eSports: The new million-dollar baby
If you watched sports on TV last weekend, you’re part of a declining audience. If you played capture the flag in Call of Duty, you may be part of the future of competition.
The world’s biggest sports powers are betting they can bridge the two arenas, as they try to meld major league powerhouses with competitive video gaming in a new phenomenon called eSports.
The genre is already attracting big-league dollars in sponsorships and investment from some of the biggest names in sports and entertainment, all in pursuit of elusive millennials who have abandoned the event-based traditions of sports and movies.
Among the new players: incumbents trying to disrupt themselves. Canada’s Maple Leaf Sports & Entertainment is one of 17 NBA franchise owners set to launch a new virtual league in 2018. FIFA is already there, filling stadiums in Europe and Asia with competitive gamers while millions more watch online. The NHL may not be far behind.
Major leagues are up against the natives of eSport, such as League of Legends, the world’s most popular game, which drew 36 million viewers for its 2015 finals, outdoing both the NBA championship and World Series.
With surging audiences and fan bases, the eSports sector is forecast to generate US$1.13 billion in 2017, more than double what it did last year. That could double by 2021, according to a range of projections, with revenue growing to $2.70 billion and an audience approaching 500 million.
Here’s some of the factors that will determine who wins:
A strong system
Professional eSports work like any other competitive league: players compete one-on-one or in teams, advancing through tournament brackets to take on progressively tougher competition, as fans watch in arenas or through streaming services. Some games, such as Call of Duty or Street Fighter, are head-to-head competitions, while others, such as Dota 2 or Counter-Strike: Global Offensive, are collaborative and team-based.
Of course, the leagues rely on players who need the same discipline as pro athletes — practice, training, game strategies — as they shoot for the growing mega prizes. League of Legend’s world championship this year handed out more than US$25 million to competitors.
An elusive demographic
Video games and young men are nothing new. Newzoo estimates 22% of male millennials in the U.S. watch eSports, roughly equal to baseball and hockey. The difference now is big business is trying to use competitions to build scale, which is what every advertiser wants. Canada’s Cineplex theatre chain is one of the audience aggregators. It’s using its 2015 purchase of WorldGaming to drive players into specially retrofitted movie theatres and campus tournaments. Its Collegiate Stars league, which reaches 1,000 campuses, ran 350 tournaments in 2016 — many with scholarships as prizes.
A virtual franchise model
Like traditional sports leagues, the creators make some of their money by selling new franchises. Riot Games, which built League of Legends, recently introduced a $10-million franchise fee, which teams and players need to recoup through sponsorship agreements. And like traditional sports, that means they must stay relevant by winning and by playing the most popular games. Without a geographic base — the loyalty-based model for old-school sports — their fan base is as precarious as anything on the Internet, which every sponsor knows.
A new screen play
Weekly TV viewing by Americans aged 18–24 has fallen by nearly half since 2011 and continues to decline. The NFL has not seen real audience growth since 2013. Many of those viewers have turned to eSports, which generated more than six billion hours of viewing in 2016, up 19% from the year before. Twitch, the video-game streaming service which is like the ESPN of eSports, has 15 million daily active users. And they watch 106 minutes of content every day. Small wonder Amazon paid $970 million for Twitch in 2014.
Brand risks
First-person shooter games have scared away many traditional advertisers. So have the disturbing episodes of misogyny and hate speech in many online leagues, which draw an overwhelmingly male crowd of players and followers. Of the 100 top earning players this year, none are women.
Call of lawyers
The biggest eSports leagues are run by so-called publishers like League of Legends owner Riot Games or Call of Duty owner Activision Blizzard. They have dibs on revenues from broadcast rights, sponsorship and matches — and the legal power to shut down anyone who uses their games to set up rival leagues.
The global game
In 2015, Chinese internet giant Tencent took over Riot Games, developer of League of Legends. Tencent also has a stake in Activision Blizzard, which created Call of Duty, Starcraft and Overwatch. China accounted for more than half of all viewing last year, as its netizens tuned into eSports more than 11 billion times — four times more often than Americans did.
