Blockchain is the powerful disruptor that will drive eSports to the next level
Many would say that eSports itself is a disruptor! Who would have thought that people playing video games and people watching them play games would start to push aside traditional sports? Or that it could be included in the Olympics? Or that it would be attracting big-brand sponsors, major investors and tech companies, and high-profile celebrities? In fact, major traditional sports teams are buying into eSports: soccer franchises in Europe are now joined by the NBA’s Cleveland Cavaliers, Golden State Warriors and the New York Yankees.
Prize money is growing exponentially, driven by crowdfunding. The Dota 2 International in 2017 had a prize pool of nearly $25 million. This should be compared to prize pools in major traditional sports like the Tour de France (less than $3million), the US Golf Open ($10 million), the cricket IPL ($8 million). Tennis (at about $40 — $50 million) and, of course, soccer (with the prize pool for 2018 predicted to be $400 million) are bigger. But eSports is less than a decade old!
Audiences are also growing. There are close to 400 million eSports fans. The CS:GO world championships in 2017 attracted 46 million viewers, and the LoL world championships 43 million. Most this audience are millennials, about 60% of them male. They have above average education, higher income, they spend more online and are significantly more likely to place a wager online, than the average population.
Betting is a major part of the eSports world. According to some estimates, the 2016 global volume was about $600 million and estimated to reach more than $5 billion by 2020.
Everything seems to be going well.
WHY, THEN, WOULD ESPORTS NEED A DISRUPTOR?
If the eSports industry wants to continue its fast move into mainstream sport, it must deal with the issues that have the potential to slow it down or reduce its acceptability. Some of these have been identified — and blockchain technology is being shown to be the answer to many of them:
- Opportunity is skewed to professional players with very little being available to amateurs or those in lower leagues. League of Legends has 250 million players who want to build, grow and manage their teams, but there are only 100 League of Legends clubs worldwide.
- Gamer community toxicity includes players abusing others, threatening to throw games if they don’t get to play their chosen character or cheating.
It’s easy to cheat in eSports. You can use technology to disrupt an opponent’s internet connection, take drugs to speed yourself up, or “throw” games. The Esports Integrity Coalition (ESIC), has been set up to address threats to the integrity of match results, such as from hacking, scripting, match-xing, DDOS, or hardware manipulation. Blockchain solutions are emerging to deal with this. For example, FirstBlood and Network Units are adding User Reputation Systems (URS) to encourage players to behave honestly (for example by giving them priority in future matches) and to punish players that don’t. Blockchain systems allow for random selection of viewers to take part in judging or in reviewing games.
- Because of all the betting, the game is becoming susceptible to corruption. This is no different to traditional sports — one has only to look at the recent scandals around Slatter and FIFA. But it is possible for blockchain technology to set up smart contract frameworks for tournaments. This reduces the chance of cheating and automatically distributes prize pools.
- The problem of addiction is a growing problem, where children as young as 6 refuse to go to school and adolescents miss large chunks of school time.
- Monetization of digital goods is problematic. Players spend inordinate amounts of time and money to earn digital goods — but they have no value if the player turns to a new game. It’s difficult to know exactly what the value of a skin is. There is also no secure way to sell these digital assets to other players or across games, and to convert skins to fiat. Blockchain and tokenization are the obvious answer here.
- Related to this is skin gambling. Virtual goods such as skins are used as virtual currency to bet on the outcomes of games — or are even used in other games such as blackjack or roulette. There is a significant amount of money involved here — in 2016 it was estimated at $5 billion, and the value of collections is thought to be close to $50 billion.
Valve has tried to manage some of this through its digital rights management programme on the Steam platform and has been forced to stop certain sites from using the Steam interface to enable gambling. However, skin gambling just goes underground.
Opskins has set up a marketplace to buy and sell virtual items but is still faced with difficulties of cross-border deposits, the conversion of skins to fiat currencies, high transaction fees and minimum deposit requirements. The potential for fraud means that the number of customer transactions must be restricted.
A solution to many of the problems listed is blockchain technology. It will also make the eSports industry more transparent and efficient.
- It provides transparency; it’s incorruptible; smart contracts ensure fairness, security and speedy implementation of payments and other agreement terms.
- The key is tokenization, where value is held and distributed via peer-to-peer networks rather than centralized hubs. eSports is a perfect application of tokenization, and there are predictions that, in the future, game-purchase transactions will occur exclusively in cryptocurrency.
- Blockchain shifts power relationships — so, in eSports, this means putting some of the power currently in the hands of publishers and large tournament organizers into the hand of players and viewers.
- Platforms become facilitators of decentralization, rather than providers of centralized services.
- Financial and geographical restrictions become irrelevant — this is important to eSports, which, after soccer, is the first truly global sport.
STARTUPS ADDRESSING THE PROBLEMS ASSOCIATED WITH ESPORTS
Start-ups are aiming to leverage the benefits of blockchain to set up smart contracts, host tournaments, facilitate the purchase and exchange of virtual assets, allow for legal betting, develop player skills and build communities.
Some examples include the following:
- Gimli is a platform that allows for interaction between viewers and streamers, across several games. Users use the Gimli token to make donations directly to their favorite streamers, participate in challenges and surveys, have an impact on streamers’ decisions, and bet on results.
- Opsports has introduced the Wax token to overcome the difficulties associated with cross-border trading of skins.
- FirstBlood has a platform on the Ethereum blockchain to decentralize tournament setup and the distribution of winnings. Players can test their skills, solo or in teams, and challenge each other for rewards — but they won’t need traditional money transfers, financial regulations and middlemen. Using blockchain, all FirstBlood’s transactions are publicly verifiable and resistant to counterfeit. It will also encourage the use of cryptocurrencies.
- Unikrn is a high-tech eSports betting platform. It was launched in 2014 with backing from Mark Cuban, 500 Startups, and Ashton Kutcher. It created its own token, the Unikoin, and, recently, the UnikoinGold, as a currency for betting on eSports events. With new blockchain developments, Unikrn allows users to bet legally from almost anywhere in the world, using its virtual tokens. It also uses the technology to handle account verification, KYC, anti-money-laundering, and problem gambling.
- Esports.com provides an online betting and statistics service, linked to an online eSports shop, where users can shop directly from multiple suppliers (rather than watch advertisements), and a “university” to build the understanding and skills associated with various games. Esports is also a member of the Esports Crypto Consortium — where members will pool their resources and provide interoperability across platforms. This consortium will bring together crypto tokens and coins to encourage competitions and build communities, allow for decentralized sports betting, and provide a decentralized interactive platform for streamers and viewers.
- Eloplay caters for the millions of players who want to battle for prizes and awards, but who are excluded by the focus on professional players. Players and brands can set up “Smart Tournaments” governed by smart contracts, and using Eloplay tokens as the prize pool.
- DreamTeam addresses the need to provide some structure to the recruitment of players for teams, especially from small tournaments, and for the management of these teams. It uses smart contracts to set up contractual financial relations between participants and to pay out prize money correctly.
- Network Units uses the decentralization process to pool computing resources and unused bandwidth, thus increasing efficiency and speed of play while significantly reducing the normal costs to gamers and developers. It also has a built-in reputation system to improve fairness and prevent cheating.
Despite this progress, there is still fragmentation in the services offered. Many of the existing projects aim to solve a single problem on the market. There seems to be a need in the eSports market for a large ecosystem that will synchronize more of the aspects.
This makes the emergence of another startup — Play2Live— very interesting.
THE PLAY2LIVE SOLUTION — THE FIRST DECENTRALIZED STREAMING PLATFORM
Play2Live aims to use blockchain potential at full power. It creates a comprehensive ecosystem for streamers, gamers and eSports fans. It has created a streaming platform which integrates blockchain functionality and therefore has unique interactive features and monetizing tools.
Some of its features — all integrated in a simple and seamless way — include:
- Easy interoperability that encourages other products, partners and users to join its ecosystem, rather than competing with them (this is much like the Steam model).
- Blockchain technology ensures a revenue-sharing model that is fair and transparent and allows everyone to benefit — including viewers. There are 15 different ways to generate revenue for the platform — and 11 of these are shared.
- An inbuilt crowdfunding system can be used for tournament organization or for streamers who need funds to launch their broadcasts. Funds can be collected for many events simultaneously.
- An escrow system where the platform itself facilitates goals to be set according to the funds raised ensures that conditions are met and that payments are distributed correctly
- A ticketing system for major tournaments
- A streaming platform, like Twitch and YouTube Gaming
- Packages of benefits to participants and premium subscription services
- Integrated betting and gambling on the platform, allowing viewers to place bets during tournaments (with no middleman required) or to place bets with outside bookmakers, without leaving the platform.
- The use of cryptocurrency — all transactions on the platform are via its own token, the LUC. LUC can be bought using either fiat currencies of cryptocurrencies like bitcoin and Ethereum. Winnings and earnings can be re-converted into any of these currencies, or used on the platform to buy games from partner stores, to make donations directly to streamers, for bets on teams and competitions, for subscriptions and for fees to participate in tournaments.
- Interactivity on a new level allows viewers to influence the content and the end-result of tournaments. They can use LUC tokens to vote for the teams they’d like to see competing against each other, the tournament format, the commentators and even the locations. Play2Live works with tournament organizers to set up tournaments to match the wishes of users.
- Interactivity allows streamers to set tasks for viewers (e.g. to watch other streamers, or to watch adverts) and reward them for completed tasks. Streamers have 11 ways of monetization and can start to earn LUC from their very first streams, without any limitations. They are B2B partners on the platform, incentivized to attract new viewers.
- A new approach to advertising sees advertising disabled by default on the streaming platform. However, viewers are incentivized to watch the adverts, as they are rewarded with LUC every time they do.
- P2P CDN service on the platform allows for content to be distributed via users’ PCs/laptops/gadgets, thereby reducing CDN maintenance costs for the platform. At the same time, users are rewarded with LUC for sharing their resources.
So, Play2Live will provide most of the services provided in fragmented form by the startups we listed earlier — but all in a single, integrated, blockchain-based ecosystem. As well as that, Play2Live aims to allow any third-party projects and developers to freely integrate with the platform via API. The project have provided enough incentives to encourage viewers, streamers, tournament organizers, publishers, bookmakers and advertisers to migrate to this platform.
Blockchain, cryptocurrencies and eSports are all new and growing. They are set to both support and disrupt each other. Play2Live is poised to be part of it!
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