Should we be talking less about esports and more about streaming?

As I was sitting back eating my popcorn and watching the latest Twitter debate regarding the Tfue/FaZe Clan saga a couple of days ago, this tweet from Tempo Storm owner Reynad caught my eye:

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Reynad was making a point about esports salaries for mediocre players, but what I found interesting was that he used “players with under 50k followers” not “players with X esports accomplishment” as the proxy for what constitutes a mediocre player. The main barometer by which Reynad judged a player’s worth to his organisation wasn’t how many tournament wins they have or how much prize money they bring in, but how many Twitch followers they have.

And you know what, Reynad’s probably right. In a business that runs primarily on sponsorship and advertising dollars, a player’s ability to draw eyeballs on Twitch is probably far more important to a team’s bottom line than that player’s competitive gaming accomplishments.

While being good at the game is an important part of what they do, for a lot of players (or should I say personalities) in gaming, especially the really big names like Ninja and Tfue, competing successfully in an esports setting comes a distant second to building their brand and getting viewers for their streams, where they make their real money.

This is fundamentally different from traditional sports, where on-field success is a pre-requisite to marketing success. LeBron James is the most marketable basketball player in the world because he’s generally acknowledged to be the best basketball player in the world. If he didn’t win a bunch of championships and put up ridiculous stats, he wouldn’t be the marketing juggernaut he is.

That’s not true for someone like Ninja, for instance, who is not by any means the best Fortnite player in the world (don’t get me wrong, he’s very good, but there’s a lot of players out there who are as good or better than him and more accomplished in competitive Fortnite), but is nonetheless by far the most famous and marketable name in pro gaming. Unlike LeBron, guys like Ninja and Tfue didn’t get where they are by succeeding at their chosen (e)sport competitively, but by being good at building their brand and providing an entertainment product to their viewers.

Indeed, aside celebrity pro-am tournaments that help get his name out there, Ninja by his own admission does not participate in esports on at a high level because the practice would interfere with his streaming schedule. Similarly, Tfue recently announced he will no longer be participating in competitive Fortnite because he makes more than enough money in streaming and content creation. If I had to come up with a traditional sports equivalent to this, it would be LeBron James quitting the NBA in order to focus on putting up YouTube videos of himself playing basketball against random people on street courts across the country. Not going to happen.

Indeed, the most successful personalities in gaming today have a lot more in common with talk show hosts or (*sigh*) social media influencers than professional athletes. They provide a nightly entertainment product and try to maximize their audience. Competition, of the kind we associate with traditional sports (or esports), doesn’t figure much into what they do.

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The future looking us in the eyes.

I think this is something that needs to be more widely acknowledged, as it’s key to the direction the industry will be heading in the coming years.

It’s been pretty clear for a while that there’s a lot of people out there who like to watch other people play video games, and we’re basically seeing a new form of entertainment evolve based on this fact. Until recently, though, I think the general assumption has been that the main way people would consume gaming content would be through watching people play competitively in “traditional” esports tournaments and the like.

However it’s looking more and more like that’s not true (for instance, Ninja had three times as many viewer hours watched on his Twitch channel last year as the entire Overwatch League) and that in the future the majority of the viewer hours, and thus money and attention, will go to the streaming and content generation side of the industry, rather than the pure competitive esports side.

All of this is to say is that maybe we should stop talking so much about the esports industry and start talking more about the “digital content creation industry” or some such, of which esports is a subset, as that certainly looks to be the way the wind is blowing. 

Is There an Esports Bubble?

There’s no question that the business community is going a bit crazy for esports right now. It’s rare that more than a couple of days pass without some huge esports investment being announced. Last Friday it was Intel announcing it would be putting another $100 million in to the ESL pro league in Europe. A few weeks ago PlayVS raised $30 million for its high school esports platform. Michael Jordan and Drake are now helping teams close $20+ million funding rounds.

Even in the local esports scene here in Vancouver, things have changed in the past few months. Every esports event I’ve been to recently has been packed with unfamiliar faces, most of them people from the financial world who would not have been around if the same event had been held last year. A friend who’s on the executive of the esports program at a university here recently told me he gets multiple calls a week from investors and hedge funds asking to buy him lunch so they can learn more about the industry. Everyone wants to know how they can get involved with the hot new thing.

What the last esports event I went to looked like.

As more and more investors continue pouring ever larger sums of money into esports, the question of whether the these investments are financially sound, based on where the industry is at, is starting to loom larger and larger and larger.

Today, Ben Fisher of Sports Business Journal published an article noting how the revenues of many of these entities aren’t keeping up with the hype, and a “market correction” may be coming (Ben pointedly avoids the word “bubble,” but I have fewer scruples about using clickbaity titles, so bubble it is). In response to Ben’s article, a lot of industry people on Twitter raised similar concerns how they’ve been talking about the same thing internally the past few months.

I think people are right to be concerned. Whenever a new technology or idea  like esports hits the mainstream, there seems to be a bit (or a lot) of irrational exuberance that kicks in as everyone tries to get in on the ground floor, leading people to make decisions they probably shouldn’t.

A lot of what’s happening now reminds me of what happened with cryprocurrency around this time last year, when  blockchain technology finally started getting attention in the media. Crypto events were packed with new faces, people were starting new companies in the space left and right, existing companies were adding “blockchain” to their name and seeing their stock price quadruple overnight, and the price of Bitcoin surged from around $3,500 USD at the start of August to $20,000 USD by December.

Where is crypto now? The hype has dissipated, the price of Bitcoin is back down to around $3,500 USD, and a lot of the people who put money in last year are taking a sober second look at their investment and not liking what they see. That doesn’t mean that blockchain technology isn’t still going to change the world. I’m sure it will. Eventually.  But it certainly hasn’t yet, and there’s no telling whether, when it finally does, the companies people invested in during the rush last year are going to be the ones to do it.

If esports was Bitcoin, I’d say it’s getting close to the $20,000 mark right now. People are excited. They don’t want to miss out. And as a result they seem to be willing to invest large sums of money into the space, even though they may not understand quite what they’re getting themselves into. And just like with crypto, it’s very likely that a year or two down the road a lot of these people will be taking a look at their investment and regretting their decision.

The assumption everyone seems to be going off right now is that esports is destined  to continue growing at its current pace until it reaches the same level as traditional sports (or replaces it). People investing in Cloud9 or Team Liquid probably think they’re bying into the future esports versions of the LA Lakers or Manchester United. That’s a pretty big assumption to make. While esports could certainly reach that level, there’s nothing that guarantees it will. For all we know it could conceivably follow the trajectory of something poker, and flatten out into a niche sport with a limited audience after an initial meteoric rise, or end up somewhere in between.

There’s still a lot of questions that need to be answered before we can say with any certainty that esports will reach the heights people assume it will. Will esports ever be able to meaningfully cross over to a non-gamer audience? Will it ever have success on TV? (and does that matter?) How exactly do you market esports athletes, and will someone like, say, Faker ever be a household name like a Steph Curry? Even if esports succeeds, will the game publishers be the ones reaping all the rewards? None of these questions have answers yet, and I’m not sure that we’re going to be finding out the answer to many of them anytime soon.

Despite all these concerns, I, like most people in the industry am pretty confident that esports will not follow the path of poker, and that it will succeed… in the long term. Whatever other issues esports may be facing, the core, inescapable fact remains that huge numbers of people currently exist who are extremely passionate about it, that the majority of these people are young, and that their numbers are only growing. Just based on that foundation, if nothing else, I have every confidence that in the long run people will figure out how to make massive sums of money off esports, just like I’m pretty sure blockchain technology will eventually change how we all live our lives in some way.

What I’m definitely not sure about is when that will happen, or whether the companies people are putting money into now will necessarily be the ones to make it happen. And if I was an investor today thinking about putting money into an esports team at a +$100 million valuation, or paying $40 million for an Overwatch League franchise, I would definitely take a second, breathe, and look carefully at how I can expect to see a return on that money, beyond platitudes like “well, esports is on its way up.”

2018 Asian Games Esports Games List Includes Some Surprising Choices

Yesterday, the 2018 Asian Games, billed as the largest multi-sport event in the world outside of the Olympics, announced what games will form part of competition at its inaugural esports event. While esports will be a “demonstration,” not a medal event at these games (they will be a medal event for the next games in 2022), this is still a pretty big deal, as it’s the first time esports has formed part of a major traditional sports competition like this. The games forming part of the lineup are: League of Legends, Hearthstone, StarCraft 2, Pro Evolution Soccer, Clash Royale and Arena of Valor (a Chinese mobile MOBA that basically looks like a mobile version of LoL).

I have to say, if I had guess what games would form part of the lineup, these are not the 6 titles I would necessarily have come up with. My thoughts on each of these choices:

League of Legends: Not a huge surprise, as this is by far the most successful of the six games listed. Of course, the other of the world’s two most successful MOBAs, DotA, is not part of the event. I’m wondering if this was intentional, as the organisers felt they had to pick one game or the other in order to prevent “MOBA overload.” You have to wonder if the two games will become mutually exclusive at major multi-esport events in the future for this reason.

Hearthstone: It’s going to be fun seeing how this one turns out, just because of the RNG factor. Yes, every sport involves luck (although with a lot of other e-sports the luck factor is surprisingly small), but given how blatant and in-your-face the luck factor in Hearthstone is, something seems a bit off about having it as an event at a major sporting competition where medals are won, national pride is at stake and *serious sports things* happen. Do you really want the medal winner of your event decided because [insert name of random damage card here] ended up hitting face instead of the opponent’s board?

Also, given that Hearthstone is not necessarily an easy game to pick up by watching, and you basically need to have played the game to understand how it works or what any of the cards do, the game will have pretty much zero accessibility for non-esports fans (or even gamers who aren’t Hearthstone fans).  This means it’s maybe not the best choice if the purpose of this event is to expose esports to a non-gaming audience.

StarCraft 2: The grandaddy of the e-sports scene! While it doesn’t have the audience numbers it once did, given its role in the development of esports it seems fitting that SC2 should be one of the events here. StarCraft is also probably pound-for-pound the most fun to watch out of the six listed here, and also the easiest game understand and digest for a non-esports audience (when non-gamers think video games, a game like StarCraft, with space marines fighting each other, etc. is probably what they think of). Overall, can’t really complain about this one.

Pro Evolution Soccer: Why not FIFA? [Update: as some reddit commenters to this post have pointed out, PES is the soccer game in Asia instead of FIFA, so that solves that mystery.] Also, scratch that comment about StarCraft 2. This is definitely going to be the most easy to understand game for a non-esports audience, although I feel like it shouldn’t really count because it’s the only game that’s simulating a real sport. On an unrelated note, since I’m assuming real soccer will be an event at the games too, how about a “split” event where the soccer players play real soccer for the first half, and the gamers play PES for the second half, then the scores are combined? This could be the esports equivalent of chess boxing.

Clash Royale: Clash Royale is kind of like the quiet overachieving kid of the esports scene. No one really thinks too much about it, but it shows up in these tournaments more than you’d think. This is also the first of two mobile games forming part of the lineup. People who haven’t played Clash before can literally see the event, download the game on their phone, and be playing 30 seconds later. I feel like I should take this opportunity to invest in SuperCell stock or something.

Arena of Valor: I’ve never heard of this game, and while some quick googling tells me it’s huge in China, I have to wonder if it was really the optimal choice here, especially since the game play is so similar to League of Legends, which is already part of the competition.

Overall, there’s a few major omissions that I would have expected to see on this list, including DotA, Overwatch and CS:GO. Even and Smash Brothers or PUBG may have made an interesting addition if the organizers wanted to stray from the beaten path a bit.

In particular, the lack of shooters is a bit puzzling . If this is supposed to be a showcase of esports in general, it seems like you’d want at least one shooter there. Maybe the organisers were concerned about the potential violent nature of these games, and this isn’t really the image they wanted to convey.

Regardless, while this is not necessarily the game lineup I would have gone with, it will be fun to see how this turns out. Hopefully the organizers pick up some pointers about what worked and didn’t this time around, and use those lessons when setting the lineup for future events.