eSports: The Gaming Industry’s “other income”
A detailed look into the growth of eSports
The gaming industry has been in many an economist’s eyes these past few years, one of the few industries that actually grew during the recession. The Guardian in 2009 reported that AAA titles make more money than Hollywood films, with increasing investor interest the industry is booming, with game launch sales rising ever higher. But there’s also a second niche market within the industry that has always been on the rise, regardless of which platform: eSports. What began as locally run Arcade competitions has now grown into a multimillion dollar industry with the presence of fortune 500 sponsors and million dollar prize funds. The fact of the matter is, that something that started as a hobby for most, has become a career, which to many it may seem sad, but professional players play video games as if it was a job as most of their day goes to training for tournaments.
Since the inception of video games, they’ve been played competitively, with Guinness world records being set and high scores in the Arcades recorded extensively. This quickly moved on with the advent of the PC in homes and home consoles, with early LAN tournaments in Quake and Doom. In 1997 the Cyberathlete Professional League was founded by Angel Munoz which became the world’s first true global eSports league. Through out the past decade, the CPL has consistently held tournaments around the world, inviting the world’s best to compete in a fair and adjudicated medium.
Similarly there are a number of other eSports tournaments and leagues now such as Major League Gaming (MLG), World Cyber Games (WCG) and Electronic Sports World Cup (ESWC). However as the competitions became larger, governing bodies formed to regulate the competitive aspect of games and ensure both players and event organisers are treated fairly. It’s this degree of passion and interest that has made these tournaments well structured spectator events.
There are reports of many PC based eSports leagues and tournaments that have filed for bankrupcy and left players with no prize money. This is true to an extent, however doesn’t reflect the eSports industry as a whole, as many analysts failed to recognise to rise of competitive console gaming, with tournaments run by companies such as MLG. Home consoles have recently become a platform for competitive gaming, with Halo taking the eSports world by storm as MLG continued to grow through the decade as the premier arena for console gamers. This rise in console gamers and the billions of dollars made in the console industry gave precedence to console games as competitive eSports games. New leagues such as the Australian Cyber League (ACL) formed and console games seeped into most major eSports leagues.
Competition grew fierce as more and more tournaments and leagues opened up, handing out cash prizes to teams and players, with teams forming actual companies that hire players to win for them. Sponsorship from the biggest names in the IT and technology sector; Intel, AMD, nVidia, ATi and Pansonic to name a few, allowed teams to grow and pumped much needed cash and incentive into eSports, allowing the industry to grow beyond just the Hardcore gamers, showcasing competitive players as superstars in their respected games. Amatuer players soon became obsessed with purchasing the same equipment used by the superstars and sponsorship soon grew beyond just the best players, with smaller companies sponsoring up and coming teams. One player Lim Yo-Hwan who also goes by the pseudonym of SlayerS_Boxer became the highest payed player in the world, with annual earnings exceeding $400,000, showed the world that there was money to be made as a pro Starcraft player.
More recently, media mogul Rupert Murdoch’s company News Corp backed a league called the Championship Gaming Series. The CGS went up against MLG according to CNN Money by focusing on TV advertising to make the revenue, which evidently failed. CGS was aired on Sky TV in the UK for 2 seasons and was abruptly discontinued. CNN reports that the major difference between MLG and CGS was the fact that MLG had already ventured into TV and learnt that through their website and webstreams, they could reach out to 5 times more young men than any TV network, whereas the BSKYB backed CGS failed to recognise and had minimal web presence.
This presence on the internet is what I believe is the reason behind why investors poured in $35 million into MLG, the returns are being made and the world is about to embrace eSports into mainstream, not because of the TV presence, or the fact that starcraft is practically South Korea’s national sport, but the fact that the web presence of these massive leagues is bringing millions of unique visitors to their sites, millions are watching the live streams, thousands are attending the events. Even if it is predominantly young men with the average age of 19, there is a large amount of internet traffic that is being tapped into by advertisers and sponsors in the eSports arenas.
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