August 24th 2013, the League of Legends final sells/sold out the LA’s Staple Center in less than an hour. Resale tickets inflate/inflated to the hundreds of dollars, becoming instantly available in Stub Hub. The expectations and excitement of the competition is huge and fans struggle to purchase tickets. On the day of the competition, 40,000 plus seats were sold out at the Staples Centre in Los Angeles. More than 27 Million viewers logged in to live stream the League of Legend Championship. You would think that LOL is a pseudonym for a basketball game or a fighting event, but the reality is that it is an E-Sport. The athletes are neither footballers nor fighters, but video-game players in their early 20’s, wearing huge headsets and drinking extra large cans of energy drinks. The industry is no longer just a niche market, the reality is that E-Sports is a real concept with a massive market that is rapidly growing. Fans gather around to watch and support their favorite teams as cyber athletes compete for astronomic tournament prices.
What are E-Sports?
E-Sports are multiplayer video game competitions between professional players, aka competitive gaming. The most popular are real-time online strategies or multiplayer fighting video games such as League of Legends, Dota II or Starcraft. Cyber athletes play individually or in teams, in what are moderate length games, with an approximate duration of 1 to 2 hours. Meanwhile, fans gather around and urge on their favorite players with excitement. As you can observe, the only difference between E-sports and the more traditional sports today, is the longevity of the latter and that the e-sports doesn't require athletes, but cyber athletes; people competing using machines, being tested more on their cognitive skills than their physical abilities. Currently, competitive gaming hasestablished popularity in South Korea and other South Asian countries. The competitive gaming market is rapidly growing in Europe and America as well. However there are also curious cases like Japan, where the demand for competitive gaming is not met, due to hefty regulations in the country.
The rise of professional cyber athletes
The first video game tournament took place almost 20 years ago. Some say that the time for E-Sports has arrived, a fact that corroborated with market data, shows E-Sports as the fastest growing sport with a 30% expected global growth over the next five years. When annualized, these figures hit double digits in certain markets. Professional video game players are no different from traditional sports athletes in the sense that they make money from tournament prizes, team salaries and sponsorships. Competitions happen individually or in teams and fans gather both physically and online to watch their favorite players compete against each other. Not surprisingly, given the nature of video games, most fans log in online to stream matches-with certain tournaments averaging more than 100k viewers per week on midweek tournaments-. In addition, people gather in stadiums to see major events and log onto youtube to watch the best highlights. In the eyes of their fans, professional cyber athletes are heroes and in South Korea some of them have attained the status of being national celebrities.
205 Million People watched E-Sports during 2014 (data source: Newzoo)
$612M E-Sports 2015 expected global revenue
21% Expected annual growth rate for E-Sports in North America & Europe for the next five years
Pipelines of revenue?
No different than any other traditional sport. Players get paid through tournament prizes, team salaries and sponsorships. For entrepreneurs, opportunities are rising in the field ranging from licensing competitions, offering paid streaming service, selling tickets, distributing merchandise oreven displaying online ads. In particular, online streaming has become a great source of revenue for business in the competitive gaming industry. Therefore, the pipelines of revenue are similar to other revenue streams found in more conventional sports but with the unique trait that E-Sports viewers are extremely appealing to advertising due to their unique demographics.
But WAIT; who watches E-Sports?
If you are not familiar with the demand, you can take a guess, but it is likely that you will be wrong. Forget the traditional stereotype of a gamer as a young, single, male living in a basement (most likely in his parents house). No doubt the E-Sports audience is young, but at the same time it is global, diverse and aspiring. This demand has been attracting major sponsors brands such as Coke, Nissan or Red Bull that are already betting hard on this being one of the next big sports out there. For the US supporters, in terms of gender, the distribution is pretty even with 6 out of 10 being males and 4 being females. Additionally, approximately 60% of the viewers are between the ages of 21 and 35, which makes the audience extremely appealing to advertisers as the average age of the followers for other sports has been in an upward trend over the last years.
But will E-Sports really become a thing?
Many of us wonder whether E-Sports will ever manage to have the same size of other more popular sports such as soccer or basketball. Even the question of whether we will see an Olympic Games for E-Sports or include them in the current olympics arises. The only real answers is that time will tell but as of now E-Sports are big, rapidly growing and on the path to become huge.
My bets are that over the next years with the implementation of virtual reality into the video game industry, E-Sports are only set to go uphill. Big brands such as Coke, Nissan or Red Bull are betting on them and regular midweek tournaments are already attracting more than 100k online viewers. In fact, the League of Legends 2013 final introduced at the beginning of this article had more viewers than some of the most well known traditional sports in the world such as the Masters, the NBA Finals or the World Series. The number of viewers that E-Sports are attracting, can be better understood by observing the graph below published earlier this year by ESPN.
The question whether or not e-sports will manage to become a popular and revenue generating sport is being raised by many. Not only sponsors are betting hard on competitive gaming but also tech giants such as Amazon who have acquired Twitch.tv (with over 100M unique visitors and is the largest streaming service for video games) for over $1B in 2014. Bets are on and only time will tell whether E-Sports eventually become a major entertainment source and in what form they do so.