One of the fastest-growing sports in the world in popularity and revenue — competitive gaming, or esports — is, not coincidentally, one of the most accessible.
That accessibility is a big driver of the growth in esports’ global audience, with audience numbers quickly rivaling those of traditional mainstream sports. And that audience growth is resulting in skyrocketing revenues for the industry.
But what exactly is esports?
First, don’t think of esports as a singular thing — that’s where it makes a stark departure from traditional sports. Each electronic game that grows in popularity — and there are hundreds of them, from Super Mario Kart to Call of Duty — develops its own following, competitions and dedicated teams. All of these fall under the umbrella term “esports.”
You may not even know that you — and your children and grandchildren — have participated in or watched esports. The esports industry has come a long way in the decades since the first Christmas Eve prayer that the box under the tree would be the latest video game console.
Video game competition itself has evolved dramatically since the days of battling your best friend for the high score in Pac-Man. It’s not only the quality of the games that has improved greatly, but also their accessibility on a global level (thank you, internet!) and their popularity. More accessibility and popularity, however, raise the bar for players who want to compete at a professional level.
Detroiter Norris Howard remembers his first foray into video games was playing Duck Hunt on an original Nintendo console, and he says his interest in gaming kept him from getting in trouble as a kid.
Now gaming is his job: He’s a host and producer of CheckpointXP, a daily, live, Detroit-based syndicated radio program broadcast to more than 60 affiliates in North America that has a live show on the streaming site Twitch.
“If you’re used to listening to ESPN Radio, our format is very similar,” Howard says, “but we focus on esports and video games.”
Of the hundreds of video games out there, the most popular and lucrative are fighting games, which have been around for decades in some format and style. But those two-player games of a few decades ago — think the popular Street Fighter, where two players battle using the fighting skills their character is trained in — are a diminishing part of the market.
The more popular games now, Howard says and global gaming data show, are multiplayer online battle arena (MOBA) games and first-person shooter (FPS) games. In MOBA games, like League of Legends and Dota 2, teams compete against other teams and the traps and rewards programmed into the game. In FPS games, like team and group games Overwatch and Call of Duty, the screen shows what the individual character sees, rather than a team view.
Follow the $
Esports — or you could use the term “competitive gaming” to avoid triggering the “Is it a real sport?” argument — became a $900 million market in 2018 from publishing fees, media rights, merchandise and tickets, advertising and sponsorships, according to Newzoo, a global gaming industry analytics and research firm.
That figure, which excludes gambling and other traditional gray areas of a sports market, represents a 37 percent year-on-year increase, underscoring esports’ growth in both players and spectators.
And while there is prize money for winning teams, especially the annual championship tournaments that offer purses in the millions of dollars, esports competitors are finding that other forms of revenue from the traditional sporting world are crossing over into the digital realm.
Take sponsorships, for example. For smaller, less internationally known teams, “their lifeblood is sponsorships,” Howard says. Those can come from brands that make mouse pads or headsets or involve larger sponsorships of an event, competition or broadcast. For example, the Overwatch League (OWL) — owned and operated by the video game’s maker, Blizzard Entertainment — has sponsorship deals with Coca-Cola and State Farm Insurance, Howard says.
In addition, game-owned leagues are launching a franchise model, where teams are created to win the lucrative prize money and the leagues reinvest those earnings into the games and operations.
“In 2018, the American franchising model for traditional sports found its way into both the Overwatch League and North American League of Legends Championship Series (NALCS), selling franchise slots to participants for large sums of money,” reported the industry publication The Esports Observer. “The first year of franchising in the NALCS resulted in teams paying $10-$13M USD franchising fees, and spots for OWL’s inaugural season reportedly went for $20M.”
Another revenue stream for game makers, which doesn’t have a traditional sports example to follow, is in-game purchases, called micro-transactions, such as cosmetic upgrades to a character, like a new “skin” for their weapon that makes it look more menacing.
If you build it …
WMU’s Esports Arena, which opened in the former Little Theatre in October, is both a draw for students and puts the university on the map, says Howard.
“Very few teams, from a (traditional) sporting point of view, can contend with (the universities of) Michigan, Nebraska, any big schools you can think of,” he says. “WMU is probably never going to catch up to them in terms of sporting apparatus. Esports, however, is a space in which any school can be competitive if you make the investment early.”
A traditional-age college student is likely toward the end of his or her potential professional career as a player, Howard says, since reflexes become less sharp after about 23 years old. Howard compares the professional opportunities for an esports player as akin to those of soccer players in Europe, where youth that show potential are courted by professional teams instead of by post-high school educational institutions (as opposed to the situation in traditional U.S. sports, where higher education is the gateway to a professional sports career).
Howard calls university esports programs “a scholarship driver for education, not a college-football-equivalent pathway to becoming professional.”
Still, there are minor league equivalents in esports, such as Overwatch‘s “contenders” division. “If you’re good enough, a top 500 player, you’re getting looked at by major teams,” he says.
As noted in the main esports story in this issue, major esports competitions can fill arenas, but will people watch a video game the same way NFL fans sit on their couches on Sundays? Pretty much, says Newzoo. The research firm’s “game streaming tracker” report says that in 2018, live viewership of tournaments for the four biggest esports games on YouTube and the gaming-stream site Twitch were watched for “an impressive 190.1 million hours.”
With the internet underpinning seemingly unlimited platforms, and game designers having seemingly unlimited ideas, players don’t even need to leave their homes to take part in the booming industry.
“After all, the global esports audience will total 456 million in 2019 — up from 2018’s 395 million,” Newzoo says. The Asia-Pacific region accounted for 57 percent of that audience last year. North America held 17 percent of the audience, although it accounted for more than a third of the revenues in the market.
An October 2018 Goldman Sachs Equity Research report puts the esports audience at less than half of Newzoo’s estimates but notes that the audience is still larger than baseball and hockey. Esports’ popularity will continue to grow due to development in institutions like leagues and arenas for live competitions, though the vast majority of viewers watch channels streaming online, the Goldman Sachs report says.
“We believe esports are at the cross-section of some powerful trends: social connections being formed and maintained online, digital consumption of video, and global growth in the gaming audience,” the Goldman Sachs report says.
Popularity means opportunities to make money, which is why a former La-Z-Boy pastime is quickly broadening its scope. Esports are being considered for inclusion in the 2024 Olympics (though there are concerns that formal university-level governance of esports would mean college competitors can’t get paid).
But really, how popular is it?
The large number of players and viewers are driving not only revenues, but the influence of esports as well.
In January, when a gamer was playing his 50th straight hour of a new version of Donkey Kong on his “Twitch stream” as an awareness fundraiser for a British transgender youth support organization, he got a surprise online guest. He and the estimated 17,000 viewers watching him heard newly elected U.S. Rep. Alexandria Ocasio-Cortez (D-NY) use the platform to say, “Trans rights are civil rights are human rights” — not a stereotypical conversation in international online gaming.
Esports’ popularity and influence are likely to be seen in terms of generations, not years. “How it penetrates the culture, it’s a matter of time,” Howard says, especially in overcoming the stigma of gaming being a kids’ hobby.
“Professional sports never had that stigma when coming into the cultural zeitgeist. Once you have a generation of gamers becoming executives of news organizations and Fortune 500 companies, you’ll see a cultural shift and acceptance,” he says.
“Very few things are as democratic as video games,” Howard adds, noting that the digital divide is becoming less entrenched in both classism and sexism.
The champion of the sport might be an unlikely hero: Dominique “SonicFox” McLean, a 20-year-old gay African-American born in Delaware who likes to dress up in animal costumes when he plays. He has earned $500,000 as a player, is a four-time winner of the international fighting games tournament Evolution Championship Series, and was named Esports Player of the Year at The Game Awards 2018.
He ended his acceptance speech with perhaps the most next-generation trash talk ever broadcast: “I guess I just gotta say that I’m gay, black, a furry — pretty much everything a Republican hates — and the best esports player of the whole year, I guess!”
