re:Think Games — May 7, 20 Esports Industry Observations

Real-Time Strategy (RTS) games were not the only games that drew large audiences. Fans of First Person Shooters will no doubt make a case that “shooters” should get the credit for launching the industry or fighting games. The reality is that the industry evolved across multiple genres of games simultaneously with large events like Gamescon and the Nintendo World Championships in the 90s building awareness and interest. A $1.6M prize pool for “the international” however set a bar that I think few had imagined possible.

The other significant technology that spurred the growth of professional gaming was streaming.

It is really hard to put into perspective how important streaming is. In many ways, I feel it will be the future of media. (I am a GenX’er. Our generational motto is, “It is not that I don’t trust you. I just don’t believe you.” I wear cynicism like a badge of honor.)

When we told our kids, now Generation Z — “don’t be consumers”, we thought it meant stuff, things, products. To them it also meant content. They don’t want to simply consume. They want to participate, they want to co-create. YouTube opened the door for people to broadcast their interests. Twitch made it interactive. How much money is there? Imagine you took all the overhead out of the television industry, most of it anyway, and eliminated it. Streaming directly connects consumers with the entertainment they enjoy.

Streaming dramatically increased fan access to the “stars”. Think of it this way. In broadcast TV, the performers have no way to hear the audience. How good does a conversation have to be for you to sit there for hours never having the chance to participate? Broadcast TV has to be that good.

How much more interesting is a conversation if you get a chance to participate? Audiences will accept a much lower level of production value for the chance to contribute. Anyone would. It’s human nature. We want to be heard, recognized, included. That is what streaming services like Twitch and Mixer allow. It gives the audience a chance to participate in the events. Audience participation creates engagement, the holy grail of consumer sentiment.

Traditional sports has never seen anything like it. What’s more, it still does not quite know how to capitalize on streaming. Imagine Tom Brady, at the hight of his career, deciding to stream his practice sessions and workouts live. Not only would he let the audience into his private work out, but he would also share what he was doing, and why he was doing it. He would share the strategies that made him win. He would encourage the audience to interact with him during his practices.

I am not aware of any traditional sports teams at any level that provide this kind of interactive engagement — partly technical, but also partly out of fear it would give their competition an advantage. In the gaming community, there seems to be a mindset (or at least an acknowledgment) that you can know what I know, but doing what I do will require a lot more work and effort than you can imagine. Yet, when it comes to fan engagement, streaming trumps broadcast.

Is it any wonder that professional gamers built a global audience overnight? You may not be able to play football, but virtually anyone can play a video game — and you get access to the best players in the world to help you get better.

As a result, a new economy materialized. In just under a decade Valve and Riot capitalized on the enormous potential for MOBA’s. In 2019, these two games paid professional players $57M in prize money. That puts these two games slightly ahead of Wimbledon which pays out $49M in prize pool winnings.

Two games, many people have never heard of, offer more prize money than the arguably most prestigious Tennis Tournament in the world. Granted it is not a fair comparison as I’m taking one tennis tournament and comparing it to all the video game tournaments for two games combined, however, I think you get my point. Wimbledon has been around for a long time. In a decade esports has spanned the globe and now features prize pools that rival some of the most storied sporting events in the world.

But DOTA2 and League of Legends are only two games of the same Genre in the $1B esports industry. What are the other titles?