Odds on the Future of eSports: How Big Could This Get?

When I think of competitive gaming, I immediately hearken back to the classic 1989 film The Wizard starring Fred Savage.

You know the one, where Corey and his little brother Jimmy hitchhike across the country to compete in the ultimate video game championship. It’s the movie that introduced young gamers to Nintendo’s Power Glove. Ah, yes, the good ol’ days.

Competitive gaming has come a long way since the 80s arcade era, when people would spend their quarters trying to break the world record and get their names in Twin Galaxies Magazine.

Now, every game costs a lot more than a quarter to play, but you can also think of the money spent as an investment, because there’s potential to earn millions as a pro.

How Popular Are eSports Right Now?

The influx of money into eSports is a result of its ever-growing popularity. The way things are trending, competitive gaming will one day be bigger than most modern day professional sports. It already outperformed the World Series and NBA Finals by one metric. Dare I say the Super Bowl is next?

It’s a bold statement, but Millennials are eSports fanatics, and the following generations will be, too.

According to research conducted by Newzoo, 14-percent of North Americans aged 21-35 are competitive gaming enthusiasts, while 18-percent watch NHL hockey. When it comes to the NFL, 40% of Millennials enjoy watching pigskin but that number is in a slow decline. And those numbers only focus on the North American market. The international appetite for eSports is massive.

According to Newzoo, the global eSports audience will reach 385.5 million in 2017, made up of 191 million eSports “Enthusiasts” and a further 194 million “Occasional Viewers.” The number of Enthusiasts is expected to grow by 50-percent by 2020, totaling 286 million alone, and it’s estimated eSports will have an overall awareness reach of 1.8 billion by 2020.

How could video games become more interesting than watching the New England Patriots win another Super Bowl? “GosuDreams,” a freelance League of Legends commentator, sees the medium as part of the method:

“I think the biggest factor with the rise of eSports has to do with improvements in technologies and the changes in how people consume their media online. The introduction of online gaming changed the interaction between gamers entirely. Prior to the switch to online, people had to find a house or rent an area for them to meet up and play.”

According to GosuDreams, competitive gaming really took off when people could watch their favorite players or teams compete live from the privacy of their own bedroom.

“Streaming platforms had a threefold effect for competitive gaming. The first was for the event organizers. Since the games could be viewed online, there was no reliance on television networks. Organizers could put on events without having to worry about numbers. 

Streaming platforms also gave tournaments and their organizers the tools to expand their reach, growing viewership over time. As the numbers grew so did sponsorship interest. This sponsorship money gave legitimacy to the scene. It helped by attaching a well-known brand name to the events which looked great from a customer perspective but it also provided the funds necessary to up the production quality.

The third impact is what the shift towards consuming media online has had for the players themselves. Sites such as YouTube and Twitch.tv ha[ve] become phenomenally popular. This has given a much-needed secondary source of revenue for players – removing the reliance on tournament winnings or another job to keep themselves afloat.”

What Games Are People Watching?

Currently, three games dominate the eSports landscape: League of Legends, CS:GO (Counter-Strike), and DOTA 2. These three titles make up a majority of the viewership on platforms like Twitch, and generate sellout crowds in countries across the globe.

However, Activision/Blizzard’s Overwatch, a first-person shooter, is increasing in popularity with players competing via console and PC. It recently unseated League of Legends as the top-played game in Korean internet cafes which is a massive accomplishment. And the company’s Overwatch league has recently seen investments from traditional sports franchises, including the New England Patriots and Miami Dolphins.

You’re also seeing games like EA’s FIFA become bigger titles in the eSports scene with some of the larger European soccer clubs paying gamers to represent them in the FIFA e-leagues. Having professional sports teams, athletes, and celebrities invest their time and money into eSports has had a big impact from an awareness point of view.

One impediment to the growth of eSports is a lack of parity. Although competitive gaming is huge all over the world, the dominance of teams from South Korea and China is likely hampering growth in other markets.

Both South Korea and China have embraced competitive gaming. They have turned their top players into big stars and they pour tons of money into player training. But as we see new games come onto the scene, the playing field has started to level out.

How Far Could This eSports Thing Go?

ESports are still very young but when you see large-scale tournaments like DOTA 2’s The International generate a $20 million prize pool, the biggest in the history of eSports, you wonder how high the ceiling is.

Ultimately, the more popular the game, the more likely you will see competitions created. It might seem like a win for game developers because it gets their game out there and played by millions, but as much as eSports has taken these game titles to the stratosphere, it has not always been a profitable venture for some developers.

Putting on massive events in stadiums, having to provide prize money, and many other costs have made competitive gaming difficult as a business venture. Take Riot’s League of Legends for instance. Although it has been the crème de la crème when it comes to competitive gaming, it has actually cost the developer a small fortune. The cost of casters, broadcast equipment, and infrastructure to support the marketing effort has created a loss.

There’s a simple fix, in theory. Publishers just need advertisers and sponsors to invest more money than what is going out. Easier said than done, of course, though corporations will see increased value in advertising/sponsorship as the eSports audience continues to grow. We’re already seeing the positive impacts of that audience growth.

In 2016, ESPN and other major networks invested $50 million in eSports, and that number is expected to jump exponentially over the next few years as more networks button-mash their way into the action. Big sporting brands like Nike, Adidas, and Under Armour are also fighting over jersey rights for some of the big eSports events.

Overall the future of eSports looks bright and yes, it will one day be bigger than most traditional sports. Instead of picking up a stick and ball and dreaming of playing for the Chicago Cubs, kids will be picking up keyboards and dreaming of playing for Digital Chaos.

Is It All Sunshine and Lollipops?

The quick answer is “no.” Currently, competitive gaming is the Wild West when it comes to organization and regulation. Some eSports tournaments and events are run professionally, but most are not, and the life of most “pros” does not feature the glamor of, say, an NBA star … or even one who rides the pine. Most dedicate their whole life to gaming in hopes of hitting that big pay-day, but ultimately only wind up with a few extra dollars and an extreme case of burn-out.

But GosuDreams sees those aspects improving in time:

I often draw parallels between eSports and where UFC was several years ago. UFC was relatively under the radar. However, once people began to talk about it, it quickly garnered attention, which leads to investment, which turned into the powerhouse we see today. At this stage, I don’t think it’s a debate of ‘if’ but rather ‘when’ eSports will become mainstream. The real question is what that landscape will look like when we get there.

Gone are the days of putting quarters in a machine or wearing a gimmicky Power Glove, today it’s big business and shows no signs of slowing down. As “GosuDreams” says, “The future is bright and the path is paved with tiny, glowing LEDs.”

Odds on the Future of eSports

Odds eSports become a demonstration sport at the Olympics in the next 50 years: 2/1

Over/Under on the largest live crowd for an eSports event by the end of 2020: 199,000

Over/Under on the largest live online viewership for an eSports event by the end of 2020: 120 million

Odds the following countries create government-funded eSports programs by 2020

• Russia: 9/1
• United States: 50/1
• Canada: 100/1

Financial Odds

• Odds eSports sponsorship revenue will increase to $650 million by 2020: 7/3
• Odds eSports media rights generate $300 million by 2020: 1/1
• Odds an eSports tournament has a $75-million prize pool by 2020: 1/1

Odds on the #1 eSports game (globally) by 2020

• Overwatch franchise: 3/1
• League of Legends franchise: 4/1
• Counter-Strike franchise: 9/1
• DOTA 2 franchise: 10/1
• Starcraft franchise: 19/1
• FIFA franchise: 24/1
• Hearthstone franchise: 50/1
• Call of Duty franchise: 100/1
• Madden franchise: 200/1
• FIELD: 2/1