Esports — Bigger than Traditional Sports ?

Some may argue that there has been no major new sport invented for more than a century. However, it can be convincingly argued that esports is emerging as a true sport and beginning to compete with the traditional sports. It is arguably the world’s fastest-growing sport and is the first sport, outside of football, that is truly global.

Esports is not only growing exponentially as a new independent business, industry and sport, but also accelerating the convergence of various established industries. The industry provides millennial's with the opportunity to capitalise on their favourite past times: playing videos games and watching video game content. With an increasingly wide array of games and the emergence of streaming videos, esports is well on its way to becoming a billion dollar industry.

What are ‘Esports’?

Esports or electronic sports are a form of competition that is facilitated by electronic systems, particularly video gaming. A specific game played for a sport would be an esport (singular).

Most commonly, esports takes the form of organised, multiplayer video game competitions, particularly between professional players. It typically involves team-based gaming as a spectator sport with ranked matches. It is like traditional real-life sports in their nature, but generally engaged online.

The History of Esports

The earliest video game competition took place on 1972 at Stanford University for the game Spacewar (“Intergalactic Spacewar Olympics”). The first large scale video game competition was the Space Invaders Championship held by Atari in 1980, attracting more than 10,000 participants across the US, establishing competitive gaming as a mainstream hobby.

During the early 21st century, many games benefited from increased internet connectivity which in turn benefited esports tremendously. Although large esports tournaments were founded before the 21st century, the number and scope of the tournaments have increased significantly. This proliferation of these tournaments included experimentation with competitions outside traditional esports genres.

Multiplayer Online Battle Arena (MOBA) games, which pit two teams of five players against each other, blended strategy and RPG elements together. These MOBA games became a real hit. Each player controls a single character, who can level up, buy new items to get stronger and work with teammates to defeat the enemy team and destroy their base. Two of the most popular MOBA games, League of Legends (launched in 2009) and Dota 2 (2011 — though its final finished version arrived in 2013), gained enormous followings. Today League of Legends has around 100m players!

The popularity and emergence of online streaming services have also helped the growth of the industry, and are the most common method of watching tournaments. Twitch, an online streaming platform launched in 2011, routinely streams popular esports competitions. In 2013, viewers of the platform watched 12 billion minutes of video on the service!

Viewership & Overview of the Market

Due to its globalised and online nature, viewership for esports is significant, making it comparable to traditional sports. In 2013, League of Legends brought in the 2nd highest amount of views for last year’s Championship final (27 million viewers), beating every sporting event except for the Super Bowl.

Nearly every big esports tournament is streamed free to Twitch TV. Twitch allows people to watch their favourite team or individual players while chatting with other spectators. Some watch for pure entertainment, others watch to learn from the best and apply that knowledge to their own games. As of 2016, Twitch has over 100 million viewers per month. Additionally, the viewership is increasing as time goes on, not diminishing. It is suggested that esports will have more viewers than NFL Football by 2020, making it an advertising goldmine.

Tech & Media Companies are paying attention to esports due to the desirable demographics of the audience. A Swedish Company purchased the oldest esports company, Turtle Entertainment (the holding company for ESL), for $87 Million. Amazon purchased Twitch for $1 Billion in 2014. Canadian motion picture exhibitor Cineplex spent $15 million to acquire an esports company and create a new gaming league that will take place in its theaters. Although esports might not match or surpass traditional sports any time soon, its potential business value is clearly too significant to ignore.

Football clubs such as Manchester City have started signing FIFA stars who are players of the virtual game, rather than the real thing. Other clubs, such as Paris Saint-Germain (PSG), have signed up a whole squad of players in a number of different eSports, including League of Legends. The thinking is simple for both clubs: digital gaming is where the next generation of fans will come from. Often, a young person’s first interaction with a professional football club is through the FIFA game, and so eSports are a vast reservoir of future income. Additionally, esports will allows clubs to raise their global profile. It will allow clubs to generate new fans of the brand, tapping into US and Asian markets.

Prize Money

When esports first started, the money was not there. Tournaments were hosted inside lobbies of hotels and the payout was just a couple thousand dollars. However, as the industry has grown, the prize money has increased considerably.

In August 2015, the DOTA-2 International Tournament was played over 5 days and the prize pool was a whopping $18,429,613. That was the 4th highest prize pool in sports history, beating the Super Bowl and World Series. In 2016, the prize pool for the International Tournament for DOTA-2 hit a cool $20,770,640!

The Esports Economy

The 2017 Global esports Market Report (NewZoo) provides an in-depth look at the esports economy and a realistic estimate of its future potential in terms of trends, viewers, participants, and revenue streams.

This report indicates that the global esports economy grew to $696 Million in 2017, with a year on year growth of 41.3%. Brands spent $517 million, broken down into $155 million on advertising, $266 million on sponsorship, and a further $95 million on media rights. Consumer spending on tickets and merchandise amounted to $64 million. Another $116 million was invested by game publishers into the esports industry through partnership deals with white-label organizers. Brand investment will double by 2020, pushing the total market to over $1.5 billion.

In traditional sports, total revenue per fan is a key indicator of how well a sport is “monetized”. It encompasses all revenue streams, including media rights, sponsorships, and consumer spending. Based on the audience and revenue expectations for esports in 2017, the average revenue per fan this year will amount to $3.64. As the esports industry matures and incorporates an increasing number of local events, leagues, and media rights deals, the average revenue per fan is anticipated to grow to $5.20 by 2020. This is still a factor three lower than a popular sport such as basketball and a factor twelve lower than the most commercial league in the world, the NFL.

Classification as a Sport

Whether playing video games is a sport is a controversial point of debate. Much like professional athletes, gamers spend large amounts of time developing new skills that will help them compete in their games. Often the core rules of the game do not change often, but the dynamics change as new characters and environments are added. Players constantly go through strategies to combat the different scenarios that they may encounter in a game. Gamers also need to have very fast reaction times and the capability to keep up with the pace of the action.

Esports can be considered a “real sport” by definition, much in the same way as chess or poker can be. There are many parallels between traditional athletic sports and esports. However, the virtual environment and lack of physical activity call into question whether we can truly define esports as “real sports” rather than a “mind sport”. Like poker and chess, esports are mind-based sports with limited physical activity. Some definitions use words like ‘usually’ and ‘or’ when talking about the physical activity involved. This further makes the case for the fact that sports need not always be physical athletic activity. The physical exertion and outdoor playing areas are not required by all traditional or non-traditional ‘sports’

According to the US Federal Government, esport players are considered professional athletes. In 2013, a Canadian League of Legends became the first pro gamer to receive a United States P-1A visa, a category designated for ‘Internationally Recognised Athletes’ allowing a stay of up to 5 years. In 2016, the French Government started working on a project to regulate and recognise esports. Recently, they passed legislation which regulates professional esport player contracts within their country.

Although many argue that popularity of esports should justify competitive gaming as a sport, I believe it is the careful planning, precise timing and skillful execution that should support the activity’s classification as a sport.

Future of eSports

It may be a career many kids and teenagers dream of, but as of now, it is clearly not a profitable one (apart from players who literally dominate in their game). Although top League of Legend players have contracts with quite promising salaries, we all know they do not get to stay on the top forever. Either way, it is extremely difficult to make a name and succeed in esports. I believe that the requirements to succeed in esports are not only hours of practice and absolute dedication, but also pure talent.

The industry is definitely booming and will gain global traction over the coming years. The future is bright and exponential. Teams are managed and ran like any other sports teams. In the future there will be well established career paths in the industry, whereas in the past, being a competitive gamer was not even considered a career. Currently, however, it is not a profitable career for gamers unless one literally dominates their chosen game to compete in.

The future of esports looks like it will be made even more interesting with immersive technology such as VR Goggles. As these immersive technology evolves, esports will become much more advanced and the industry will flourish.

In conclusion, esports does have an extremely bright future thanks to the copious amount of both casual and competitive players worldwide, although aspiring to be a professional gamer is very risky and insecure. At some point in the near future, it is highly likely that esports will be recognised as a true sport, particularly as the industry matures and a dynamic infrastructure is in place.

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