eSports is unraveling
The segment gaming never needed
It’s been a tough few months for the segment known as eSports. Vindex (NB: not Windex) made a fire sale to ESL and then promptly shut down its Beyond Gaming venues in the US, followed by layoffs in other teams yesterday. Activision axed its eSports crew. Esports site Boom.tv’s Sumit Gupta decided he had enough free time to also become CEO of Dr. Disrespect’s Midnight Society. League of Legends teams threatened a walkout after some capricious rules changes from Riot. All of this drama, and not a single ounce of it impacts gaming as we know it.
I think it’s fair to call time of death on eSports.
The vertical has been limping along for years, never really breaking out of being less than 1% of the global games market. The whole thing earns less than a single top eSports game itself. But a decade ago, it became the hot topic. Developers asked me, “how do I build an eSport?” Brands asked how they should get involved. Publishers thought they were going to cash in on huge distribution deals. Players thought they’d be Michael Jordan all-stars. And venues pictured packed houses.
Some of this happened. Activision inked deals worth $160M with YouTube for streaming exclusivity; some eSports saw higher viewership than leagues like the NBA; events attracted sponsorship from major, mainstream companies like Pepsi, Red Bull, Mastercard, and others; and a League of Legends event sold out Madison Square Garden. That’s pretty impressive for a space that, just 10 years ago, most people still thought was a niche hobby for dangerous, pale boys in basements.
The funny thing is, what made gaming so powerful was also what made eSports so unnecessary for gamers, advertisers, and publishers.
When I talked to non-endemic brands that were open to exploring sponsorship, they had no idea of the magnitude of the industry, and I tried to put it in terms that were familiar to them:
“How many people play football the day after the Super Bowl? Probably near zero.
How many people play League of Legends the day after the World Championship? 30 million.”
Gamers didn’t need it
The engagement loop of gaming is unparalleled in any other consumer category, hands down. In no other vertical—especially traditional sports—can you play, watch, buy, wear, post about, and compete as an average participant in a single day. Gaming is instantly and always accessible and democratized. As a non-eSports gamer, I play exactly the same way, in the same matches and environment, using the same equipment as any professional eSports player at whatever time of day I want. I’m not limited to how fast I run, how tall I am, how old I am, or my gender. So given the play vs. watch scenario, I can choose whatever I want at that moment. Regular sports? Not so much.
It’s not like my options are either 1) haul a ton of gear down to the worn-out, local high school football field and play with a ragtag team of so-so school friends vs. 2) opt to sit cozy at home and watch professionals do it all way better in a beautiful arena from the comfort of my couch. In that scenario, I can see what wins.
Advertisers didn’t need it
Gaming also doesn’t have seasons when it’s “on” or not, isn’t restricted by the weather, doesn’t need a special location, and doesn’t limit access to competitive players. Unlike traditional sports, there’s no buildup to a single-sport season and once it’s over, it’s over. All games are ready for competitive play or competitive viewing every single day. Which is awesome for reaching consumers if you’re a brand.
Which leads to the elephant in the room: streaming. About 1 billion people watch gaming video content, more than double that of eSports viewership. Thanks to streaming, I don’t need structured eSports to watch some even-better players do their thing in a competitive environment. As the second-most viewed category on YouTube (formerly the first, next to music), I’ve got an endless supply of live streams, how-tos, comedy, you name it. Plenty of things to watch when I’m not playing, most of it not live, formal competition. In addition, advertisers don’t need eSports to reach the eyeballs of this highly valuable population—they can go natively in-game, as we’ve seen with Fortnite’s skins and brand collabs, and reach not only every player, but every viewer beyond formal eSports. This was a major nail in the coffin.
Publishers didn’t need it
So eSports already started way behind the curve in attractiveness compared to 1) just playing games and 2) watching all the other content. Publishers and leagues knew this, so, to make up the difference, they doubled-down on incorporating more aspects of traditional sports.
This was a mistake.
Gaming is an inherently global stage. I can play against someone in Spain and Japan in the same match, or watch videos from anyone, anywhere. But eSports needed to harness tribalism to get people really jazzed up and rooting for their colors, and they thought that location-based teams would be the way to do it. If you grow up in NY, you’re a Jets fan so you should also be a NY Excelsior fan, right?
The newness of eSports was also an issue. Leagues and announcers tried to instill a sense of deep seated rivalries, which felt inorganic instantly. West Ham and Millwall football clubs have been battling since 1897. The average digital game might live a good five to ten years if it’s lucky, and then its teams need to move on. Most eSports teams play more than one game, which also diffuses the intensity of rivalries.
Live fan participation is also just weak compared to traditional sports. The downtime in a football reset or a quiet soccer volley has inspired fan songs and chants that have been around for decades. In gaming, you won’t have a scenario where you can go 90 minutes without anyone scoring, or half an hour watching two teams push each other back and forth a few yards. But that didn’t stop eSports teams from trying to bring music into the picture.
In general, the top-down force feeding of these kinds of rah rah moments landed on jaded viewers who didn’t want them, and reflected the overall directionality issue and misalignment of incentives that plagued all of eSports. Without teams and viewers, the NFL ceases to exist and the game of football loses its luster and bottom-up swell of kids dreaming to be high school star to college recruit to professional draftee. But the game of football wouldn’t die because the NFL did. Activision, meanwhile, could nix its entire eSports structure and not bat an eye. Lose a little distribution money, maybe notice some fall-off in short term user re-activation or LTV. The game itself would continue to thrive until such point they decide to kill it. And then that’s it. Servers off, game over. I think that the power dynamic has been notable not only for leagues and competitors, but everyday gamers.
Is eSports really over and done with? Probably not yet. Saudi Arabia, as part of its $38B planned investments in gaming, claims it will build a $500M “eSports city,” whatever that is. (Maybe construction is suspiciously cheap over there, but NYC’s Hudson Yards occupies a measly 28 acres and cost $25B.) Even if built, the country will have to entice the world’s gaming population—perfectly happy at home on their computers— to travel to a single spot to be met by advertisers who don’t care and publishers who have better ways of making money.
That’s some stiff competition, eSports.
There are plenty of misleading comparisons and some seemingly large disconnects between the writer and the actual esports scene itself. Esports is a new wave and is here to stay. It is the lowest barrier of entry competition on this planet and has the reception of it. It is certainly in a stage of growing and uncertainty but it will prosper long term. There is undeniably a strong audience for this.