the relationship aspect,” he said. “These creators have relationships with their fans that go deeper than fans would have with Steph Curry or LeBron James. As streamers are making videos, fans are learning about them and their everyday lives.”

He added that streamers and content creators turned to creating merchandise as another source of revenue that isn’t dependent on advertisers. Their fans tend to buy to support the streamer, but also because of the connection built over time from watching the content creator share their lives. “Oftentimes, people buy merch for the sole purpose of supporting the creator. Merch is all about community building. You’re getting gameplay and their lives, and that’s relationship building.”

In noncompetitive gaming communities, new Nintendo title Animal Crossing: New Horizons, which launched on March 20, has risen in popularity despite Nintendo Switch consoles being sold out worldwide. Getty Museum added an art generator tool in the new game that allows players to make clothing featuring artworks by Van Gogh, Monet and Renoir. 100 Thieves released its entire apparel collection in the game as well.

“We saw our fans all making their own versions so we thought a great way to say thank you would be to release official digital versions,” Robinson said. “We want to be thoughtful about releasing new collections to our community given everything that’s happening.”

But while this time is breeding opportunity, Gangemi asserts that this is a sensitive time for all and Andbox has taken this into account for new product launches. “We’re very sensitive to everything in the world right now,” she said. “Communicating that we do care has been really important for this organization. We view our upcoming collections as an opportunity to do some good in our community. We will launch things differently than if things are usual.”

Kamel added, “It’s not business as usual for any business. We consider ourselves very fortunate, and it’s important to have perspective in that regard.”

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