Competitive video gaming is poised for winning growth, driving destination viewing and sports rights
Dan SchechterGuest Writer | September 7, 2016 @ 8:30 AM
This summer, TV viewers tuned in to the Olympic Games in Rio to watch the world’s best athletes compete. But another type of live sporting event is becoming increasingly popular among twentysomething males: eSports.
Simply put, eSports is competitive video gaming. Multiple players and teams compete in organized leagues and global tournaments, and fans can watch live broadcasts and attend spectator events.
If you think this is an obscure niche, then think again. eSports is already a global phenomenon. According to Newzoo, worldwide in 2015, there were an estimated 113 million eSports enthusiasts (those who watch or play more than once a month) and an estimated 147 million occasional viewers (those who watch less than once a month). Through 2017, growth in viewership and participation is projected at approximately 14 percent per year.
Given eSports’ transformation from niche interest to mass phenomenon, we believe eSports is poised to become the next UFC — and traditional media companies need to identify how they can use this to their advantage. In 1993, UFC, like eSports, began as a niche offering, and few traditional media companies even considered carrying it. UFC expanded its fan base significantly in the ensuing years, paving the way for a consortium led by WME-IMG to purchase the company for $4 billion. UFC is proof that niche entertainment that goes mainstream is a source of the tremendous value.
Although eSports has had a strong presence in Asia for many years, it is only now emerging as a multimillion-dollar industry in North America, with revenues reaching $138 million as of 2015, as evidenced in the figure below.
More than 80 percent of these revenues come from corporate sponsorships, which means advertisers are targeting the eSports viewer, who is 21 to 35 years old and male — a member of the elusive young male segment. Ticket sales and merchandise together account for 11 percent of revenues, but this figure will grow as attendance expands.
Major eSports tournaments’ viewership rates and attendance are comparable to those of major sporting events, as shown in the next figure. For example, in 2015, League of Legends World Championship drew approximately 36 million viewers, whereas the BCS National Championship, NCAA Final Four and NBA Finals each drew less than 30 million viewers. Granted, the BCS, NCAA and NBA figures include viewership in the U.S. only, but the number for eSports undeniably points to a tremendous following that continues to grow.
The impressive attendance rates at live eSports events will also continue to expand. Arena tickets regularly sell out in a matter of hours, if not faster: All 17,000 tickets for the final event of the League of Legends World Championship sold out quickly. Prize pools of professional eSports tournaments such as the International now rival — and sometimes far exceed — those of traditional sports tournaments. For example, in 2015, the International’s prize pool was more than $18 million, compared to the PGA Championship’s $10 million.
Clearly, eSports is big money, and the closer it gets to being on par with more established, traditional sports, the bigger it will get. Traditional media companies should use the eSports craze to their benefit. But how?
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.