Can Traditional Media Companies Get a Slice of the eSports Pie? (Guest Blog)
Opportunities to make money — and reach millennials — grow as the competitive video gaming business balloons
Dan SchechterGuest Writer | October 12, 2016 @ 8:30 AM
In our last post, we gave our view on possible future scenarios for eSports. It seems that the eSports space will ultimately be worth billions of dollars, but the industry needs to put up with some growing pains first, and that process may unfold in different ways.
Thus far, the clear winners in the eSports space have been game publishers and major distribution channels.
For example, Riot was valued at about $400 million in 2011 when Tencent acquired a majority stake. Since then, revenues have grown to about $1.6 billion in 2015. Recently, Riot stated that its pure eSports business (excluding in-game revenues) is not profitable but plays a crucial role in maintaining player engagement. In another example, Amazon acquired Twitch for approximately $970 million in 2014. In 2015, the streaming platform’s revenues rose to roughly $1.6 billion (prior to content creator share).
Traditional media companies can make their mark in the eSports space, but they need to choose one of three options for how they want to engage:
Spectate: This is a low-commitment option that includes using eSports as an advertising platform to reach millennials.
Participate: Examples of this medium-commitment approach include striking deals to become linear-TV partners of up-and-coming leagues or co-investing with an existing streaming platform.
Drive: Companies pursuing this high level of commitment in eSports could purchase an existing entity and bring to bear traditional TV production and distribution skills to drive value; an example of this could be producing scripted content for gaming characters and story backbones.
Traditional media companies looking to successfully enter the eSports space will need to ask themselves the right questions to determine what level of commitment they can assume, how large a share of the eSports market they want to pursue and what the opportunities are.
First, TV organizations must understand the long-term outlook for eSports and get comfortable with its inherent uncertainties. They then need to understand what their competitors are doing and identify the approaches that are most attractive for their organization.
The final step is to identify tangible opportunities. This involves assessing the overlap between the company’s consumer base and eSports enthusiasts, understanding the fit with the company’s broader strategy, quantifying the opportunity and evaluating partners.
Conducting analysis can help traditional media companies build a roadmap and catch the eSports train before it’s too late.
Our series of posts on eSports has aimed to help traditional media executives understand eSports and the opportunities it represents. This is certainly not a fad. While it is still in its infancy in the U.S., eSports will present an intriguing way for linear TV to attract millennials.
The 30 Best Video Games of All Time, Ranked (Photos)
What makes a video game "the best"? Technical prowess? A moving plot? A huge amount of features? It's a difficult concept to nail down for an entertainment medium as young and as all over the place as gaming. But we tried our best -- even so, you will definitely not agree with us.
30. "Roller Coaster Tycoon 3" (2004) It wasn't the first game to let you design a roller coaster and then ride it, but it was definitely the best and most robust example. You could build whatever you wanted, and it was one of the few games to make that claim and actually deliver something legitimately compelling.
29. "The Chronicles of Riddick: Escape From Butcher Bay" (2004) It's the story of how Riddick (played by Vin Diesel even in the video games) got those cool glowing eyes, and it's also a thrilling sneakfest that makes the "Metal Gear Solid" franchise seem super quaint.
28. "Uncharted 2: Among Thieves" (2009) The closest an action game ever came to really emulating the experience of watching a (very long) movie. While its sequels were major regressions from that peak, "Uncharted 2" remains representative of an ideal that, quite possibly, no game will ever fully realize.
27. "Zork" (1977) This is a game experienced entirely through text -- thus the label "interactive fiction" being thrown around a lot -- a type of thing that was pretty common as personal computing started to become a thing back in the '70s and '80s in the early days of gaming. But "Zork" was operating on a whole other level from its peers, allowing a complexity in player interaction and a depth to its storytelling that was unheard.
26. "SimCity 2000" (1993) The best way to describe "SimCity 2000" is as a sand castle simulator. You spend hours painstakingly constructing your masterpiece, and then when you're done you tear it down in a cathartic fit -- thanks to its surprisingly robust disaster scenarios, which you can trigger on demand. The series never bested this one.
25. "Command & Conquer: Red Alert 2" (2000) Strategy video games rarely manage to be all that accessible, but "Red Alert 2" was both funny and easy to get into -- moreso than any of the other "Command & Conquer" games before or after. And so it remains a delightful gem worth revisiting every once in a while.
24. "Full Throttle" (1995) An example of what in the '90s was referred to as an "adventure game," "Full Throttle" today feels like the direct predecessor to the part of the current wave of independent games with well told stories that has adopted a similar visual style -- "Kentucky Route Zero," "Kathy Rain," and the like. But it remains just as good as (almost) all of the games it inspired.
23. "Super Mario RPG" (1996) One of the rare examples of a Japanese RPG that was truly accessible to the masses, and it remains one of the best examples of that genre because of that.
22. "Prison Architect" (2015) On the surface it's just another simulation-style game in which you have to design and manage some kind of real world thing. But by tackling the specific topic it does, "Prison Architect" delves into issues in a way few games do. And the depths of depravity it allows the player to delve into can teach you a lot.
21. "FTL" (2012) A journey through space, fraught with bad luck at every turn. You'll probably never win it, and that's part of the fun. That's also why it's a work of art -- "FTL" is really about your life.
20. "Alpha Protocol" (2010) Though it's functionally awkward in a lot of ways, "Alpha Protocol" is a delight if you can look past those physical flaws and embrace its glorious personality. One of the greatest examples of a flawed but compellingly ambitious video game.
19. "Far Cry 2" (2008) Publisher Ubisoft has spent the past decade putting out open world video games that it insists have no political agenda -- except for "Far Cry 2," the game that seems to apply a big ole "Heart of Darkness" metaphor to the very open world genre it inhabits.
18. "World in Conflict" (2007) Set during a Soviet invasion of the U.S. during an alternate version of the late '80s, this forgotten gem was an attempt to build a cinematic experience around a strategy game -- which probably seems counterintuitive but it actually works pretty well. It remains the only game to ever do something like that, so bonus points for ambition.
17. "Max Payne 2: The Fall of Max Payne" (2003) Full of love, irony and tragedy, "Max Payne 2" is still unlike any other video game in the way it manages to so effectively wallow in the misery of its lead with a masculine detachment that never quite crosses over into macho territory. You just get Max in a way that's very unusual for a game.
16. "Deus Ex: Invisible War" (2003) Though popularly maligned, "Invisible War" actually represents the delightful paranoia of "Deus Ex" better than any other entry in the series. It doesn't take itself too seriously, even while it tells a story in which everyone -- and I mean everyone -- is out to get you for some reason or another.
15. "Counter-Strike" (1999) There can only be one king of the online multiplayer shooters, and "Counter-Strike" (along with its various updates and remakes, like the recent "Counter-Strike: Global Offensive") remains the one thanks to its still-unusual match rules: once you die, you're done for the entire round. It's thrilling in a way that other online shooter simply aren't.
14. "Splinter Cell: Double Agent" (2006) The tale of "Splinter Cell" is one of unfulfilled potential, usually, but "Double Agent" was the high point. A brilliantly twisty spy story in which nobody knows who the good guys are, and even your own alignment is in question as you change sides over and over.
13. "The Dig" (1995) As much as a game like this could ever be considered an event, "The Dig" certainly qualified thanks to the involvement of Steven Spielberg and Orson Scott Card, as well as a novelization by Alan Dean Foster. It was extremely heady, which lessened its appeal somewhat, but that also made it the best example of the point-and-click "adventure" genre of the '90s.
12. "Danganronpa: Trigger Happy Haovc" (2010) This Japanese visual novel/adventure game about a group of teenagers being locked in a school and forced to murder each other (without getting caught!) is surprisingly enthralling despite its insistence on never staying grounded at any point. "Danganronpa" is both silly and sweet, and among the most human video games I've ever played.
11. "Portal 2" (2011) Comedy in video games is rarely any good, but the comedy in "Portal 2" is spectacular. That's it's one of the greatest puzzle games ever is just a bonus.
10. "Red Dead Redemption" (2010) You'd think the Western genre would be a natural fit for video games, but it's rare that anyone makes the attempt. It could be that "Red Dead Redemption" worked so well that other developers are afraid of trying. If we're going to be stuck with one big Western game, though, might as well be this one.
9. "Burnout Paradise" (2008) The only driving game that ever mattered, a non-stop adrenaline rush through an open city designed to let you fly -- both in the "driving real fast and never slowing down" sense and the "making sick jumps off conveniently positioned ramps" sense. It's perfect.
8. "Star Wars: TIE Fighter" (1994) Subtlety tends to be something video games are very bad at, but somehow the game about flying a starfighter in service of the fascist Empire pulls it off. It turns out it is possible to humanize those faceless grunts.
7. "Half-Life 2" (2004) and its sequel episodes It's a chaotic experience, spanning a pile of different genres seemingly at random -- but it works. Even more than a decade later everything about it just feels right. More right than the many more recent games that have tried and failed to recapture its magic.
6. "Grand Theft Auto: San Andreas" (2003) Many games promise a virtual open world in which you can go anywhere and do anything, but "San Andreas" might be the only one that actually delivers on that promise.
5. "Mass Effect 3" (2012) It rightly catches a ton of flack for its awful ending, but the core of the experience -- beautifully curated action vignettes that are roughly the length of an episode of a TV drama sans commercials -- is nearly perfect. Developer Bioware may have stumbled upon the ideal way to tell a story in a game like this.
4. "Star Wars: Knights of the Old Republic 2: The Sith Lords" (2005) The best "Star Wars" stories are the ones that subvert our perceptions of what define the franchise, and "KOTOR 2" is one of the definitive examples on that, taking a close look at what happens after the war is won.
3. "Call of Duty: Black Ops 2" (2013) One of the few games that tells a story that changes based on the player's actions -- while being confident enough in its vision to not tell the players it's happening. It matters just as much, of course, that "Black Ops 2" is as great in execution as it is in concept.
2. "The Witcher 3" (2015) The whole is less than the sum of its parts, but those parts -- huge open world, an expansive story that has time to breathe, robust combat -- are so good that it's almost forgivable that they don't all gel. For now, "The Witcher 3" is about as good as it gets for an action adventure video game.
1. "Gods Will Be Watching" (2014) A video game with a well told story which the player isn't really in control of his own ability to make it through. For example, completing the story requires you to survive a game of Russian roulette. This is a profound subversion of the standard video game power fantasy.
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”Call of Duty,“ ”Grand Theft Auto“ and more in honor of #NationalVideoGamesDay
What makes a video game "the best"? Technical prowess? A moving plot? A huge amount of features? It's a difficult concept to nail down for an entertainment medium as young and as all over the place as gaming. But we tried our best -- even so, you will definitely not agree with us.
Dan Schechter is a Managing Director and Partner at L.E.K. Consulting, and he leads the firm's Global Media, Entertainment & Technology practice. He has broad experience within the media, entertainment and technology sector, including TV, film, Internet content and commerce, radio, magazines, theme parks, advertising and news. He also has experience working with retail, consumer products, travel and industrial clients. Dan was awarded his MBA from Stanford University and his BA, cum laude, from Harvard University.