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Esports: Millions of Viewers, Millions of Dollars

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Initially published on Medium — July 22, 2015

For my 12th birthday, I received Xbox Live and Call Of Duty 2 for the Xbox 360. My friends and I played online together daily. We quickly became exposed to the competitive scene, and started to play “clan” matches regularly. My dream, at the time, was to become a professional gamer. To this day, I still feel more upset about not “clutching” up in certain Call of Duty matches than I do about missing game-winning shots in intramural basketball games. My dreams of becoming a professional gamer halted when I went to college; however, that has not stopped me from attempting to fund the future of eSports.

What is esports?

Competitive gaming is not a new concept. If you have ever been to an arcade, you have likely seen strangers and friends competing on games like Street Fighter, Dance Dance Revolution, etc. Over the past 20 years there has been unprecedented growth in the industry of eSports.

There are several key innovations and milestones that contributed to this explosive growth. The invention of personal computers and gaming consoles resulted in Local Area Network (LAN) parties, where people could play and compete locally. Furthermore, the introduction of the internet enabled people to compete with individuals and teams globally. Naturally, this has led to countless opportunities for tournaments, both online and offline. The ability to live-stream and upload your gameplay allows hundreds of thousands to tune in regularly to watch matches and scrimmages.

As tournaments started to become more popular, it became increasingly clear that more formal business organizations needed to exist to organize these matches and tournament. These organizations range from: Major League Gaming/GamebattlesESEAFaceItGfinity, etc. Each of these organizations has helped propel and power eSports.

I highly recommend watching this short documentary by PBS, if you are interested in learning more about the world of eSports. To summarize, within eSports there are several genres that competitive gaming can be sorted into:

  • Shooters (Halo, Counter Strike, Call of Duty, etc.)
  • Fighting (Street Fighter, Tekken, Super Smash Bros, etc.)
  • Real-time Strategy (StarCraft, WarCraft, Command & Conquer, etc.)
  • Multiplayer Online Battle Arena — MOBA’s (League of Legends, Dota, Smite, etc.)

Shooters and MOBA’s are heavily focused on teamwork and team coordination. In contrast, real-time strategy and fighting games are typically individuals competing against one another. Each of these genres of eSports is incredibly large; however, MOBA’s and Shooters are really leading the charge currently. Specifically, Counter Strike: Global Offensive, Dota 2, and League of Legends.

Why is eSports so compelling?

  • Watching live is critical because each eSports game results in a win/loss.
  • When not playing matches, professional players often stream and interact with their viewers personally. Imagine being able to watch and interact with Michael Jordan or Tiger Woods as they practice. People watch streams for the action, but stay for the personalities and interactivity from streamers.
  • If a professional player isn’t streaming their matches or scrimmages, they are typically creating YouTube content to increase their fanbase.
  • eSports still creates the fandom and comradery that “normal” sports produces. As a viewer and fan, you understand and realize the high-stakes that these players have. Especially if you watch their personal live-streams and have interacted with them.
  • Becoming a professional eSports player seems a lot more attainable to most children than becoming a professional athlete might.
  • Accessibility is key. As more people have access to the internet and personal computers, it is easier than ever to watch streams and start practicing to become a professional player.
  • Video quality and graphics are extremely high.
  • For first-person-shooters, you are able to watch matches from the Pro’s perspective.
  • eSports is a community. Every streaming site has a live-chat where you can chat with other fans and the streamer.

But…do people actually watch eSports?

Hopefully, by now, you’ve gathered that the answer is yes. It’s probably easiest to breakdown viewership of eSports most popular game: League of Legends.

League of Legends has over 27 million daily players and over 67 million monthly players. Every year, League of Legends hosts a World Championship where 20 of the best players (4 teams of 5) in the world compete for a large cash prize. In 2014, the 1st place team took home $1,000,000.

On October 4th of 2013, history was made in eSports as 32 million viewers watched the grand finals broadcast of the 2013 League of Legends World Championship. The grand finals had a peak concurrent viewership of 8.5 million. To put things into perspective, that is more viewers than the 2013 BCS National Championship, 2013 NBA Finals (Game 7), and the 2013 World Series.

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Although the 2014 League of Legends World Championship saw a decrease in total number of unique viewers for the Grand Finals, 27 million viewers is nothing to be upset about. Despite having a lower unique viewer count in 2014, fans watched the grand finals for an average of 67 minutes, which is 25 minutes longer than the 2013 average.

The reason for the decrease is not explicitly clear; however, it is likely attributed to the fanbase sizes of the teams in the Grand Finals. For example, in the NBA, an NBA Finals between the Los Angeles Lakers and Boston Celtics would have much more viewers than an NBA Finals matchup of the Detroit Pistons and Utah Jazz.

On June 1st of 2015, League of Legends announced that the North America League Championship Series will come to a close with a finals held at Madison Square Garden. The winner of this event will punch their ticket for the 2015 World Championships. Unsurprisingly, tickets sold out almost immediately. Expect this years Grand Finals, to yet again, shatter eSports viewership records.

League of Legends is not the only game that brings in large viewership. Last year, Dota 2's International Championship had over 20 million unique viewers. Counter Strike: Global Offensive is a first-person-shooter that I expect to eventually reach these large viewership numbers, as well.

Also, Amazon’s Twitch can’t be left out of this discussion. In a recent industry report, it was stated that almost half of eSports viewers in the United States use Twitch to watch gaming content. Even more compelling, roughly half of eSports viewers participate in some form of competitive gaming. The industry report also stated that the eSports market has reached over 134 million viewers.

Ok…but do professional players actually make money?

There are several revenue streams for competitive gamers: sponsorships, tournament earnings, streaming, and YouTube.

Sponsorships:

Most professional teams and players are sponsored by various brands. For example, one of North America’s most famous League of Legends teams — Team SoloMid is sponsored by companies like: Logitech, HTC, Geico, HyperX, etc.

Depending on the popularity and success of your team, these sponsors might help provide you a salary or travel reimbursement. Most teams wear jerseys when competing at tournaments that feature their sponsorships. Thousands of brands and companies of all scopes and sizes have stepped forward to sponsor eSports teams and events.

Tournament Earnings:

This is the most obvious way players can earn money, but also the most volatile. The most successful PC gamers have earned as much as $1.25M, whereas the most successful console gamers have earned around $250K. If you are interested in seeing the specifics of what professional gamers earn from tournaments, I highly recommend checking out eSportsEarnings.com.

The annual tournament, The International, for Dota 2 has quickly become one of the major talking points of eSports. Valve and Dota 2 started the prize pool off with a base of $1,600,000, and allowed the rest to be crowdfunded by purchasing “compendiums.” Compendiums, in their simplest forms, are a way to track tournament statistics, and earn exclusive content for contributing the prize pool. Valve/Dota 2 contributes 25% of all Compendium sales to the prize pool. Two months after launching the promotion on May 1st of 2015, all stretch goals have been reached and the prize pool is currently over: $16,590,000.

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That means, to date, close to $15,000,000 has been crowdfunded for this prize pool. It should be noted that there is still over 20 days until the tournament takes place. If Valve/Dota 2 follows similar prize distribution to last year, the 1st place team will be taking home over $7M. For obvious reasons, this tournament validates the love, passion, and high stakes that people compete for.

Streaming/YouTube:

As stated above, professional gamers often stream their scrimmages and practices as a way to interact with their fanbase. There a several major platforms for streaming: Twitch.tvMLG.tvAzubu.tvMobcrush.comHitbox.tv, etc. Depending on the live-streaming site, there are ways to donate and subscribe to broadcasters. This is a huge way for professional gamers and streamers to make a living.

Personalities are critical in making extra money while being a professional gamer. For competitive Call Of Duty, there are several professional gamers that have done an incredible job of capturing their audience, such as: OpTic NaDeSHoT (Twitter/YouTube) and OpTic Scump (Twitter/YouTube).

In short, there are a lot of different ways to monetize as a gamer; however, it takes a ton of work like any other job would.

Companies to watch for:

Live-streaming:

Fantasy eSports:

  • Vulcun — eSports Fantasy (Similar to DraftKings/FanDuel)
  • AlphaDraft — eSports Fantasy (Similar to DraftKings/FanDuel)
  • Unikrn — eSports Betting (Only available in UK and Australia)

Misc:

Request for Startups + Potential Challenges

Moving forward there are a lot of interesting opportunities to be explored in the eSports industry. Below are some ideas that I’ve brainstormed and would love to see implemented.

  • An effective way to match/find teammates for competitive gaming.
  • Instructional videos and tutorial sites dedicated to helping players train.
  • A better live-streaming platform, solely focused on competitive gaming. This might sound crazy, especially given the number of live-streaming platforms that exist; however, I truly feel that there is an opportunity for another major player to emerge. Current live-streaming platforms are missing easily accessible replays, videos-on-demand (VOD), stats, etc.
  • Tons of opportunities for new gaming peripherals to exist.

As far as challenges go, there are many:

  • Planning and running offline tournaments is tedious and expensive. It also requires an extensive amount of volunteers to ensure an event is properly run.
  • When sports matches face security issues, they bulk up on security guards, security checkpoints, etc. However, when an online eSports match faces DDoS attacks, there is very little teams and players can do. In fact, many players have voiced concerns regarding their online matches being “betted” on, as outsiders can actually affect the outcome of games.
  • In order for a game to build a competitive scene, it requires a ton of cooperation and encouragement from game developers. For example, Valve has helped dramatically with making Dota 2 one of the most popular games in eSports.