Giant stadiums, teenage millionaires, great fans, millions of spectators and big companies: welcome to the world of eSports. Some people find it dreadful, for others it is a great spectacle. Most people have heard of eSports. If you haven’t, you will know what eSports is about after reading this report. It has been said that eSports will be the next level of sports for the next couple of years. But what is it exactly? How did it start and why are companies investing in eSports? How does the future of eSports look? All of these questions will be answered in this report.
It seems strange to think that gaming could rival or replace the more physical sports, but eSports is changing much about the world of sports. From the huge companies sponsoring professional teams, to the money professional gamers get paid and the names they make for themselves, it’s all starting to look like one of the bigger sports like football. During the last few years eSports has made its way out of the underground into the mainstream. More and more people start watching eSports championships and tournaments, either via streams or in the stadium itself. The number of people who play these games online themselves is also increasing, which is leading to the growth of the eSports industry in something much bigger than anyone expected ten years ago.
About eSports
But what exactly is eSports? As you might have suspected, eSports involve competitive tournaments of video games, especially between professional gamers. This is made possible by using different electronic systems, such as personal computer, Playstation’s or Xboxes to name a few. There are a lot of different kinds of games being played at these tournaments, but the categories you’ll see the most are real-time strategy, First Person Shooter games and so called MOBAs (Multiplayer Online Battle Arena).
These games are often played competitively by a lot of people. As with other sports there are a lot of people practicing for fun, but also a select few who play professionally. These professionals come together to find out who’s best at tournaments. These tournaments, as with other sports, are played in stadium’s in front of thousands of fans.
Tournaments such as The International, the League of Legends World Championship, the Battle.net World Championship Series, the Evolution Championship Series, and the Intel Extreme Masters are the most well-known, and thus get visited the most. As many as 45,000 fans visited the Sang-am World Cup Stadium during the League of Legends 2014 World Finals (Guzman, 2015).
Most people however choose not to come to a stadium, as it is much easier to just watch at home using streaming media such as Twitch.tv or Hitbox.tv. These sites tend to get a lot more viewers during the tournaments. As many as 36 million unique viewers watched the LCS finale (Brautigam, 2015), a lot more than you could fit into the biggest stadium ever build. During these big tournaments, teams or individual players can win a lot of prize money should they come out on top, which generates a lot of excitement among these players.
The history of eSports
However eSports is only starting to become a phenomenon in the past couple of years. The first ever official tournament to be organized took place on 19 October 1972 at Stanford University for the game Spacewar. The grand prize to be won here was a year’s subscription for Rolling Stone. This tournament was rather small scaled of course. The first larger tournament to be organised was the Space Invaders Championship in 1980. More than 10.000 players attended this tournament. This tournament marked a milestone in eSports history, as it turned gaming into a mainstream hobby. The above tournaments were of course not played using the internet, as technological advancements had not yet come that far.
Around 1990 however, more and more games started using the internet to facilitate multiplayer online gaming. Because of the possibility to connect with friends and play together, online gaming caused a rise in popularity among a lot of people, especially youth. TV-shows started featuring eSports, making it more and more mainstream. Ten years later, technological advancements had improved a lot more, making online gaming even more accessible. Following this was the South-Korean financial crisis. During this period a lot of people started looking for things to do while they were unemployed. eSports quickly became the go to activity, which founded the Korean-Style internet community, with Internet Cafés and Gaming Centers all across South-Korea. A lot of tournaments started out this way: people without jobs looking to make money and have fun while out of work. These people gathered together to play games with each other, and in time started organizing tournaments to see who would be the best at a particular game. These tournaments became bigger and bigger, eventually running into the arena-sizes tournaments we know today.
From 2000 to the present the number of people who play games online has risen tremendously, due to the reduced cost of the personal computers needed to play these games. This increase of players brought with it the increase of tournaments and the popularity of these tournaments. Around 2009, this increase really started becoming exceptionally high, caused by the increase in games focused on multiplayer and competitiveness. A good example of this is League of Legends, a Multiplayer Online Battle Arena game or MOBA for short. Created in 2009 by RIOT games, it quickly became one of the most popular online games, climbing in players from 32.5 million in 2013, to 67 million players is 2014 (RIOT games, 2014). League of Legends also created one of the largest eSports event to this date, the League Championship series or LCS. As mentioned earlier, the LCS had a viewership of 36 million viewers.
Investing in eSports?
These numbers caught the attention of several companies, as they saw an excellent opportunity to advertise and make money using eSports. Large companies like Coca Cola and Red Bull quickly began sponsoring events, larger events especially. placing banners and sponsoring teams. Companies associated with gaming are also very interested in sponsoring, as they can provide hardware for the teams, which will be seen by everyone watching the tournaments. Professional players also serve as an example to many other players. If these professional players use hardware of a certain brand, other players who watch them will be inclined to buy these exact products, as they expect it will help them become better players. Companies who have made clever use of this include Razer, Alienware and Madcatz.
As mentioned earlier, the number of people who watch eSports is rising, so investing in eSports will become more profitable over the years. It is expected that the total viewers of eSports will grow to a total of 335 million viewers. In 2014 this was ‘only’ 206 million viewers, so the growth we see currently is bigger than ever. Because of this, investing in eSports seems like a profitable thing to do, as the revenues for 2017 are expected to reach 465 million dollars (BROM). This again is much more than in 2014, where the revenue was 194 million dollars. According to Newzoo (2015), eSports revenue is expected to reach as much as 1 billion, an incredible increase in revenue. This will be caused by the estimated increase of eSports viewers which, as shown above, will be increasing to about 335 million. It is also expected that there will be a lot more eSports related events, creating more and more opportunities to invest and profit from this particular market.
Challenges and difficulties
For these predictions to come true, there are some challenges and difficulties to overcome first. These challenges are of the technical kind. Ashish Mistry, managing partner at private investment firm BLH Venture Partners, says the following: “In the future, if it’s not happening already, one of the biggest issues that the eSports industry will face is how to level the connected playing field. When you’re playing competitively, one second of lag can make or break a game. Gaming and platform developers, professional leagues, and players will all be looking for the best solution to ensure that they’re operating at the highest level during a competition.”(BRON) What’s meant here is that for an eSports event to be fair to everyone, everyone needs to experience the game the same way, which means they will need to have the same amount of ping (time required for your hardware to reach the server and send information back) and the same amount of potential lag (latency). This can be difficult to accomplish, because a slight difference in distance to the server can cause a small difference in ping. Even if there’s a difference of only 1ms (millisecond), this would mean that the competition would not be entirely fair to all players. Organizations try to prevent these small differences by ensuring everyone uses the same hardware (excluding mouse and keyboard) and connecting this hardware as close as possible to the server, for each player at the same distance. Using these methods, technical difficulties or imbalances have been prevented as much as possible. Future developments on a technical level may however produce new challenges and difficulties, new technologies like Virtual Reality make their way into the mainstream. The possibility that in ten years online games will be played competitively using these new technologies is very likely, so eSports companies will have to be ready for these changes, possibly already tweaking their games to accommodate for such a change. Should these eSports businesses fail to adapt to these changes, this could mean that a lot of potential profits will be lost, resulting in investors not being eager to invest in these eSports companies.
The future of eSports
Concluding this report, the future of eSports looks brighter than ever. While playing games competitively has already been done for quite a long time, it is only in recent years that we really see a massive increase in popularity. This increase in popularity causes revenues to double, which changes electronic gaming from being only entertaining, to a competitive multibillion dollar industry. Investing into eSports as a company would most likely be a wise choice, as it is likely that the eSports industry will continue growing for a long time. This because of the technological improvements and innovations that are being made, which will only raise the popularity of gaming and thus eSports. With viewership already higher than traditional sports, the eSports business is going places.
So if you are the owner of a business looking to make some easy money, you might want to consider investing in the eSports business.