The Billion-Dollar Game – How Esports became a Big Business
The Billion-Dollar Game – How Esports became a Big Business? Esports or competitive video gaming has evolved from a niche activity to a multi-billion dollar industry. It now boasts sold-out stadiums, celebrity owners and prize pools that rival many sporting events. It’s no longer a hobby, but a multi-billion dollar game industry. There are sold-out arenas, celebrity team owners and prize pools that dwarf those of many traditional sporting events. The journey from high score to high finance is the story of technological advances, smart marketing and a fundamental change in how we define sports and entertainment. This blog is related to zainblogs.com. From Pixels to profit: the genesis of a new economy Dollar Game competitions are as old as the Dollar Game themselves. In 1972, the first tournament was held at Stanford University for the game Spacewar, The grand prize was a subscription of Rolling Stone. The arcade culture of the 1980s fostered local rivalries. However, it was not until the 1990s when the commercial foundations were laid. With the advent of the in ,ernet, players could compete from a distance. Dollar Games like StarCraft and Quake fostered online communities. South Korea is where the professional esports models were forged. In the late 90s, government investment in broadband infrastructure created a hyperconnected society. Combining this with the phenomenon of PC bangs, StarCraft Brood War became more than just a game. In the 2000s, the formalization and expansion of international tournaments was a key event that marked the transition to a global industry. World Cyber Games, the Electronic Sports World Cup and other events, which were structured as a digital Olympics brought together players from all over the world. These events were important, but the prize pools are modest today. The real economic boom was still to come and would be fuelled by platforms that brought esports to the masses. The Streaming Revolution – Unlocking a global audience Live-streaming platforms like Twitch.tv were the single biggest catalyst in the commercialization of Esports. Twitch was launched in 2011 and provided a dedicated platform where anyone could broadcast live gameplay to a global audience. This fundamentally altered the business model on several levels: Accessibility in a Massive Way: Instantly, top-tier esports were free to watch. No longer did fans have to depend on live events or television broadcasts. This resulted in a global audience that was massive, engaged and easy to measure. Top athletes were no longer competitors, but content creators. They built their personal brands by streaming practice sessions and interacting live with fans. The direct relationship with consumers gave them tremendous marketing power. Monetization is for Everyone. The streaming of video created new revenue streams. Subscribers could make donations directly or subscribe to their favourite channels. Advertisements and sponsorships could be used by players to turn their gaming into a career, even without winnings from tournaments.Amazon’s acquisition in 2014 of Twitch for almost $1 billion sent a clear message to the world that the audience for gaming was massive and valuable. This surge of viewers created a perfect environment for other pillars in the esports industry to thrive. The Esports Economy: Its Pillars The modern esports market is a complex eco-system with many interdependent revenue streams, which collectively contribute to its billion dollar valuation. Advertisement and Sponsorship The industry’s largest revenue source is from this segment. Companies outside of the gaming industry have flooded the market to reach the 18-34 age group, which is hard to reach. Intel, Razer, Louis Vuitton and Nike logos on jerseys are expected. But the real growth comes from companies like Coca-Cola and Mercedes-Benz. These companies pay for jersey placements and branded content during broadcasts. They also sponsor teams, leagues and individual players. These companies are buying access a highly tech-savvy and engaged audience, which is often not connected to traditional media. Media Rights A competitive market for media right emerged as viewership numbers began competing with traditional sports. The organizers of tournaments and leagues are now selling exclusive broadcasting rights exclusively to streaming platforms, and increasingly to linear television networks. In 2018, Twitch and the Overwatch League reportedly signed a two-year $90 million deal. Since then, platforms like YouTube Gaming and Facebook Gaming have entered the fray, signing multi-hundred-million-dollar deals to become the exclusive homes for major leagues like the Call of Duty League. These deals help to legitimize esports and make it a premium form of media. They also provide leagues with a predictable, stable revenue stream. Publisher Fees for Tickets, Merchandise and Ticketing The Dollar game publishers who create the esports games play a key role. Some, such as Riot Games ( League of Legends ) and Blizzard ( Overwatch ), have adopted a franchise-based model. Teams must pay a large fee (tens or hundreds of millions of dollars), in order to secure a permanent spot in a league. The publishers get upfront capital, and the team owners have a stable asset to build their business around. A significant portion of revenue comes from fans. Publishers and teams share revenue from in Dollar Game items such as character skins with team branding. The physical merchandise from hats to jerseys functions the same as in traditional sports. Finaly, the ticket sales of major live events at arenas such as the Staples Center Los Angeles or Mercedes-Benz Arena Berlin generate millions in revenue. They also create the electric atmosphere which defines championship-level esports. Professionalization of Play The big money brought about the need for more professional structures. Modern esports organizations are far removed from the online competition of a few friends. The top-tier teams, such as Team Liquid and TSM, are multi-million dollar businesses. These organizations provide players with housing, salaries, dedicated team facilities and full support staff. The staff usually includes nutritionists and sports psychologists as well as coaches. It is now common knowledge that the performance of players depends on their physical and mental health. This professionalization not only has improved the quality but has also made investing in teams more … Read more
