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E-Sports Pioneers Are Making It Up as They Go

By Peter Suciu E-Commerce Times ECT News Network
Aug 3, 2018 5:00 AM PT
e-sports has massive revenue potential along with many obstacles to overcome

A major "sporting event" aired on ESPN, Disney XD and ABC last weekend. It wasn't the recently completed FIFA World Cup, the finale of the Tour de France or the MLB All-Star Game. It was the Overwatch League Grand Finals -- the biggest e-sports championship to date.

Much of the competition was "broadcast" via the online service Twitch, but on July 11 the Overwatch League announced a major deal with Disney to bring the grand finals to those aforementioned channels. Video games literally went prime time -- airing on ESPN on Friday night and in the afternoon throughout the weekend.

Although the ratings may not have been blockbuster -- Friday night's broadcast on ESPN reportedly reached 215,280 households while Sunday's coverage on ABC reached 356,800 households -- the viewership could be enough to prove that e-sports is the real deal.

The concept of professional video gaming isn't entirely new, but it has only been in the past few years that it's gone from a relatively small niche sport to a multibillion-dollar market.

By 2020, the global e-sports market is expected to generate US$1.5 billion in revenues and have an estimated global audience exceeding 600 million fans, according to a recent report from Deloitte.

Next Big Thing

Many past sports and quasi-sports -- from paintball to NASCAR to pool/billiards to poker -- have been dubbed the "next big thing." However, none of those have reached the levels of established sports such as football, baseball or basketball, and even the very international game of soccer (known as "football" around the rest of the world) hasn't cracked the U.S. market.

"I'm not sure what constitutes a 'big thing' -- is it followers, participants or revenue?" pondered Ted Pollak, senior analyst for the game industry at Jon Peddie Research.

"The Westminster Dog Show is a big thing; the Kentucky Derby is a big thing," he told the E-Commerce Times.

"It all depends what your interests are, and for people who enjoy fast-paced competitive video gaming, I can assure you that e-sports is a big thing," Pollak added.

"What makes e-sports different is the overwhelming sense of community it provides and the availability of games on a global scale," suggested Gayle Dickie, CEO of Gamer World News.

"Players are able to make friends with other players halfway around the world and challenge them to a game," she told the E-Commerce Times.

"It can be as localized as a city event or the worldwide viewing of Overwatch League Grand Finals last week in New York with 20,000 people live and millions watching on ESPN," Dickie added. "It's a sport that has so many ways to watch it and caters to a younger loyal growing mobile audience."

Low Barrier of Entry

One advantage that e-sports may have over many other traditional sports is that it has a low barrier of entry.

"E-sports don't have the structural limitations," noted Pete Giorgio, head of the U.S. sports practice at Deloitte Consulting. For example, with "NASCAR you need a track."

That is, of course, a main reason auto racing is limited to a few cities and growth has been slow. E-sports doesn't require the types of facilities that are necessary for established sports such as baseball or football. In a sense, it could be a professional sport that still operates like a pick-up game among friends.

"You could conceive a match in the morning, plan it at lunch, and hold an event that can still be watched by fans around the world in the evening," Giorgio told the E-Commerce Times.

"So will this be as big as the NFL or the English Premier League? We'll see," he mused. "Instead, this could be the ultimate consumer-driven sporting event that could grow from grass root efforts instead of just commercial efforts."

What could make this even bigger is the variety of the games. E-sports encompasses many genres, from shooters to fighting games and more.

It offers "different game genres for different interest groups, adoption of tournaments by niche events -- even celebrity standoffs," said Dickie.

Another reason e-sports has strong growth potential is that, unlike many other sports, whose fans may only be spectators, e-sports attracts video gamers, many of whom could become e-sports competitors themselves.

"Today, 62 percent of U.S. consumers in broadband households play video games at least one hour per week, and 10 percent of consumers in broadband households watch e-sports," said Hunter Sappington, research analyst at Parks Associates.

"This means that there is still a large portion of gamers, in some capacity, who are not watching e-sports content today," he told the E-Commerce Times, "but with gaming and gaming culture becoming more mainstream, e-sports will very likely become more widely accepted and watched in the future."

Is the Fanbase Too Low Key?

One hurdle that e-sports may need to overcome is that the popularity of a handful of online celebrities has created a phenomenon in which many fans are happy simply to watch others play. This may sound exactly like the way traditional sports operate, but the notable difference is that many young fans grow up wanting to be the pros.

If young gamers are content simply to watch, does that bode well for the future of a multibillion dollar sporting league?

"As far as spectating, there are those that play the game and want to watch to admire the skill, and there are also those that in the future will watch because the game genre addresses an interest area," said Jon Peddie's Pollak.

However, what e-sports has going for it is that low barrier of entry, and physical ability isn't crucial.

"E-sports has a larger potential player pool than a sport such as basketball, due to the fact that physical traits matter far less than they do in traditional sports," Sappington observed.

"For example, the Overwatch League, which is the highest level of Overwatch competition, features Se-yeon 'Geguri' Kim, a female who competes alongside all of the male players in the league," he pointed out.

There are those who are gifted with a talent that allows them to excel, of course, but as with any sport, training and practice could be the keys to victory.

"It starts early with gamers as young as middle school," said Dickie.

There is the possibility that as e-sports grow, colleges could offer scholarships. For many schools with a strong STEM program, having an e-sports champion might be better than winning the Rose Bowl -- but that day isn't here yet.

"Currently there is an oxymoronic state of affairs where we see kids turning pro as early as 16 or younger -- and playing through their normal college years to find themselves going back to college after their professional time is done," noted Dickie.

"Also, just as in traditional sports, the more attractive the lifestyle and financial packages are for these young players, the more competition and opportunities there will be for young gamers to turn pro," she said.

Legit Career?

Just as no one should count on that NBA contract, kids probably shouldn't count on pro e-sports as being a high-probability career option, remarked Pollak.

"It's like any pro sport. Not even one kid per school makes it. But as e-sports expands, both the bar to be a pro will lower as more games are adopted, and the average compensation will also drop," he warned.

In other words, today's professional superstars of video games could become akin to Horus Wagner or Ty Cobb, but the future might not be filled with all-stars. Instead, e-sports could become built around minor leagues.

"The definition of a pro will widen, just like what we've seen in auto racing," said Pollak.

"There are sponsored pro drivers at the track all the time in small local races," he noted. They might be sponsored by a local auto body shop -- and then there is NASCAR and Formula One. What this means is that e-sports does not have to have prize money to be a sport, and it could be just like playing hoops on the corner court."

Level Playing Field

E-sports may not require a dedicated arena and pretty much any reasonably large space can easily accommodate even a modest sized tournament, but how level a playing field will the games need to be?

On the one hand, e-sports could take a NASCAR approach, with the competitors/athletes utilizing the same level of equipment. Or it could take the approach of an arms race, where the best equipment gives players an edge.

"We will probably see a bit of each for now," said Deloitte's Giorgio.

"There will be some type of cues from NASCAR and Formula 1 that sets limits to equipment -- but then again, in the sports world we love that a team might be the underdog," he suggested.

Some sports already have salary caps, but e-sports may need an equipment cost cap as well, so that someone can't simply buy a massively overpowered computer rig to gain an advantage.

Then there are the issues about network connectivity.

"It's less about the machine/device and more about the back-end technology that supports the live stream," said Stefan Birrer, CEO of Phenix, provider of real-time IP video solutions.

"You can have a seamless, high-speed 4G connection or a full WiFi signal on your tablet, laptop or cellphone, but if the network delivering the content isn't able to support a true real-time experience -- meaning high-quality, subsecond latency and a potentially infinite number of concurrent users -- then it doesn't matter how advanced your device is," he told the E-Commerce Times.

This could just encourage leagues to ensure faster networks -- while players may have to invest in better systems.

"I'm not sure we want a completely level playing field, as we need to encourage investment while there is still parity, so maybe it will be a balance," suggested Giorgio.

Cheat Codes

Even with comparable computers used by the athletes -- and even more so with console-based games, which obviously would run on virtually identical equipment -- there will be the unpleasant issue of cheating.

Perhaps it won't be the use of performance-enhancing drugs -- apart from energy drinks and too much caffeine, of course -- but there is always the possibility of cheating via software or hardware.

"That's a very valid concern and is why the major tournaments are played in person," said Pollak.

"Even then there could be manipulation of the game environment or latency applied to certain player's controls," he added.

"With e-sports, although dominated by computer codes, people can use third-party software to manipulate and improve performances, and there are fines being implemented to deter such occurrences," said Gamer World News' Dickie.

"There will always be some sort of intrusions and suspected interferences, especially with Counter Strike: GO, and we will see continued monitoring of the pro games in an effort to deter it or eliminate it with bigger fines and even expulsion, but it's definitely a facet of e-sports that requires a majority of eyes watching at all times," she noted.

"To stop it entirely is probably not possible in today's fast-paced tech world," added Dickie, "but keeping it to an occasional and not a regular occurrence should be expected."

The problem will only increase if and when gamers compete online.

"As for remote e-sports, I would never play for money against someone I did not know -- but when you are playing for the joy of the competition, it removes or reduces the incentive for hackers to cheat," Pollak suggested.

"E-sports will go through its own growing pains," said Giorgio, "but that is the nature of competition."


Peter Suciu has been an ECT News Network reporter since 2012. His areas of focus include cybersecurity, mobile phones, displays, streaming media, pay TV and autonomous vehicles. He has written and edited for numerous publications and websites, including Newsweek, Wired and FoxNews.com. Email Peter.


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