REV FOR REVENUE
Racing industry is seeing a surge in cash in simulated route.
It takes more than gasoline to make a race car run. It requires money. And money requires sponsors. And sponsors require spectators who they hope will become customers. Which became a problem for motorsports when COVID-19 shut down tracks worldwide early last year. The cash drought put teams, tracks and race series in danger of extinction.
The industry turned to an emerging phenomenon — simulated racing. In these highly realistic video games, cars obey the laws of physics and race on reproductions of real-life tracks that are accurate down to the last pavement seam.
In an experiment, NBC and Fox replaced the canceled races with sim races. No one knew if digital cars would draw viewers and pay off for sponsors. Traditionally, race cars served as high-speed billboards leading consumers to clamor for the engine oil proved superior by the winning car. Could a sim car sell engine oil, having neither an engine nor oil?
Ten months into the experiment, sim races seem to be paying off, as television and web audiences helped to salvage the 2020 season. And now sim racing gives teams a new source of revenue, gives sponsors a more accountable form of marketing and has interested a young audience that motorsports have struggled to capture. Soon sim racing will face the real test: Can it retain fans and sponsors when real cars are back on real tracks and real spectators are in the stands?
Racing video games aren’t new. You could play Indy 500 and Street Racer on Atari in 1977. By the ’90s, more sophisticated Formula One games — albeit with blocky graphics — flourished. Graphic refinement vaulted ahead in successive generations of game consoles from Xbox, PlayStation and Nintendo. Now, at a casual glance, you might not even notice the races are simulated.
Desktop computers also run highly complex networked games, like iRacing, which was the chosen platform of a number of race organizations, including NASCAR, IMSA, IndyCar and the W Series. Formula One chose its own commercial game by Codemasters.
Many pro racers privately used the games to train. At a minimum, the tracks’ fidelity lets drivers memorize the layout. Some teams use special simulator software to finetune the setup of their actual cars before a race.
Sim racing builds driving skill enough that some gamers, like William Byron, have graduated into real cars. Byron, a NASCAR Cup Series driver, now owns an eNASCAR team, which won a $100,000 purse in the 2020 eNASCAR Coca-Cola iRacing Series.
Pro drivers have sneaked unannounced into online competitions for years. For fans, it’s like joining a pickup basketball game and finding LeBron James on the court.
Carmakers see the brandbuilding value of games. Chevrolet made news when its simulated C8.R mid-engine Corvette joined iRacing’s IMSA series in September.
Chevy, like manufacturers as varied as Mazda and McLaren, licenses its vehicles to dozens of games including Forza, Project CARS and Gran Turismo Sport.
Gamers may not be the prime market for a $60,000 Corvette, said Kevin Kelly, a Chevrolet spokesman, “but it’s a chance to become loyal to the brand.”
Sim racing was an afterthought until about three years ago, when technology, social media and real racing began to converge, said Bryan Cook, who was hired by Joe Gibbs Racing (JGR to fans) in 2009 to handle social media. He expanded into iRacing four years ago, beginning with a private league that pitted JGR pro drivers against “your average Joes,” he said.
A year before the pandemic, iRacing became an official part
of the JGR marketing program, offering sponsors a younger audience and social media data — for a fee.
“You get to the point where drivers need to be paid,” Cook said. “There are equipment needs. We said we really need to cover our costs here.”
Sims got their big break on March 22, when both eNASCAR and virtual Formula One races were shown on TV in place of canceled races. The eNASCAR race drew 910,000 viewers, fewer than the 3 million typical for NASCAR but more than the 400,000 typical for a virtual race.
“We started realizing this could be a real replacement for those NASCAR races,” said Brad Zager, Fox Sports’ head of production and operations.
The first F1 replacement race, the Virtual Bahrain Grand Prix, drew 4 million total viewers on digital and
TV, less than the 34 million average for an actual race, but ahead of the average 1.8 million viewers for pro digital races.
Last year “provided a new level of exposure for F1 Esports,” said Julian Tan, head of digital business initiatives and Esports at Formula 1. “We saw record digital numbers on engagement when we came back racing live in Austria and even our Esports content from our official virtual championship last winter saw record numbers.”
Suddenly the sim racing audience was big enough to demand attention, but too new for marketers to know how to capitalize on it. Sponsors took different approaches, but all aimed for an elusive new audience. NASCAR’s fan base has declined since 2005 as it ages. Sim racing attracts a younger and more racially diverse audience — attractive to both sponsors and leagues.
“It’s really hard to reach that 18-to-35 demographic,” said Patrick Daugherty, who manages sponsorships for Valvoline. “Gaming overindexes with young DIY-ers.”
The company signed with Parker Kligerman, a celebrity racer and an eNASCAR driver, before COVID-19 struck. “The viewership and engagement exceeded our expectations,” Daugherty said. “We got really lucky, and we are going to renew with those guys in 2021.”
Despite being the official grill of NASCAR, Pit Boss Grills couldn’t afford to sponsor a front-running racer, which is reported to cost up to $35 million. That changed with eNASCAR.
“This gave us the opportunity to jump in on a primary sponsorship,” said Carlos Padilla, director of brand partnerships. “It allowed us to be live on a broadcast on a car, if you want to call it that, at a price point viable for a company of our size.”
It cost four figures per race, he said, to be seen by 1 million TV viewers — a bargain.
Sim’s simplest appeal to brands is that it delivers viewers. “This is a way to get eyeballs for the brand, to stay top of mind,” said Eric Schwartz, a marketing professor at University Michigan’s Ross School of Business.
Online audiences offer sponsors an ability to measure responses in a way that TV doesn’t.