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Why The Intersection Of Music And Esports Is Bigger Business Than Ever

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On Tuesday, Drake and Scooter Braun continued their reign as influential trendsetters in the music business when they announced an investment in 100 Thieves, one of Forbesmost valuable esports companies.

But when it comes to the intersection of music and esports, Drake and Braun are far from first movers.

Artists such as Steve Aoki, Jennifer Lopez and Imagine Dragons already own stakes in esports leagues. Major label Universal Music Group currently has two active esports ventures: an artist-marketing partnership with Luminosity Gaming in Canada, and the open-submission esports label Enter Records, a joint venture with German esports production company ESL.

In terms of live performances, esports tournaments regularly host artists like Metallica and Mick Jenkins to perform for captive audiences during breaks and opening ceremonies. League of Legends developer Riot Games, which has a total of seven-in house composers as of press time, has worked with artists like Zedd and The Glitch Mob on bespoke tournament anthems since 2013.

Notably, at least four different festivals dedicated specifically to the combination of esports and music have taken place or been announced so far this year: Hyperplay by Riot Games and MTV, PLAY Festival by Insomniac, the ICBC e-Sports & Music Festival by the Hong Kong Tourism Board and the Harrisburg University Esports Festival by the eponymous university and iHeartMedia.

Why are music and esports merging and gaining more momentum now than ever before? It’s a two-way exchange: on one hand, esports leagues and game developers are blooming into full-fledged media brands, and are looking to the music business for both financial and cultural capital. Recorded music generated $17.3 billion globally in 2017, while esports revenues are projected to reach $906 million by the end of 2018—far behind music but likely not for long.

On the other hand, off of a streaming high that has returned their industry to a state of growth, music companies are looking to diversify their revenue, experiment with new audiovisual technologies and tap into the power of highly engaged subcultures. Esports checks off all of those boxes—and we’ve only seen the beginning of what’s possible.

Why do esports companies want more music?

According to gaming market research firm Newzoo, 40% of this year’s esports revenue will come from sponsorships, 18% from media rights and just around 11% from merchandise and tickets.

That distribution of income is likely to change over the next five years, in part because of esports' burgeoning media ecosystem. Aside from game developers and publishers, there are teams and tournaments; producers and advertisers surrounding said tournaments; and digital media networks that support livestreaming and community development around said games and events. These latter networks range from conglomerate-owned YouTube and Twitch to more niche news outlets, platforms and services like Fanreact and DBLTAP.

Hence, the in-game experience presents only one of several ways that esports companies can invest meaningfully in music and vice versa.

“We make dozens pieces of music every year and have a back catalog of hundreds of tracks, but League of Legends actually contains only three songs in-game,” Viranda Tantula, Creative Lead at Riot Games, told me. “Everything else we compose to support the experience holistically, through channels like live esports tournaments, broadcasts, narrative and editorial content. Music acts as a connective tissue between all of those things.”

Esports-branded music also often performs well on streaming services and could become a significant revenue stream for game developers who own stakes in the tracks' master rights.

For instance, Riot Games acts as both the label and distributor for most of its own game soundtracks and esports anthems and has direct relationships with streaming platforms like Spotify, where the official League of Legends account has over 1.9 million monthly listeners. The anthems for each League of Legends World Championship seem to be gaining more popularity with every year: as of press time, “Legends Never Die,” the 2017 World Championship anthem, has over 38.1 million streams on Spotify, while the 2015 anthem "Worlds Collide" has 17 million streams.

As with traditional sports games, live esports tournaments take place regularly throughout the year and require anthemic, energetic music to keep viewers and players entertained and motivated.

“The [FIFA] World Cup creates its own song every four years. We’re doing that every single year,” Marc Johns, Global Esports Marketing Lead at Riot Games, told me. “It’s a platform to speak to our players and our audience, to craft a unique and exciting message that hopefully helps them feel proud to play this sport.”

Why do music companies want more esports?

When evaluating potential marketing, distribution and licensing partners, major-label execs will pounce on anything with meaningful, engaged reach and scale.

On the live entertainment side, flagship esports tournaments certainly deliver the eyeballs that many artists and labels want, surpassing even some of the biggest music festivals. For example, Beyoncé’s historic headlining performance at this year’s Coachella Festival helped the event attract a record 41 million viewers in total to its YouTube livestream, a 75% increase year-over-year. But that’s still only around half of the 80 million viewers who watched the 2017 League of Legends World Championship semifinal round between teams SK telecom T1 and Royal Never Give Up in Shanghai, China—and those viewers tuned in over the course of around seven hours, not two weekends.

Given this level of digital engagement, there is also a natural connection between esports and music streaming, the latter of which accounted for 38.4% of recorded music revenue in 2017. We are already seeing this connection come to life on Twitch, which has beefed up its in-house music strategy team and worked with labels like Monstercat, Spinnin’ Records, Dim Mak and Fool’s Gold on building a legal, royalty-free music catalog for live-streamers. Artists like Drake, Post Malone, Danny Brown and T-Pain have also made Twitch a crucial pillar in their fan-engagement strategy, for both music lovers and gamers.

Spotify, which reported 83 million paid subscribers in Q2 2018, also has integrations with the Xbox One, PlayStation 4 and other gaming consoles, which can create meaningful incremental revenue for labels as the esports scene continues to rise.

“Hardcore esports players can play for 10 to 11 hours a day, and games will heavily influence what music they listen to,” Gustav Käll, Head of Gaming Partnerships at Universal Music Group and one of the execs behind the Enter Records launch, said during an esports panel at the Reeperbahn Festival in September. “A community of this size can actually reshape the sound of our generation.”

In terms of business models, the online gaming industry at large carries valuable lessons for music when it comes to price flexibility: the former was an earlier adopter of freemium and free-to-play services, as well as in-game micro-transactions (e.g. for skins in League of Legends).

Esports are no exception when it comes to shedding light on potential alternative revenue sources and contextual commerce for recorded music. One example that Käll shared at the Reeperbahn Festival involved TheFatRat, a German electronic artist signed to Universal who made a “music pack”—the rough equivalent of an EP in the music world—available for purchase in the DOTA 2 store for 4.4 euros apiece. The pack, titled Warrior Songs, had already been available for streaming on Spotify and YouTube for two months, but still sold 25,000 downloads through the DOTA store in just the first three days.

TheFatRat often samples sounds directly from video games in his work (in the spirit of subgenres like chiptune), which presents a particularly ripe and organic opportunity to cater to hybrid music-esports fans.

“I think if an artist like that came to us [at UMG] five or six years ago, we would have never let him into the building,” Käll told me over the phone. “But now it makes so much sense because the community is so big.”

Okay, so it's big. How do I get involved?

Today, there are two main ways people are capitalizing on the intersection of music and esports: bringing in outside musical expertise to invest directly in leagues and physical event infrastructure and tailoring musical talent scouting and development deliberately for esports communities.

1. Investing in esports leagues and event infrastructure

As mentioned at the outset of this article, several artists now own stakes in esports leagues, and gaming conventions like DreamHack and TwitchCon as well as traditional concert promoters like Insomniac are deliberately weaving music and esports together in their event programming.

The business of brick-and-mortar esports arenas is also ballooning, with production and construction companies like China-based Allied Esports dedicating themselves solely to the scene. In the U.S. alone, new esports arenas have been announced in cities like Las Vegas, Nevada; Houston and Arlington, Texas; Oakland and Manhattan Beach, California; and Winter Park, Florida (next to Full Sail University).

Considering that each of these arenas will likely hold several events a year—and that the biggest esports tournaments can attract dozens of millions of viewers globally—some artists and record labels believe that music can help transform tournaments into definitive, must-see pop-culture moments that even rival the Super Bowl.

“Sometime way back, someone came up with the concept of a halftime show: an entirely separate entertainment segment within a game that would serve viewers with an elaborate musical and artistic production,” said Käll. “Now, the Super Bowl halftime show is the most valuable ad spot in the world. What I want to do [as part of Enter Records] is to develop a format similar to a halftime show, except for us it’s the Opening Ceremony."

Universal Music Group and Enter Records will play a critical role in live entertainment at ESL One Hamburg, which kicks off tomorrow (October 26) and is the largest DOTA 2 tournament in Europe. The opening ceremony of the tournament's grand final will be "a complete audiovisual experience, with pyrotechnics and a musical performance by TheFatRat, right before the final game of the weekend," said Käll.

2. Investing in musical talent that caters to esports communities

While the intersection of music and esports has been thriving for several years, the practice of cultivating musical artists specifically for esports marketing is still in its relatively early stages.

What type of music works well for esports? There's a stereotype that only electronic and hip-hop artists will fit—which is somewhat rooted in reality, in that the high-energy in-game and spectator experiences around esports fit more organically with similarly pulsating, anthemic backing tracks.

At the level of top tournaments like those for League of Legends, producers are more drawn to mainstream music genres that can cater to international audiences. “The media from our esports events have to be distributed across dozens of regions globally, many of which speak different languages,” said Johns. “We’re consciously trying to find a medium and musical style that is more relatable across the board. We don’t use it to limit ourselves on creative exploration, but we need the right artist to help convey the message we’re going after in an effective way.”

That said, there is no official limitation on genre, and the music featured in esports content is gradually diversifying along with its audience. For instance, Spotify recently launched a branded “Party on the Payload” playlist in partnership with Activision Blizzard’s Overwatch League, which featured a wide range of genres and styles—everything from reggaeton (“Despacito”) and pop-country (“You Belong With Me”) to classic rock (“Bohemian Rhapsody”) and even troll-friendly ‘80s rock (“Never Gonna Give You Up”).

The ideal energy level for esports music also varies somewhat by country. According to Spotify data released in August, average beats per minute (BPM) for music streamed through gaming consoles range from around 115 BPM in Germany and Sweden to around 140 BPM in the U.S. and Japan.

“The music that Riot Games puts out is a good example of how genres are blurring—how do you categorize that music?” said Tantula. “It’s not as simple as saying that this is definitely an alt-rock track or only an electronic track.”

From an A&R perspective, esports may be dark-horse terrain for talent scouts because many aspiring music producers are also passionate gamers, and vice versa. Hence, alongside partnerships with A-list musicians on releases tailored for esports, Universal Music Group and Enter Records are hoping to source talent directly from esports players themselves by embracing an open submission process for music, following in the footsteps of YouTube-borne labels like Trap Nation.

As of press time, over 600 submissions have already been sent to Enter Records via its SubmitHub page. The label plans to sign artists on a single-by-single basis, rather than to binding multi-album contracts,and is "looking to onboard two more A&R people before the end of the year" to handle the inevitable volume of submissions, according to Käll.

Gaming audiences also tend to be earlier adopters of both technology and culture, and therefore can serve as powerful ambassadors for movements that resonate with them. But developers warn that it can easily go the other way around, too: if they sense an artist or brand is cashing on esports merely because of hype but with no pulse on the deeper culture, they will withdraw their support.

"Gaming fans and audiences are highly attuned to authenticity, and brands can't just try to pull a fast one on them for money," said Tantula. "Unlike with a Super Bowl halftime show, one key factor for us in choosing our music is that we're approaching it with a creative-first mentality, as opposed to strictly thinking about partnerships or brand reach."

"We never go out to an artist with the viewpoint that just because they have a big name, they can help bring more viewers into our space," agreed Johns. "For the artists we choose to work with, it's really important that we give them the opportunity to immerse themselves in the space and garner more empathy for the culture that surrounds gaming. People who self-identify as 'gamers' spend the vast majority of their social time playing or watching games. It's a core component of who they are, and it's important that the creative outputs surrounding that experience truly speak to them."

With a combination of venture capital and dedicated talent development, the underlying business infrastructure for bringing both music and esports into a new, mutually transformative era is already underway—and, with the right messaging and sensibility, will likely serve as a new gravitational center for wider global pop culture.

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