Twin Cities e-sports companies riding video gaming surge

The disruption of traditional sports during the pandemic and the increase in people streaming from mobile devices has resulted in more money — and viewership — for e-sports.

Audiences for e-sports — otherwise known as competitive video gaming — are expected to grow 8.7% this year to 474 million. Revenue is projected at about $1.1 billion, a 14.5% increase from 2020, according to market researcher Newzoo. Of the revenue, $833.6 million will come from media rights and sponsorships.

"From a fan perspective, there's no question that when all traditional sports had to shut down, it was an opportunity for e-sports to be more on the public consciousness," said Brett Diamond, chief operating officer of Eagan-based Version1, a pro e-sports organization owned by the Wilf family, which also owns the Minnesota Vikings. "The key coming out of the pandemic and going forward for our industry is continuing to engage the new fans that came in during that period."

The Twin Cities has a growing e-sports industry led by the area's pro sports franchises.

Version1 launched two years ago through a partnership between the Wilfs and serial entrepreneur Gary Vaynerchuk. The company operates three teams: Minnesota Røkkr, which is part of a league playing Call of Duty; a team playing Rocket League, which is more family-friendly; and most recently, a team playing in the Valorant Champions Tour.

Earlier this summer, Version1 announced a multiyear sponsorship deal between Minnesota Rokker and USAA, a provider of insurance, banking, investment and retirement services to members of the U.S. military. The deal is the company's largest to date.

Year-over-year sponsorship revenue for Version1 has more than doubled, and Diamond expects the organization will announce three to four more sponsorship deals over the next 18 months.

"I honestly believe that in five years, maybe less, every brand with a significant marketing budget will think about e-sports the same way that those brands think about traditional sports today," he said.

The company also recently launched V1sionaries, a platform for female gamers that has already hosted cash-prize tournaments.

It also is opening its new headquarters at the Vikings' TCO Performance Center in Eagan to the general public. Fans that are attending Vikings training camp can play on some of the company's gaming systems and receive free apparel and accessories.

Rising viewership

In the second quarter of 2020, when live traditional sports were in lockdown, streaming platform Twitch reported a 56% viewership rise year-over-year, according to a report by Milwaukee-based law firm Foley & Lardner and the Esports Observer.

Specifically for the NBA 2K League, a 23-team professional e-sports league where video gamers compete in 5-on-5 play in the NBA 2K sports video game franchise, league broadcasts on Twitch were up 69% year-over-year in average unique viewers per stream, and up 55% year-over-year in average minutes watched per stream as compared to the 2019 season.

"It became an opportunity for e-sports franchises like ours to garner new audiences and deeper engage their existing audiences," said Ryan Tanke, chief operating officer of the Minnesota Timberwolves and Minnesota Lynx.

The Timberwolves have an NBA 2K team, T-Wolves Gaming. It was formed in 2019, a year after the launch of the NBA 2K League, a joint venture between the NBA and New York-based Take-Two Interactive Software Inc. The NBA 2K video game series has sold nearly 110 million units worldwide, the league said.

T-Wolves Gaming won the 2K League championship in its first year, giving the Wolves momentum for growing its list of sponsorship partnerships. The team's inaugural sponsor was the Minnesota Lottery, and it has added Bud Light and Pagoda Asian-style snacks.

Through partnerships, brands are integrated into the livestreamed video game competitions, which can be in the form of signage on the digital courts and venues, similar to normal Timberwolves or Lynx games, and on the jerseys of both the in-game avatars and T-Wolves Gaming players.

The team's revenue from sponsorship deals is growing about 25% annually and Tanke hopes that growth will continue as the NBA 2K League matures.

At the corporate level, NBA 2K League has sponsors like Anheuser-Busch, AT&T, Champion athletic wear, YouTube and Sony Interactive Entertainment, the company behind video gaming system PlayStation.

"The space continues to show growth, every single year," Tanke said. "The growth of both audience and reach, and the partners that are associated with it, are really positive signs for both our team and the industry."

The NBA 2K League and its teams have more than 2 million combined followers on social media platforms while NBA 2K League content has generated more than 441 million video views across all NBA and NBA 2K League social media platforms. Some of the competitions are streamed on ESPN2.

"There's distribution of these games through Asia and India, so there's a tremendous global opportunity to continue to connect people to the broader NBA platforms and the growth of the game of basketball and, of course, the explosion of e-sports," Tanke said.

A growing industry

Juniper Research expects there will be more than 1 billion e-sports and gaming viewers by 2025. The demographic of watchers is between 18 and 34 years old, according to Nielsen, who says that age group accounts for 75% of the U.S. e-sports audience.

Michael Zweigbaum, CEO of Minneapolis-based Wisdom Gaming Group, is looking to capitalize on that generation's interest in gaming.

Wisdom Gaming, a digital media company specializing in e-sports content and experiences, was created in 2019. Last year, the company announced a $3 million capital raise and acquired two gaming organizations.

In November, Wisdom Gaming hosted more than 400 people at Bat & Barrel at Target Field to watch the League of Legends Worlds Finals. The online battle arena video game, one of the most popular in e-sports, was developed by Riot Games, Wisdom Gaming's largest client. Zweigbaum said it was the largest gathering of e-sports spectators in Minnesota.

Wisdom Gaming is hosting another League of Legends watch party, this time on Aug. 29 at Mall of America. Zweigbaum hopes to continue to grow his company's presence at MOA, as well as other venues like Target Field.

In 2019, Wisdom Gaming acquired HeroesHearth, a social network for fans of online video game Heroes of the Storm. Last year, the company acquired Alpine Esports, a Minneapolis-based professional e-sports organization specializing in competitive gaming for Rocket League, and Gold Rush, a community content and tournament brand.

In just two years, Wisdom has grown its audience to more than 250,000 people across its networks, who dedicate almost 2 millions hours of viewing time per month, Zweigbaum said. The company, which already has about 60 employees, is searching for a studio in the Twin Cities for hosting and broadcasting live events before a live audience, Zweigbaum said.

After working in the metal-recycling business for 20 years, Zweigbaum saw the potential in gaming after noticing how it affected the social interactions among his three sons.

Almost all of his 12 year-old son's friends are gamers, he said.

"When these 12-years-olds become 20-year-olds, it's going to be ubiquitous," he said.