How the players, developers, and leagues of e-sports are making money and creating a thriving industry

Above: MLG's Call of Duty commentators.

Image Credit: Enrique Espinoza/MLG

Traditional gaming is having a pretty exciting fall season. Microsoft and Sony both launched new consoles. Developer Rockstar released a new Grand Theft Auto. Nintendo debuted new Mario and Zelda games. That’s a lot of entertainment, and it’s enough to keep most gamers happy.

Yet a huge gaming audience exists that doesn’t care about the Xbox One nearly as much as it cares about which Dota 2 or Call of Duty team is No. 1.

E-sports, which are the organized competitions between professionals in certain games, are growing at a rapid pace. Traditional publishers used to ignore and avoid them, but e-sports have slowly squeezed in from the edges of the industry and made their presence known and unavoidable. Today, companies like Valve and Activision incorporate competitive gaming into their marketing strategies.

The Call of Duty open tournament at Major League Gaming's Columbus Championships.

Above: The Call of Duty open tournament at Major League Gaming’s Columbus Championships.

Image Credit: Enrique Espinoza/MLG

The reason is obvious. Young men are scooping up competitive gaming content in huge chunks. Major League Gaming, one of the big organizations in e-sports, noted that its young male viewers often watch its broadcasts for 3.5 hours at a time without interruption, and that mythical demographic is attracting money from advertisers and publishers looking to market their products.

Today, the questions that surround e-sports are no longer about whether or not they are viable businesses. Now, it’s about what its future looks like and whether everyone responsible for creating this content will benefit.

Last weekend, Major League Gaming held its fall Championship in Columbus, Ohio. The event drew a huge in-person crowd, the top pro teams for Activision’s Call of Duty: Ghosts modern-military shooter and Valve’s Dota 2 action-strategy game, and a massive audience who viewed the event online.

GamesBeat spoke with pro players, developers, and MLG about the financial reality of e-sports, about where digital competition is now, and where it is headed in the future. While everyone is optimistic, we learned that no one is certain what e-sports will look like in five years.

The not-so-glamorous life of pro players and teams

It sounds like a dream job. Play games all day and make more than enough money to get by. Only most probably don’t make enough, and if they do, it’s likely because they’re more than just a pro gamer.

Hague in one of his YouTube videos.

Above: Hague in one of his YouTube videos.

Image Credit: YouTube

“Day to day, it’s not as glamorous as people think,” Matthew “OpticNadeshot” Hague told GamesBeat. “We’re living in a house with all of our teammates. I sleep on an air mattress in my room because when I’m in the house, it’s all about work.”

Hague is a member of team Optic and a star Call of Duty player.

Matthew “OpticNadeshot” Hague

On an average day, Hague wakes up, eats breakfast, makes two YouTube videos, and then starts livestreaming Call of Duty until 10 p.m. at night.

“That’s seven days a week,” he said. “That doesn’t change. The weekend isn’t really a factor. I lose track of days, just because I’m waking up and doing the same thing. It’s a serious grind, and people don’t understand the way of life that we actually live.”

Major e-sports titles

  • League of Legends
  • Dota 2
  • StarCraft II
  • Call of Duty: Ghosts

Hague is one of the top-grossing pro players, and that grind is paying off. He’s making a six-figure income in 2013. Surprisingly, only a fraction of that money comes from his actual performance in Call of Duty.

“I have a couple of different revenue streams,” Hague said. “I monetize ad content on my YouTube videos. I also do that on my livestream. I have multiple [sponsors] that pay me to represent their products. There’s a lot of different ways to make money if you know what you’re doing and you know how to brand yourself correctly.”

For Hague, this model works pretty well, except for when he needs to take time off or even when he needs to attend an event like the MLG Championship.

“It’s very stressful, because if I take a day where I don’t upload a video, I know that day I’m not going to be making any money,” said Hague. “You have to stay focused and be self-motivated to make this happen.”

When I spoke with Hague, he hadn’t uploaded a video to his YouTube page in two days, and he said it was all he could think about.

“I feel like, well, those two days have been worthless,” he said. “If you’re having a bad day — if you’re sick and you can’t get anything done — you’re not going to make any money. It’s something that you need to stay focused on.”

While Hague is a member of Optic, the man who runs the organization is Hector Rodriguez, who is essentially the team manager.

“Every day is something different, which I appreciate because it keeps me on my toes,” Rodriguez told GamesBeat. “Every day, I wake up and go downstairs to my office and check everyone’s Twitter to make sure that nothing went wrong, that I didn’t miss anything during the night. Call of Duty players are young guys, and they sometimes like to say some things — inappropriate things.”

While outbursts like that from players could cause issues with advertisers, Rodriguez says that his concern is all about Optic’s standards.

“The guys that I bring in are fully aware of what they’re getting themselves into,” he said. “We all have the same vision, and we know what is and isn’t allowed.”

Beyond the code of conduct, Rodriguez runs the logistics of the team.

“A lot of money comes in, and a lot more goes out,” he said.

Rodriguez rents and maintains the team home. He also manages the team’s travel. He generates cash for himself by negotiating sponsorships for the team, which he then takes a chunk of. He does not, however, take a percentage of the revenue that his players create with their YouTube or Twitch channels.

It’s an interesting relationship, and it seems like the players and Rodriguez are making it up as they go along.

“I still consider myself a small business, but as far as my long-term goals — my vision — I believe that Optic gaming is going to be a very good franchise to be a part of,” said Rodriguez. “We’ve been here from the beginning. We’ve played since Call of Duty 2. We’ve created the mold and the model for a professional gamer, and it’s not just competing and winning championships. If you want to take this seriously and make a living, you have to do all of it.”

The truth is that Rodriguez, Hague, and a lot of other team owners and players aren’t just in professional gaming. They are also creating their own media platforms, which are equally or more important than the competitions themselves.

While the recognition comes from winning, the money to pay bills is made from having a personality that attracts a following online.

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More information:

Activision (Activision Blizzard) is an American video game developer and publisher headquartered in Santa Monica, CA, but now operating worldwide. It was the first independent developer and distributor of video games for gaming consol... read more »

Headquartered in Santa Monica, California, Activision Publishing, Inc. is a leading worldwide developer, publisher and distributor of interactive entertainment and leisure products. Activision maintains operations in the U.S., Canad... read more »

Valve is an entertainment software and technology company founded in 1996 by Gabe Newell and Mike Harrington and based in Bellevue, Washington. The company became famous from it’s first game Half-Life. Valve currently develops and ma... read more »

Treyarch is an industry-leading game developer whose Call of Duty: Black Ops II set world-wide launch day records, and whose previous game Call of Duty®: Black Ops set an entertainment launch opening record upon its release in 2010 an... read more »

Sundance DiGiovanni is a seasoned executive, recognized thought leader in video game culture, and veteran creative director with more than 18 years of experience in the media, technology and video game industries. He co-founded MLG in... read more »

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