From a group of online competitors to the next massive market opportunity: how much will business shape the future of the e-sports industry?
SCMP Sport’s series on e-sports looks at those who stand primed to make big money from the burgeoning industry
The history of sports is the business of sports. Pele, Namath and Jordan won sports fans hearts, but Monday Night Football, ESPN, and Nike won their share of their minds and wallets.
In the history of professional sports, business shaped the conversation, broadcasted the message, sealed the deals, filled the stadiums and sold the merchandise and broadcasting rights that grew sports into the global behemoth it is today.
And now with those same forces eyeing the next prize, the 100-year story of professional sports is set to play out in just a few short years in e-sports.
The e-sports scene, once a loose and informal collection of online competitive gaming parties, has fast become one of the most promising new markets for a range industries. Exploding viewership numbers and market size are being met with eye-watering investments. New companies are being established every day with the aim of repeating the success of sports, and the hundreds of billions of dollars in revenue that this represents annually.
The driving forces behind this push into e-sports are the promise of accessing the millennial market and the growing popularity of gaming and e-sports.
Legacy media and advertising has been trying, with little success, to get the attention of millennials, particularly males aged 18 to 35 who don’t watch traditional TV or respond to conventional advertising as they used to. Signalling a broader shift in the future, the current share of millennials in the e-sports fan base is two to three times that which tunes into the broadcasts of major US sports.
Gaming is now a mainstream activity, with more than two billion people worldwide playing games that will generate more than US$100 billion of revenue in 2017. China alone is expected to generate US$27.5 billion of this. Of these two billion, approximately 300 million are e-sports fans, and the number is growing every year.
The market size, demographics and consumption habits of e-sports enthusiasts amount to a staggering business opportunity both for old and new business interests. Major organisations in traditional sports, media and advertising see e-sports fitting nicely into the well-defined and immensely lucrative existing framework, while businesses endemic to the scene are seeking new ways monetise every aspect of the scene.
Those at the pinnacle of the sports industry – NBA, European soccer organisations, etc – see themselves as having the know-how and funds to take advantage of e-sports’ potential. Not only do they hope to build the next NFL, they also see more practical opportunities in new and complementary revenue streams. Madison Square Company, for example, has acquired a controlling stake in North American e-sports team Counter Logic Gaming, which fields professional teams across a number of e-sports titles. Massive stadiums lying idle are bad for their bottom line, so they’re seeking to fill them with other audiences.
With millions of eyes glued to screens and following their favourites celebrities, the advertising world is giddy at the prospect of tapping into the e-sports fan base. E-sports allows new, and highly effective ways to engage with consumers that just aren’t possible in other sports.
Content providers and social platforms of the digital age like Amazon’s Twitch, Youtube, Twitter and Facebook are already enjoying massive success with the e-sports audience. On Twitch alone, the top 10 e-sports titles account for tens of millions of hours of stream time per month. Millennial viewers who value authenticity above all else shun traditional media and employ ad blockers during the rest of their time online actively choose to support their favourite streamers by making subscriptions and accepting advertisements and product placements.
The more than 300 millions e-sports fans aren’t necessarily interested in the same game, and they don’t share the same culture or values. The audience is fragmented which makes it difficult for large, legacy media organisations like ESPN and Turner Broadcasting to monetise TV broadcasts. They’re pouring resources into their partnerships as they seek ways to overcome these difficulties, but have not yet found a way to match the more personal experience that the niche streaming communities offer.
Developers and publishers of e-sports titles see potential to increase game sales and maximise life-time revenues by establishing an e-sports following around their games. And with ownership of the intellectual property, the companies are sitting on a gold mine. Essentially, the developers have the sole rights to sell every football or baseball mitt used to play their sport.
And the interest doesn’t stop with the private sector. Governments and international organisations are showing interest too. The 2020 Asia Games has signalled that e-sports will be included in the games, and the 2022 Paris Olympic Committee has indicated possible inclusion in those games too.
The popularity of specific e-sports titles may rise and fall, but the underlying attraction for e-sports fans will remain the same, and interest will move from one game to the next. Many businesses will try, and many will fail, but the few who succeed will reap the rewards of a market of hundreds of millions that’s growing every day.