The Next Billion-Dollar Industry
2019 has been an interesting year, to say the least, a 16-year-old made $3 million dollars while playing VIDEO GAMES, people are making Millions simply by sitting at home and streaming, allowing thousands to watch them online, where the only stressful situation is getting up for a washroom break and racing back before the game starts (trust me, I know), and Venture Capital firms like Sequoia and Celebrities like Drake, Offset and other are investing in teams of gamers.
Somehow playing video games with your friends in your living room just became “eSports” and is set to become the next billion-dollar industry by mid-2022.
But before I explain how, let’s start at the very origins of eSports. Which can be traced back to the late 60s/early 70s.
Back then eSports was simply arcade video game tournaments. People were trying to get the highest score in games like Pac-Man, Asteroids, Space Invaders etc. But at the end of the day, these were tournaments; if you called playing these games a sport, you would probably get laughed at.
The modern version of eSports started roughly over a decade ago when FPS games(First Person Shooter games) came along with the rise of higher internet speeds. The objective wasn’t to just get the highest score anymore, it was to go and kill your opponent in the game in real-time.
It went from playing against a machine to a real person, and now, you didn’t just have to be better than an algorithm, you had to be better than other players.
The eSports Revolution
Games like Call of Duty, League of Legends, Halo, and many others were at the forefront of this revolution.
Now all of a sudden, people didn’t have to go to the arcade, they could sit in their rooms and play in tournaments against other players in real-time.
Since the structure of teams was put into FPS games, people started forming teams they would play in tournaments with. Teams such as FaZe and OpTic Gaming started to form.
Before you know it, video game franchises are hosting their own tournaments at stadiums with prize money. And the category of eSports was born.
Earlier in this decade, video-game franchises like Call of Duty and League of Legends started selling out arenas in Las Vegas, Anaheim, New York, and other major cities. Within a couple of years, these expanded to other continents such as the EU, Australia, and Asia. And the prize pools started getting bigger and bigger.
What franchises and organizations realized is that there was an untapped market of ‘gamers’ that didn’t play conventional sports and they spent the majority of their time playing these video games, and the number was in the hundreds of millions across the world.
Watching other gamers, or ‘streamers’ playing your favourite video games became the equivalent of watching your favourite football team play. Whereas organizing a football match takes a lot of time, money and effort; you can start streaming with a decent computer setup, some external hardware and a free Twitch account. Unlike football games or conventional sports games for that matter, these streams had no quantitative end to them. Once one match ends, you can just hop into another one. And this went on for hours, daily.
The competitive eSports culture spread like a frenzy. To the point where gamers started dropping out of school, getting a house with their teammates and practicing or streaming all the time. Franchises made millions simply off in-game purchases and streaming tournaments.
In 2017, the League of Legends World Cup had 100 million unique viewers, compared to SuperBowl’s 98 million. And this caught the attention of investors.
All of a sudden these gaming groups started to become registered companies and along with recruiting gamers, they started hiring business, marketing, sponsorship and other teams to take a gaming group to become a full organization.
Organizations like FaZe, Cloud9, 100 Thieves (the names are a bit absurd, I know) started to register and go into investment rounds. They had revenue streams from sponsorships, tournament prize pools, Twitch streams; they employed around 50 people(excluding the gamers) and they have a market base of millions, which was constantly growing.
The rapid growth of eSports and its culture can be credited to its relatability
Ask yourself, how many common traits do you have with Tom Brady or Michael Jordan? Often fans of conventional sports can’t relate to their heroes. But this problem doesn’t exist with eSports. Almost anyone with some talent, a good computer set up(consoles too), and a willingness to put in the time can become the next Fortnite world champion.
Organizations capitalize on this relatability to sell their merchandise as a sort of first-step to assimilating into the culture, and onboard new fans to promote their sponsors. As of now, this has been a growing feedback loop which is a part of the exponential growth of this industry.
What’s not to love about this culture?
Living in L.A in a mansion with your friends, gaming for 16+ hours a day, no course load and no fear of maintaining a high GPA, not to mention the fame that comes along with it.
Add the appeal of this glamorous lifestyle with the ease of attaining it, more and more people will come chasing this and that means more users, which to an investor means more money.
This is an international phenomenon
Every day more and more people are somehow becoming a part of the eSports industry in forms of users, gamers/content-creators, investors etc.
eSports tournaments are pulling hundreds of thousands of viewers from every continent. Since this ripple effect is happening over the internet, people from all over the globe are becoming a part of this gigantic market.
In the past, growth in a sporting franchise was heavily dependant on building infrastructure in other parts of the world. For example, after China started assimilating into the world economy at the start of the millennium, the NBA team Houston Rockets recruited its first Chinese player, Yao Ming. This expanded the market by hundreds of millions of people as early as 2004.
Today, the internet is everywhere, so the infrastructure to expand something is already there and something to grow on it doesn’t require government permissions or oversight from one institution.
So if you have an internet connection, you are potentially someone that could get a glimpse of the eSports market and potentially be in it in one role or another.
Economically speaking, this industry won’t see a downfall of consumers. Much like conventional sports, if one sport gets less interesting, there is a whole array of others to choose from. In eSports, if one game gets less interesting, there are at least 10 others in the same category for consumers to shift to.
This unprecedented exponential growth
is what makes this industry the next billion-dollar industry. It has everything from scalable infrastructure, no oversight/red tape, a very high consumer onboarding and retention rate, relatability, and it sells the dream of greatness.
Even universities are recognizing this growth and have started to form their own eSports teams as a part of their athletics sector, and have started offering scholarships for it.
Now, it seems like spending countless hours in front of a TV, playing a video-games with friends and not doing homework can actually pay off and create a viable career.
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