IF READERS, LIKE Schumpeter, have children who barely have time to say hello as they hunch over a computer, headsets on, talking with friends while blasting their digital enemies to smithereens, here is some advice. Take them to a competitive video-gaming, or e-sports, tournament, like the Counterstrike: Global Offensive (CS:GO) “major” in Katowice, Poland, this weekend. It is an orgy of creative destruction—in the glorious, goriest sense.
Amid the razzmatazz and cosplay, it may not feel like a potent threat to mainstream entertainment. The Spodek, a Soviet-era arena shaped like a flying saucer in the heart of Katowice, only seats 11,500. But that is deceptive. The action takes place online as well as in the stadium. Fans are obsessed by the fierce strategising and skill behind teams shooting each other, throwing digital grenades and setting off bombs. As many CS:GO fanatics will watch the final as boxing fans watch a title fight. The biggest e-sports game, League of Legends, achieved more than 100m online viewers for a final last year, mostly Chinese. That is more than the number of Americans who watch the Superbowl.
Most compelling for fans, though, is the ecosystem around e-sports. CS:GO fans are also CS:GO gamers. They discuss the tournaments with their CS:GO teammates. They stream games on Amazon’s Twitch, listen to CS:GO “casters” (commentators) on YouTube, and go behind the scenes with—and even tip—their favourite players. It is an adrenalin-filled corollary to social media. The intense, year-round relationship between e-sports and its fan base should strike fear into the heart of the sports and entertainment industries whose core audiences are ageing fast. Trigger-happy 15-35 year-olds are literally calling the shots. They have the dependable era of the couch-potato in their sights.
The line between e-sports and video gaming is blurry. Gaming long ago vaulted from the bedroom to big business. Its global revenues, estimated at almost $150bn this year, rival those of traditional sports. In America last year, the industry earned as much as Hollywood. E-sports is professional gaming, which builds on the huge popularity of competitive gaming among amateurs. Newzoo, a consultancy, says its revenues will exceed $1bn for the first time this year, mostly from media rights, advertising and sponsorship. That is just $5.45 per serious fan. Yet already the smart money has caught the sweet smell of digital disruption.
Take Team Liquid, a Los Angeles-based outfit that is one of the hottest teams in Katowice. A few years ago, its CS:GO manager, Steve Perino, earned $500 a month, and would lie to people about his job because it was too obscure. His players, self-taught in their bedrooms, had exceptional talent but were sullen and insecure. Then they hit the big time. Liquid now has teams spanning 14 different video games, each with its own fan base (similar to, say, soccer and basketball). Its financial backers include Michael Jordan, a basketball legend, Peter Guber, a film and baseball mogul, and David Rubenstein, a private-equity bigshot, giving it a valuation estimated by Forbes last year at $200m. It has a plush training facility, including chef and psychologist, and its CS:GO team spent 11 days at a “boot camp” in the Netherlands preparing for Katowice, counselled by a champion poker player. Mr Perino now makes sure his five team members build upbeat personal brands, to keep advertisers and sponsors like Honda happy. When Mr Guber invited the team to his palatial home in January to celebrate a big win, the penny dropped. “Holy shit, we’ve made it,” Mr Perino says.
E-sports teams are striving to become not only more professional, but more profitable. Riot Games, owned by China’s Tencent, which publishes League of Legends, last year revamped a North American league, in which teams bought slots for $10m from which they cannot be relegated. Similar to the National Basketball Association, such leagues attract sponsors and guarantee teams a steady income. The cash prizes from tournaments are huge: $150m in total last year. In Europe, teams do not command the same lofty valuations as their American peers, says Nikolaj Nyholm, founder of RFRSH, owner of Astralis, the Danish world champions of CS:GO. But Astralis is increasing revenues by directly cultivating its fan base. In China six cities are vying to be hubs of e-sports (though a government crackdown on gaming has hurt). In South Korea, where e-sports first became a craze, it has matured. The best players are marketing machines. One Russian advertises Head & Shoulders—surely a useful product for gamers.
Not so anti-social
E-sports has picked up a lot from mainstream sports and entertainment. But those industries ignore its advance at their peril. The first lesson is engagement. E-sports “athletes” have direct contact with their fans, via Twitch, YouTube and social media, streaming to them live via webcams to their bedrooms. That creates a more intimate relationship than most fans have with stars. The second is global reach. Team Liquid transmits to its Brazilian fans in Portuguese, and its Chinese fans in Mandarin. Victor Goossens, who founded the team in his teens, revels in being a “citizen of nowhere,” rather than being tied to a home-town club. That broadens the appeal. The third is experimentation. Fortnite, a gaming sensation, is combining e-sports with entertainment. In February a game hosted by Marshmello, a DJ, attracted 10.7m viewers.
The competition is pricking up its ears. Sports teams with dwindling numbers of young fans are investing in e-sports. Traditional broadcasters, like Disney and ESPN, have purchased media rights. Netflix’s recent interactive film, Bandersnatch, targeted gamers. Incumbents may hope that a sport steeped in bloodshed will have limited mainstream appeal for advertisers (not to mention parents). But instead they should seize on the appeal of high-intensity engagement, rather like Sanquin, a Dutch blood bank that niftily sponsored a League of Legends killfest. Otherwise its hashtag #MyFirstBlood could be their epitaph.
This post was originally posted at https://www.economist.com/business/2019/03/02/video-gamers-v-couch-potatoes.