The Wild West World of Esports
The stigma associated with being a gamer is over. The taboo that comes with staying at home on the weekends to compete in a Battle Royale with 100 friends from across the world is behind us. Sharing in the joy that comes from enjoying a virtual concert with more than 10 million attendees is the new norm and will come to be expected from future generations.
Why did ESPN put “Ninja” on the cover of their magazine? Will video games really be a $300 billion industry by 2025? Is this another fad like 3D TV/Movies? Are people actually watching and participating? Similar to the “dot com” boom of the 90s, there are many unknowns regarding monetization methodology as well as the long-term viability of the industry. Obviously, there are those who are looking to capitalize upon the nascency of the trade; however, the altruistic nature of those in the space suggests that the gamer culture is one of inclusion and acceptance allowing everyone a fair chance to showcase their skills.
Changing the Industry
To understand how the industry got to this point, we need not look further than our societal desires. Western culture has always had an affinity to extol those that standout in the areas of competition: Tom Brady, Michael Jordan, and Tiger Woods are superstars who have transcended their respective professions to create brands that are synonymous with winning and excellence.
Can that same line of thinking be applied to non-traditional sports as well? The answer, resoundingly, is yes. Not only were Brady, Jordan, and Woods successful at their respective crafts, they were so successful that they changed the way their audiences consumed their skills. CBS attempted to put Brady in primetime almost every Sunday afternoon to capture a greater share of the national audience. Jordan raised the appearance of the NBA so much that more rights-holders began to bid on NBA games. And, Woods re-invented a sport that has traditionally been associated with a very niche audience so much so that tournaments in which he played were must-see events.
Winning and distribution are critical to the development of superstars. The Esports industry allows for those who don’t have the physical skill set of Brady, Jordan, and Woods to be superstars in their own right. Unlike typical Western-based pro sports leagues wherein the distribution is controlled by a few entities, most Esports titles allow for novice gamers the ability to broadcast themselves to the masses via digital sources without the overhead associated with traditional sports broadcasts. This allows for the ability to consume meaningful content at rates significantly cheaper than their stick-and-ball counterparts.
Facts and Figures
To understand the magnitude of this industry, let’s look at some of the facts and figures that define this space:
• According to NewZoo, the 2018 global monthly audience of Esports reached over 167 million people. This is more substantial than that of both Major League Baseball and the National Hockey League;
• As media rights and sponsorship continue to grow, along with the formalization of pro sports leagues, Goldman Sachs anticipates that Esports monetization will reach $3 billion by 2022.
• Based on research from NewZoo, there are over 2.2 billion active gamers globally, yet today’s Esports audience represents just 5 percent of the total online gaming population, suggesting that there is plenty of room to grow the Esports audience;
• In 2017, the Dota 2 International prize pool was $23 million. It amounted to a total purse that exceeded Wimbledon ($16 million), The Masters ($11 million), and the Daytona 500 ($18 million).
As our world continues to become more and more connected, it is obvious to see how impactful Esports will be as apparent trends ameliorate this phenomenon: the social relationships that are formed and cultivated via online platforms, an insatiable desire to consume digital video live and on-demand, and the year-over-year growth within gaming fans. Unlike technological fads that sputtered out when presented to previous generations of consumers, it is hard to envision an industry that can reach ~300 million people worldwide by 2022 will suffer the same demise as Betamax and 3D TV.