The Efficiency and Effects of Paywalling Esport Streams (Ft. Jake Pelusi)
Should you have to pay to watch esports online?
The Background:
For many years, esports has been a highly accessible mode of entertainment and content. In comparison to perhaps a game of Football or Tennis, a Counter-Strike or League of Legends event can provide many days’ worth of on-going content, typically delivered through Twitch and/or YouTube at 0 costs to the consumer. Despite this, the quality of these broadcasts and events only continues to grow and scale with the growth of the industry.
A Tournament Organiser (TO) is typically responsible for putting on all aspects of an esports event. They contribute to prize pools, supply the production, hire the stadium/venue, pay event staff and talent and also cater to the many teams who usually travel internationally to be present at these events. Events that people will be able to recognize include, ESL One Cologne (CS:GO), The DOTA International, Worlds (League of Legends), MSI (League of Legends) and IEM Katowice (CS:GO & Starcraft II). Currently, the most simple way to support these events and organisers is to watch their streams. Additionally, you can buy merch but much is left on the table in terms of additional support financially.
Many traditional sports have models where the viewer must pay to have access to broadcasts/streams or to access more analytical and additional content pieces. The NFL Gamepass and UFC Fight pass are examples of such products that put an additional level of access and content into the viewer’s hands on the condition that they have paid for the product. This model puts more money back into the organisers pocket and enables them to continue growing their product and give the consumer as much value as possible to ensure their product is constantly desired. In esports, there is always chatter around the nature of profitability and long-term planning for events. Thus spawns the conversation around whether we should adopt a similar or adapted model. With this approach comes its own problems and issues, such as whether the audience will be welcoming of these changes and if this solution is an effective means of generating long-term revenue and growth.
The following is a discussion piece between Ash ‘Shhlee’ Whyte & Jake Pelusi.
The Conversation:
Ash: At the moment in esports, we have a lot of stress on Tournament Organisers to keep putting on the best possible events. To the everyday viewer, of course, we want to see this, from a production POV we’ve come so far, but innovations in the analytical segments, graphics, overlays, and whatnot have made the experience so much better. We’re nailing it at the moment in terms of moving forward, but it always comes with a cost. It is very experienced, especially considering the amount of staff that need to be paid, event hire and flights for players and teams in some situations. We’re walking a fine line at the moment and need to reposition how esports are distributed and sold to ensure its long term viability and profitability. At a glance there is a selection of ways to test this; starting at paying for event coverage & access to the full broadcast but also even access to footage (such as POV demos) or additional content (Interviews & Analysis).
Jake: Hang on a second. From a viewer perspective, esport events seem fine right now! I mean, if they weren’t making the money to support the improved production quality then why would they even bother? That’s kind of a luxury you get to have once you have a stable core product that people are interested in. And people are! Esports have been become more and more mainstream with each passing year, with viewership leaping bounds with each major event. And I think a large part of that growth is due to it being free and easily accessible. If you wanted to introduce your mate to a professional CS:GO match you could just shoot them a link and away they go! So how do we know, as viewers, that we aren’t being taken advantage of when TOs decide to place paywalls in front of products they now know we want?
Ash: One key reason for these changes going forward is a result of what is an unsustainable ecosystem in the industry. To elaborate, the rate at which events and leagues are scaling alongside salaries and prize pools does not match the investment and income being generated, despite ongoing growth in viewership and player numbers. Being able to support and scale with growth is important, otherwise, we see not only regression in terms of production but this extends out into sponsorships and business partners, who if they’re burnt once will most likely be hesitant to return to the space. As an extension of this idea, ensuring our growth is sustainable will prevent ‘bubbles’ where people are overspending money that in some cases doesn’t even exist yet.
Perhaps that is exaggerating but it is supported through many TO’s and Organisations in Australia at the moment who are withdrawing support and scaling back. In particular, we’ve seen cuts to the OPL and our Rift Rivals competition being stopped completely. This regression is an indication of ‘unsustainable growth’ where the growth of the OPL wasn’t matching the actual money coming in and hence the backpedaling from Riot.
Jake: Ok, sure. That sounds problematic; there’s clearly a need for esport tournaments to gross a higher level of income to survive. But is such a traditional solution of simply placing a paywall in front of content that would otherwise be free a good idea? New media is full-to-the-brim with entertainment without the price tag. From corner to corner of the internet there’s free content to be found, and as of up to this point in time esport broadcasts have been no exception.
Let’s say TOs do implement some sort of paywall revenue strategy, who’s to say this will even make any money? How is it reasonable to expect that audiences will enthusiastically throw their money at the same product they’ve been receiving for free up until this point? Surely the events would lose viewership, whether it be from audience protest, laziness or a financial inability to afford the product. And at that point, are they even making any more money than they would be by playing ads to a large, paywall-less audience. Why even bother?
Ash: While I do acknowledge the idea that not everyone will get behind this, it is certainly back to the idea of sustainable infrastructure and frameworks. What I mean by this is that it will enable and most likely force the hand of the TO in how they run their event. Competing organizations are then forced to raise their product to give audiences a reason to come to their product — in the same way that the film streaming services compete between themselves for our money. I think they’re an excellent example in that people will lean into the service that is suited to their needs and potentially pay for both services. I don’t see why this cannot be replicated in esports.
A point you made was interesting in how you think people’s expectations are currently set on the idea that ‘the games are free and the broadcasts thus far have been free… so why should I pay for it now?’. And I can respect this position, but that’s why it is the mission of those involved in the productions and industry to help shift this. ESL One Cologne, for example, this is a free event to watch usually; so instead of “why should I pay to watch this event,” we as an audience need to shift our thoughts to “what would it take for me to pay in order to watch ESL One Cologne?” I agree this is tricky but it will be highly beneficial and rewarding to audiences, who will become the absolute focus.
Jake: That’s a very interesting way of thinking about it, and I think you’re starting to change my mind. However, there’s still this big fat “but” I have to bring to light; this is all well and good, but how do we know audiences actually will make this shift in their expectations. How do we know they won’t move on to another esport than offers free viewership?
One need only look backward in time to see just how inclined fans are to choose the free broadcast over its paywalled counterpart.
Does this large risk even warrant this stride towards “sustainability” when it could very well do the complete opposite?
Ash: Regardless of whether this grows or regresses the industry is largely irrelevant (within reason), as the purpose is to focus on sustainability. Of course, this implies an aspect of ongoing growth but I’m just saying that as long as it is not detrimental to our scene as a whole, regression isn’t necessarily bad in the name of futureproofing.
Jake: That doesn’t make sense to me. How can you say that any level of regression in an esports player-base size isn’t a problem so long as it’s in the name of futureproofing? Sure, it might, in theory, offer more sustainability for TOs, but TOs don’t have jobs if the player-base becomes too small. You say that a “minor” decline in viewership (while within reason) is fine, but what I’m proposing is that it will not be a “minor” decline at all and that this bubble you call “reason” is a lot smaller than you may be aware.
Sure, let’s say for argument’s sake that the immediate dip in viewership isn’t too sizeable. Let’s say that the number of people who angrily protest and/or cannot reasonably afford to view these tournaments are few in numbers. It’s reasonable to assume that many players watch the professional scene of a given game to analyse and aspire to improve their skills, as is the nature of competitive online multiplayer games. When you lock out a portion of the community from observing the esport scene from behind a paywall, you are not only isolating them from content but also discouraging them from giving a crap about their games. And this might not be an issue if these same popular esport games didn’t have such large overlapping quantities of players within their respective communities. Personally, in my group of friends we primarily play CS:GO and League Of Legends, switching between the two (sometimes for upwards of months and years at a time). And it only takes one person completely losing interest in one game for the whole group to switch over to playing the other. All of a sudden, one player turns into six… seven… eight… etcetera. Not only will this stunt any progression of future-growth, this initial disinterest in a professional scene could potentially catalyse a large downfall in the game’s hardcore and casual player bases.
I think here lies the largest, frequently-overlooked, distinction between traditional sports and esports: many large portions of sports fanbases are far more loyal to their respective sports than esport fans are to any given esport. Sports can last for years and years and then some, whereas it is in the very nature of esport games to eventually become obsolete. This is because sports aren’t owned and managed by any one company, however, esports are. You don’t sell sports; however, companies do sell esports — they’re products. And as with all products, they eventually get replaced by the next best thing. That’s why you see loads of talent working on a variety of esport games rather than any single one (it’s a safe career move), and why lots of recreational-competitive players tend to play more than one competitive game within the span of say five years.
What TOs have to work with right now with esport games in their current state is a string of multiple years of popularity followed by a harsh decline in audience interest as the next big game comes along. So why would it be a good idea by any stretch of the imagination to mess with the chance of keeping viewers for another handful of years all in the name of so-call “sustainability”. I reiterate a move like this could have the very opposite effect. A move like this could kill an esport well-before its time.
Now sure, this might be a bit of a reach. Perhaps I am teetering on the side of caution and skepticism. But I say again, is this worth all this risk?
Ash: It’s about developing a system that works, whether all events are free or paid or a mix we don’t know yet but it’s something you need to work towards and certainly try because it works in other traditional sports — esports has always been very niche and the people involved typically support it further than more mainstream sports or even other hobbies, which ideally lends itself to something like this.
It is certainly a nuanced problem but confidence in building the future of esports should be everybody’s ambition. I cannot say whether all events will need to paywalled, or with paid features or even what percentage of events should remain free and it is game dependent. However, working towards this model which is so commonly seen in traditional sport is important — should it work in esport we will be much better off. Above everything, esports began as a niche ‘passion project’, where many likeminded individuals came together with the interests of building up everything we see around us today. What this means for us is that we have a group of people at our core who go the extra step for esport than they would mainstream sport or even other hobbies — of course suggesting that some of these newer fans might not stick around/understand the passion/be as willing to take this leap of faith.
Summary:
For almost a few years now, this discussion has cropped up more and more as tournament organizers, talent and event staff look towards the future of the industry. Meanwhile, the average viewer has been changing and the viewer base ever-growing. The ‘tug of war’ is how to further monetize and provide a lasting framework for the economic viability of esport against keeping the viewer both satisfied and committed to the industry.
While this discussion may raise more questions than it answers, it does wish to point out and highlight as many unique aspects and contributing factors.
· Will esports audiences pay for broadcast access?
· Can esports mimic the models of traditional sport?
· Must esports change its models and frameworks in order to survive?
Only once these ideas and points are explored further will the true ‘answers’ of what must be done in the industry in order for its long-term success be revealed.
