In 2007, the documentary The King of Kong was released. The film followed two men, flamboyant Billy Mitchell and the more subdued Steve Wiebe, as they competed for the world record score in the video game “Donkey Kong”, which was first released in 1981.
The documentary was a huge success. Part of the appeal was the personalities of Wiebe and Mitchell (and the respective sympathy and antipathy those personalities generated). Another reason was the behind-the-scenes drama and machinations that occurred due to Wiebe’s claim of topping Mitchell’s high score. But the main reason was simply the novelty of watching two people skillfully engage in an activity they spent years honing and improving: playing a video game.
Fast forward 10 years later and professional gaming, now known as eSports, has become a market that is valued at $1.5 billion and an activity that is viewed by millions of spectators. That’s according to a recent report released from the digital research firm Superdata, eSports Courtside: Playmakers of 2017.
To paraphrase a line from another film, 2001’s Training Day: Donkey Kong ain’t got nothing on that.
The Superdata report also predicts that global eSports revenue will grow 26 percent by 2020. The big reason is that eSports has become – and increasingly will become – more mainstream. Viewership is expected to grow 12 percent each year, which will encourage third-party investments. In addition, the biggest games in the industry, such as League of Legends and Overwatch, will continue to grow revenue by selling brand sponsorships, advertisements, tickets sales and team merchandise.
The larger companies, like Activision Blizzard (Overwatch) and Riot Games (League of Legends), are expected to keep increasing prize pools to encourage participation. However, smaller games are also expected to increase their prize pools by finding innovative methods to maintain a player base.
For example, the annual finals prize pool for the eSport Defense of the Ancients 2 broke records this year by reaching $25 million, which was an increase of $4 million from 2016. However, Defense of the Ancients 2 has a much smaller base of monthly users when compared to a big player like League of Legends, 12.6 million compared to 101 million. Yet, its prize pools are over three times as much, 37.1 million compared to 11.4 million.
The way Defense of the Ancients 2 has been able to achieve these record numbers is by supporting the international championship prizes through crowdfunding (specifically by selling a “Battle Pass”, once known as The Compendium). League of Legends has taken notice and, in 2017, crowdfunding for its League World Championship prize pool helped to contribute an additional $5 million to the pot.
This speaks to the power of the eSports audience and their willingness to financially support the events and games that are important to them. Interestingly, this support has been shown to translate to companies that thoughtfully integrate sponsorships within these events. And big names are taking notice. 2017 saw a glut of new companies sponsoring eSports competitions. This year, first-time entrants included The Kraft Group (owner of the New England Patriots) and Mercedes-Benz.
One of the most interesting and illuminating forays came from the National Football League. In August, the NFL announced a partnership with Electronic Arts to create the Madden NFL Club Championship. This is an event that is open to all Madden players on PS4 and Xbox One. The competition began online through ladder matches. Then the top players met head-to-head in matches held in all 32 NFL stadiums and other popular landmarks. The final 32 players (representing every NFL team) will compete at the Madden NFL Club Championship Live Finals at the Pro Bowl Experience in Orlando, Florida. The final match is then held at the Super Bowl Experience in Minneapolis, Minnesota.
So, while advertisers accounted for 35 percent of the $1.5 billion worldwide eSports market, investors like the NFL, made up half of that market. The remaining portion was comprised of prize pools (6 percent), merchandise and ticket sales (5 percent) and betting and amateur tournaments (5 percent).
The NFL has had some bad press this season – more has been written about a number of controversies and dwindling viewership than the games that have been played on the field. The NFL clearly sees eSports as a way to maintain (or gain) relevance with a younger audience.
The structured nature of the Madden NFL Club Championship is mirroring something that another big player is hoping to accomplish: create regional eSports rivalries to generate even more interest in the product. The Overwatch League (created by Blizzard Entertainment) is the first big push to create city-based eSports teams, which is also the biggest attempt to date of bridging the gap between eSports and traditional team sports.
The Overwatch League kicks off this month with 12 teams from around the world competing in matches that can be seen on the streaming service Twitch and the Overwatch League site. The 12 teams represent nine North American teams and three international teams:
- Seoul, Korea (Seoul Dynasty)
- New York, New York (New York Excelsior)
- London, England (London Spitfire)
- Dallas, Texas (Dallas Fuel)
- Houston, Texas (Houston Outlaws)
- Los Angeles, California (two teams: Los Angeles Valiant and the LA Gladiators)
- San Francisco, California (San Francisco Shock)
- Boston, Massachusetts (Boston Uprising)
- Shanghai, China (Shanghai Dragons)
- Florida (Florida Mayhem)
- Philadelphia, Pennsylvania (Philadelphia Fusion)
Players are guaranteed a minimum salary of $50,000 plus benefits and bonuses for winning matches. According to Blizzard, 50 percent of the money earned from matches will go directly to players.
When eSports fans were asked what games they would like to see more content for in the future, Overwatch was the most anticipated title. What the Overwatch League is attempting to do is standardize viewing eSports in a way that is accessible to an audience beyond those who are already in the habit.
Imagine being out with friends and you see an Overwatch stream playing on a TV above the bar. The action is fun and frantic and, when you find out that it’s a local team playing, you pay closer attention. The regionalism of the Overwatch League has the potential to pick up new fans.
As for viewing eSports content, two channels dominate: Twitch and YouTube. Twitch is used when fans wish to view live events, while those who wish to curate what they watch utilize YouTube. Overwhelmingly, eSports viewers leverage both channels, with only 20 percent sticking solely to Twitch and 11 percent limiting their viewership to YouTube. This means advertisers that wish to focus on one platform can still reach the majority of the eSports audience.
Photo Credit: vox.com
Regardless of channel, viewership is on the rise, and new games can generate just as much interest as established contenders.The relatively recent eSports contender PlayerUnknown’s Battlegrounds surpassed 200 million unique viewers on Twitch, and that’s only seven months after its April release. The only eSport on Twitch with more views is the perennial contender League of Legends with an impressive 286 million unique viewers, which is the largest audience for a single game.
Interestingly, it is not necessary for eSports fans to also be players of the games. As of October 2017, PlayerUnknown’s Battlegrounds had 13 million players and 202 million viewers. That means people who watch PlayerUnknown’s Battlegrounds matches are 15 times larger than those who actually play the game.
If you are interested in hosting an eSports tournament or integrating your sponsorship organically with an existing event, we are ready to partner with you. The Trade Group has years of experience in the eSports industry, and we were recently awarded the 2017 Exhibitor Corporate Event Winner for the groundbreaking work we did on the League of Legends Riftwalk Tour. Call 800-343-2005 to discover how we can bring your eSports visions to life.