Esports: the billion-dollar industry you might not know exists.
Kyle “Bugha” Giersdorf is a competitive Fortnite player, and as of last month, the solo Fortnite world champion. He took home a $3 million top prize from a prize pool of over $30 million after defeating 2nd place by a wide margin.
Esports sits at the crossroads of technology and competition sports. It presents a compelling value proposition for players, fans, and stakeholders alike. While being mutually beneficial is a plus, the big insight is that esports generates value in ways that are satisfying to create and consume.
I believe in this industry and its capacity for growth going into the 2020s. Let’s take a quick look at the history of esports and how we went from hotel ballrooms to selling out venues around the world.
History
Over the years, a variety of games have captured the largest slice of esports viewership. The most popular games typically fall out of fashion as quickly as they come. A specific esport can only be viable with enough support, so when the prevailing wind of public opinion shifts, older esports are left in the dust. Games that are exciting to play, are usually exciting to watch. As such, the history of esports is defined by which games turn the most heads. As esports becomes larger, it will become easier for a wider variety of games to succeed.
Doom (1993) and Quake (1996) presented the world’s first competitive game genre: the multiplayer arena shooter. From there, Starcraft, a strategy game, arrived in 1998. Four years later, South Korean Starcraft pros were being picked up for sponsorships by big corporations like Samsung and SK Telecom. Remember, the industry moved a lot slower when it was smaller.
The fact that two different competitive game genres found success independently was BIG news. Ongoing success fueled the development of games like Counter Strike (2000). The 10-player tactical shooter developed by Valve took the world by storm with its simple concept: plant a bomb and defend it. Starcraft and Counter Strike esports dominated the scene until the rise of League of Legends in the early 2010s. As one of the first premier team-focused esports, Counter Strike reached a larger market with this unique appeal.
In 2011, League of Legends, a “MOBA” game, stepped onto the scene as another 10-player esport. Although this industry leader is yet again a member of a new genre, nothing could stop the flood of passionate players flocking to the game. League’s appeal comes from two sources: macro/micro strategy elements that made Starcraft successful and combining them with an itemization system that places emphasis on individual player performance within a team. This inevitably led to an esport that is both more challenging to play and also more enjoyable to watch.
DotA 2, another MOBA, was created by Valve in 2013. Finally, League Of Legends had some competition. Valve launched the DotA 2 premier world tournament “The International” with a uniquely crowdfunded prize pool. Users could buy loot in-game with microtransactions that paid towards the overall prize pool. The International is known for its prize pool size, typically eclipsing League of Legends’ LCS prize pool year over year.
In 2016, storied developer Blizzard released the most ambitious esport yet: Overwatch. This hero-based FPS game pits two teams of 6 against each other in a variety of game modes. From the jump, Blizzard was clear that this game was created to be an esport. By 2017 they had unveiled plans to establish a global professional Overwatch league, simply called OWL, where franchises assigned to geographic regions competed weekly. With the introduction of OWL, the industry took one more step towards the developed structure of traditional sports leagues. And most recently, Fortnite, a battle-royale game, held its first global World Cup event in July of this year. It had a record-breaking $30 million total prize pool.
Industry
In 2019, Esports crossed a major threshold: $1.1 Billion in industry revenue. Here, each of these streams cover a diverse range of activities, but the most important one is the biggest. Sponsorship revenues rising year over year indicates that investors are gaining confidence in esports investments returning value. As the industry continues to substantially grow, the appeal for more mainstream brands to enter sponsorship deals becomes realized. This begs the question: “Where is all this money coming from?”
In the esports industry, value is transferred a little like this: Esports organizations, funded by investors like Bitkraft, support players that use games developed by companies like Blizzard. Then from there, third-party resources like ESL provide gamers a chance to participate in organized league play. The last step is using Twitch to deliver live stream content to loyal fans in exchange for ad revenue. It’s Once pro gamers realized the variety of income streams available to them, Twitch became an essential final piece of the ecosystem.
Recently, game developers like Riot, Psyonix, or Blizzard have created esports leagues or tournaments to support their games upon release. But traditionally, gaming tournaments are set up either by outside gaming organizations or by members of the community. Tournaments organized by the community have prize pools based typically on the number of sponsors and other stakeholders funding the event. But let’s zoom out because esports is just one chunk in the massive gaming industry pie.
The entire video games industry has regularly outperformed the music and film industries for revenue since 2003. Video games are interactive, replayable, digital experiences. The consumer values games more than music or movies, and as such, they’re willing to pay more. The latest video games launch at $60, where movies and music hover between $10 and $20.
The esports industry is booming right alongside the gaming industry at large. As the market keeps growing, the innovation grows right with it. As a modern blend of technology and sports, esports offers a glimpse at the bright future of digital competition. It took more than 20 years to get to this point, and it’s just getting started.
Sources: https://pastebin.com/Ssuv6rjA
Atomic Robot provides mobile development, strategy and design services to businesses who need them. As lovers of great games, the Atomic Robot team strives to create great mobile experiences. We’re proud to support all avenues of innovation, visit our website for more information.
