Journey to the centre of eSports : Part 2
From novice to intermediate
In Part 1, we explored what eSports was, why insiders love it so much and why outsiders care increasing amounts about the industry. Spoiler alert: awesome games, huge revenue growth, increasing audiences, fanatical fans, new platforms and a perfect match of online sport and modern media.
This time around, we’ll explore how businesses like Activision and Facebook are looking to get in on the action. Then we’ll move on to the thoughts, insights and issues that I discovered in my discussions with entrepreneurs and gamers at the coal-face.
Big business and eSports
Having done some of the desk-based market research, watched a copious amount of Twitch and ruined my follower/following ratio on Instagram by following lots of eSports and casting celebrities it was time to get on the phones and pound the streets.
One thing which I found is that almost all of the folk that I spoke to within big organisations like Activision and Facebook were acqui-hires. While Activision Blizzard’s $5.9bn acquisition of King didn’t see them specifically acquire eSports players or ingratiate themselves with the eSports community, it certainly shows the value which big-business places on gamers across all platforms. In Activision Blizzard’s case, they paid ~$180 for every new quarterly-active-user that they acquired. The folks that I talked to there were incredibly excited about their new team based shooter Overwatch and you’d imagine that they’d be hoping for some cross-sales into their newly acquired users.
It’s hugely encouraging that larger organisations have such an acquisitive attitude to sourcing knowledge and entrepreneurial spirit in the hope of catching on to the coat tails of eSports revenue growth. With this in mind, they’ve not been neglecting the small guys nor are they being internally slack. At the end of last year they set up a dedicated internal eSports division and acquired Major League Gaming (a leading tournament organiser). This was described to me as “the circling of the wagons”. American vernacular which I had to google but makes perfect sense. I’ve used it plenty since.
One thing which did occur to me over the course of my meetings is that there is a massive heterogeneity of opinion among executives, investors, insiders and entrepreneurs. For every person who was excited about VR, I found others who thought that it was so far away that it’s almost an irrelevance (where I stand). Similarly, backing for business models varied greatly. Media/AdRev seemed to be logical for some whereas owning the stack seemed preferable to others. Events and ticket sales (a relatively professional and enthusiast market) were the way forward for a few entrepreneurs whereas monetising ‘live’ and recreational viewers and gamers held the keys for plenty. A classic case of everyone talking about it, yet few people doing it successfully, yet. That’s probably a symptom of the nascency of the market and ‘the answer’ is probably a weighted mixture of all of these things.
In Part 3 I’ll go into my own predictions of where you might put some dollars to work but there were a couple of things that everyone seemed to agree upon. First, the industry are unanimous in their praise for the impressiveness of audience growth (especially in comparison to other sports). It was mentioned far more than the revenue trend. So, having been warm-not-hot on it (in general and in Part 1), I quickly learned to keep that to myself and reconsider my stance. Second, a clear picture of categories of powerbroker in this young industry emerged: online and offline tournament venues, game-makers, video platforms for streaming and accessories / mods / coaching providers. This roughly maps onto Blake Robbins’ excellent eSports landscape diagram.
What do the players and fans think?
I wanted to spend some time talking about the social side of eSports: who the Twitch viewers are, who the recreational players of DOTA 2 are, what excites them and what are their hopes and dreams for the industry? There’s plenty of content out there which follows the fantastic, the rich and the celebrity on offer for eSports players and the best casters — the VICE mini-series below is great viewing, but I wanted to find out a little more about the every day fan and gamer: the majority.
Giant stadiums, teenage millionaires, super fans, and addiction: Welcome to the world of eSports.www.vice.com
This is possibly the most important part of the equation — understanding the customer. It’s these guys and girls who are the net promoters, who are the grassroots and the groundswell, the keys to the audience and the revenue growth. So, aside from subscribing to some Twitch channels, I spent a while in the Reddit eSports and individual game sub-Reddit wormhole and chatted to gamers in their downtime at, Meltdown, our local eSports pub.
Far from this being adolescents, moulding away in dark rooms playing through the night — a common stereotype of which there are doubtless plenty — I found a diverse crowd of age, race and gender. The fanbase, as is, is remarkably transcendent. While the age distribution is positively skewed (34% of fans and gamers are aged 18–24), it isn’t to the exclusion of older folk. The same audience research found that there were similar (actually slightly more) female fans and participants than male ones. This tallied with my anecdotal audience research at Meltdown and online. It all seems to make sense. When I was 10, I lived for Street Fighter II Turbo on the SNES. Talking to these guys and watching them play made me feel like a kid again.
Aside from questions about what they buy (to be covered next week) their support for eSports to be considered sport is unwavering and, to my mind, totally fair. Gamers spend thousands of hours practicing, professionals are subjected to intense scrutiny and those who reach the top are not only naturally gifted but have honed their talent with a dedication to improvement that is superior to lesser players. There is a wonderful, global feel and camaraderie to eSports. It arguably has its roots in Asia but has propagated through the West and it is genuinely ‘native’ within social media, live media and video. It’s borderless, deeply interconnected and as a result and every fan feels truly part of the sport. This social graph a platform for non-linear growth.
Given that the majority of people are still very unfamiliar with eSports, I also wanted to know what gamers’ and fans’ friends and family thought of their passion/hobby/fandom. Something that came up time and again was the portrayal of women in eSports and gaming, in general. The guys who I came across had girlfriends who were concerned about it. Girl fans and gamers were quick to bring it up. It’s not surprising, you can see below some of the discernibly female champions of League of Legends.
I do understand that this is fantasy and that men are also unrealistically depicted albeit in a different, often impossible, way but it’s hard to classify this as anything else but objectification and promotion of unrealistic ideals. Admittedly, as a 30 year old, white, male, VC I’m not in a good place to get on my soapbox. Furthermore the potential problems posed would seem to be significantly less than other forms of adolescent entertainment but there’s clearly some work to do here. Given that eSports and gaming audience will likely continue to be positively skewed in age there’s definitely more that can be done to encourage healthy attitudes toward women. You can watch a great primer on this issue here.
See you next week for the final installment of my journey where I’ll be reflecting on where the best opportunities are to invest in eSports :)