In 2002, Seoul’s Sangam Stadium hosted the semi-final of the football World Cup. Last year, its 40,000 seats were sold out again for another, very different sporting event — the League of Legends World Finals. Here, the action took place not on a pitch but on screen. But there were professional teams, coaches, commentators, trophies and fans every bit as devoted to their sport as those of any other.
Competitive computer gaming as a spectator sport is a worldwide phenomenon and one that is challenging its traditional cousins for the attention of fans and their money. A 2015 report on The Global Growth of eSports from market research firm Newzoo provides some idea of the scale of the industry. It claims that some 205 million people watched or played eSports in 2014. “The total amount of frequent eSports viewers will total 89 million globally this year and is anticipated grow to 145 million over the next three years,” Newzoo claims, which would put eSports’ audience on a par with that of American Football.
Those World Finals in South Korea, a country that has been in the vanguard of the growth of eSports, drew an online audience of 27 million, mostly viewing via the online broadcaster Twitch. At Newzoo’s ‘conservative’ estimate, the eSports market, which is already worth $194 million per year, will more than double in size by 2017 to $465 million.
And it’s not just the numbers that make eSports so impressive. As much a social as it is a sporting phenomenon, eSports is now genuinely worldwide with significant audiences in Europe and the US, predominantly among relatively affluent under 25s. Twitch claims 100m viewers every month, with extraordinary engagement levels.
“Gaming is what every traditional sports league is desperate to become: young, global, digital and increasingly diverse,” ESPN magazine claimed recently in a special issue dedicated to eSports.
The Leaders’ Sport Business Summit 2015, held at Chelsea’s Stamford Bridge ground in October, brought representatives from the three planks of the eSports platform together to discuss its current and future shape: Ralf Reichert, CEO of Germany-based Electronic Sports League, Wouter Sleijffers, CEO of leading pro-gamer team Fnatic and Stuart Saw, regional director EMEA of Twitch, which is the dominant online broadcast channel for eSports.
A former gamer, Reichert co-founded what was to become ESL in 1997. “We thought this is going to be a spectator sport: all spectator sports are based on the fact that more people watch than play them and we thought this would happen with gaming too,” he said. ESL “organises tournament circuits in the same way that the ATP does for tennis, and we organise regular leagues across many different games.”
Reichert’s prediction of the shift from gamer to spectator has been borne out by the data gathered by Newzoo. It found that 40% of eSports viewers today don’t play any of the most popular games, preferring to watch instead.
Those games are a mix of familiar console favourites such as the FIFA series or Call of Duty and titles that have proved particularly appealing for the competitive format, such as strategy game League of Legends and the first person shooter Counter-Strike.
Fans follow their favourite pros every bit as avidly of those of any other sport. The Fnatic team, explained Sleijffers, was formed in 2004. It has six pro teams playing League of Legends and Counter-Strike. “The players do this professionally,” he explained. Fnatic pays them a salary and puts them up in ‘gaming houses’ where the teams “practice every day. They discuss strategies, they have a manager and a coach. It’s very close to other sports teams in terms of how the athletes approach competing.” Fnatic advises players on diet and exercise. Analysts provide tactical help, while psychologists are also on hand. And just like other professional sporting teams, Fnatic has a wide range of licenced merchandise. In fact, Sleijffers said, “our mission is to build the biggest lifestyle brand in eSports”.
Key to building that brand is Twitch which not only streams tournaments live but also provides direct channels for players and teams to communicate with fans. “Twitch plays a unique part in the eSports ecosystem,” Saw said. “All of the top players have a Twitch channel. They live stream themselves, the fans can watch them playing and practising, 2
3 they play with fans, talk to fans, then that all builds up into the great stadium events that Ralf’s team run and Wouter’s play in.”
The value of Twitch was, literally, underlined last year when Amazon paid $970m for it. Why? “The engagement,” Saw replied. “Twitch has over 100m unique users on a monthly basis and the average user spends 104 minutes per day on the platform. Those statistics go through roof with eSports.”
Players who have their own Twitch channels receive part of the advertising revenue generated by pre- and mid-roll ads during streams and by unlocking extra features such as HD or chat. “On Twitch you can also do donations,” Sleijffers explained, “so if people appreciate someone’s gameplay they can make a donation to a player.” Increasingly, players are also receiving revenue from brand sponsors, on top of tournament prize money that can run into millions of dollars – one recent eSports tournament had a bigger total prize fund than this year’s cricket world cup. For sponsors, Sleijffers claimed, the close relationship between eSports and its fans offers the chance to access a very hard to reach audience that is typically resistant to traditional advertising.
For ESL, the revenue model is very similar to most other sports, Reichert explained. “The revenue channels are media rights, sponsorship, gate revenues, hospitality and merchandising but the percentages are a little different. In eSports, the live part is much smaller, but the online broadcast part is much higher. What we will see in future is the growth of all these channels. The average fan in eSports has a monetisation of $2 per year, in the National Hockey League it’s $18 and in football $54 so the monetisation is pretty small right now. Our job now is to make eSports more popular, to get the big brands educated and interested.”
Interesting those brands will in part depend on eSports becoming more professionalised. Just like other sports, it has had its scandals.
There have been concerns over doping, both digital and chemical. In terms of the former, software has been used to enhance performance in certain games. As for drugs, stimulants such as Ritalin and Adderall can boost concentration, improve reaction time and prevent fatigue. Conversely, valium or other drugs with similar calming effects have been used to help players cope with pressure.
In response, the ESL, has introduced drug-testing and announced plans to work with WADA, the world anti-doping agency, while many live streams of games now use delays to combat betting scams.
The next step will be developing effective governing bodies for eSports: South Korea already has its Korea e-Sports Association, the Philippines has followed suit. “That’s a natural evolution that will come,” Saw says. “There will be governing bodies, national associations, all these things will come in time. But eSports is a very international thing and pro-gamers go from one game to another. How you create a governing body that works across that ecosystem is still a challenge we need to face.”
“Traditional sports have had 60 years to figure this out, we have to do it in five,” Sleijffers pointed out. But, Reichert added, “We are very conscious that other sports have failed to protect their sports – cycling in particular – so we are trying to do these things as early as possible.”
The other challenge may come from sceptical parents. For all eSports’ talk of its professionals as ‘athletes’, its participants are spending some 16 hours per day in front of a screen. To reach their level of expertise will have taken many more hours of practice. Is a career in computer gaming really something that parents will encourage their kids to pursue?
“Historically it has been a big challenge,” Reichert admitted. “What I can tell every parent is that it’s a balance. Obviously it’s not a good idea if your kid plays ten hours of video games a day. But you can also see it as an opportunity to meet other people. ESports is the most social experience you can have in video games. So [my advice would be] embrace what your kids are doing and help them to get the best out of it.”
We might even see eSports at the Olympics one day. In January, the Korean Olympic Committee officially recognised eSports as a second-tier Olympic sport, placing it alongside the likes of chess and polo.
The Leaders Sport Business Summit brought together over 1500 of the industry’s most influential people, sharing insights to help shape the future of sport.
See leadersinsport.com. Lead image: Fans at the Intel Extreme Masters event in Shenzen in 2015. Photo: Helena Kristiansson/ESL
This article also appears in the December 2015 print issue of CR, our Sport special. See here for details