Post Date: 6/12/18
Even well-established sports teams such as the Golden State Warriors, New England Patriots, and New York Yankees are investing millions of dollars into eSports teams. Goldman Sachs even valued eSports at $500 million in 2016 and predicts the industry will grow at 22% annually compounded over the next three years. Now with the establishment of Pro Leagues in full swing for Riot’s League of Legends, Blizzard’s Overwatch, and Valve’s Dota 2 after-work hobbies have turned into careers.
Previously, gaming tournaments would be held at the popular video game conventions like E3, BlizzCon, and PAX. With prize pools ranging in the thousands of dollars and some only offering computer parts as prizes. Most players, even those that would go on to win the tournament, would end up losing money due to the travel costs. Then in 2001 Valve offered a prize pool of 1.6 million for Dota 2’s International 2011, with first place taking in 1 million dollars. Even the pro’s attending The International were concerned the prize pool was fake. A few years later, Valve started introducing crowdfunding for its International tournament, letting 25% of all purchases made in-game go into the prize pool. This led to the International 2017 having a prize pool just shy of 25 million dollars. Higher than the Super Bowl, Fedex Cup, and Wimbledon. What started as small groups of friends gathering at conventions has developed into an official network of tournaments with legitimate sponsored teams that pay salaries, benefits, and retirement plans.
So, if the prize pools are growing consistently then what about the viewers? Last year at League of Legends World Championship tournament, Riot reported that it had over 57.6 million concurrent viewers during the finals, and over 1.2 billion hours viewed overall over the course of the tournament. To put that into perspective, the highest peak of the NBA Finals last year was under 25 million viewers according to Nielsen viewing data. Currently the largest video game streaming website in the world is Twitch.tv. At this time, it’s ranked ahead of websites like Bing, Spotify, and Ebay according to Alexa.com which has it sitting at #31 in the world. Twitch has transformed from a niche platform to a robust community for all eSports viewers and streamers alike, part of the reason why Amazon had purchased it for just under 1 billion dollars in 2016.
Although the eSports industry as a whole is prospering there are still some hurdles it’s going to face in the near future. One being how the advertisers are going to reach the viewers. For your typical sporting event, companies can buy a tv spot. However, eSports spectators’ demographics are more concentrated in young males that are avid ad-blockers. Most don’t have a typical cable plan and reject conventional advertising. It seems the best answer for this is to have the tournament directly run the ads to the viewers so ad-blockers can’t interfere.
Despite countless arguments from traditional athletes and news organizations whether it should even be considered a sport the numbers backing the industry are continuously growing. Even the Olympics are considering adding it after the PyeongChang Olympics to appeal to a younger audience. Whether the industry maintains its obscenely high growth projections remains to be seen, but eSports will be here to stay for the foreseeable future.
This post was written by a good friend of Chronocide and our groups resident DOTA 2 fanboy, Alex Nelson.
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