Steven Roberts, chairman of esports tournament company ESL, remembers when people made fun of esports, and how they just didn’t get the idea that people would want to watch someone play a video game.
But esports is a real thing now, with $892.4 million in revenues in 2016, according to market researcher SuperData Research. Esports viewership hit 213.8 million in 2016, and brands put $662 million in sponsorship money into it, SuperData said.
The phenomenon is growing, but it still has a long way to go before it matches traditional sports like the NBA and the NFL. Right now, sports such as basketball monetize fans at $15 per person, while esports is monetizing at around $2.83 per person, according to market researcher Newzoo.
But Roberts believes esports is maturing quickly. He thinks many of the companies that are in it for a quick buck will drop out, and those that remain will create a strong foundation, enabling brands and other participants to have a much better chance of success.
“It’s going to coalesce and mature, but until it does, there will be fragmentation,” Roberts said.
I caught up with Roberts at the recent [a]list Summit in Los Angeles. We talked about everything from mobile esports to influencers like PewDiePie and their effect on the growth of esports.
Here’s an edited transcript of our interview.
GB: Where do you think the different interests are aligned in esports now? What do you think still needs to be worked out?
Steven Roberts: The alignment of interests overall is ensuring that esports continues its growth. Obviously, the different parties have different interests in doing that. Different parties see that growth in different ways. There’s fragmentation, partly because it’s still an evolving ecosystem. That ecosystem, just like any new sport or activity, until it coalesces a bit and matures, will be fragmented.
Between the professional sports leagues getting involved — to a certain extent, that will create less fragmentation in the ecosystem. The maturity of some of the new owners of teams will create a coalescing of interests. Things like WESA, which ESL is involved with, help that fragmentation in the industry. Ultimately, everybody has the same goal. There may be different ways to get there. I don’t think the environment of esports is finished maturing. It has a long way to go. The players, like ESL, will be there for the long term. We’ve been there 15 years, and we’ll be a player that continues to help the overall industry evolve.
GB: There was a certain belief that the sponsors would be spread too thin if there would be too many leagues. Kind of like the game conference business, which we’re in.
Roberts: What you’ll see over the next 12 to 24 months — this meteoric growth in esports will mature. You’ll start to see the guys that jumped into esports to make a quick buck, like in any other industry. You’ll be left with, overall, a much stronger industry and ecosystem than what you see today. You’ll still see some of that growth, but the playing field will rest on much stronger foundations. Brands will have a much better chance of success.
GB: Some of those company-owned leagues are strong because their particular games are strong. ESL can have a strategy independent of that, though, right? Each popular game can eventually lose popularity.
Roberts: They’ve proven not to last forever. We hope they do, for everyone’s sake. I do believe that a rising tide lifts all boats. But ESL’s success is in the fact that we work across 65 different games. Most of those games are with long-term partners, with publishers that believe esports and competitive gaming can be healthy for their core product, which is selling games and getting people engaged with their IP.
What we’re seeing now, with some publishers like Riot independently creating esports ecosystems, again, I think it’s great. But overall, for the success of esports, we need more games and more IP that have the scale to fill stadiums. ESL’s business is based on an aggregate of all those games, which I think is important for the health of the industry.
GB: What are some points you’d tick off as far as where the industry should be more like, say, the NFL, and where it should differ from traditional sports?
Roberts: It’s important to understand the differences inherent in esports. First of all, it’s much more like track and field, with independent individual disciplines. The javelin and the hurdles don’t necessarily cross over much, but it’s all track and field. In the same way, esports has RTS games, shooters, MOBA, each with its own success and huge scale within each one. Inherently, you see a much different environment than an NFL.
Within each one of those, the more coalescing that can occur, like the NFL has — the NFL controls a great deal — I think will be healthy for brands, healthy for players, healthy for all of the independent players within each one. But it’s quite different. What we all need to do is create a firm foundation so that the brands feel comfortable about entering in different ways and becoming successful.
One of the reasons why the NFL is successful, and the NHL and all these other players in traditional sports, is not only because of the product they have, the storytelling they do — we have to do all those same things to make it a broader marketplace. But they also leverage their partners, their brands. When Coke or Pepsi goes out to promote their association with the leagues, they get an enormous amount of value from that. That broadens their perspective. The same thing has to be done with esports. Once these non-endemic brands come into those disciplines, more than the amount of money they pay for sponsorship, the need for them to go out and market this association is that much more important. That’s what will grow the base.
GB: What do you think should happen with local esports? City by city competition versus global competition.
Roberts: To date, city by city has not worked. Fans have come to esports with that global nature involved. It’s much more team-oriented, as opposed to being focused on Chicago or New York or London. That’ll be an interesting new variable as it enters. It’ll be interesting to see how the communities take hold. But right now, it’s very global. That’s one of the nice things about esports and the community, that there are no barriers. We’ll see how the city by city and localization takes place.
GB: I visited China a couple times recently. It seemed like a lot of companies were setting up in the esports scene there. I wonder how that particular territory is going to fit within the larger global esports picture.
Roberts: Our biggest event is in Katowice, Poland. Katowice and Poland came to us almost building a stadium for esports. They said, “Come here,” almost like Field of Dreams. In this case, it worked. Whether or not that can be replicated — I believe it can, on a local level. There’s that many fans and gamers on a local basis in key places around the world.
GB: What about your own presence in the U.S.? Are you hitting all the right milestones?
Roberts: Our growth in the U.S. has followed esports in general. It’s meteoric. We consider North America still our fastest-growing market and the greatest opportunity. It has all of the elements that are necessary for success, in the same way the NFL and other traditional sports have. There are great brands based in the U.S. that want to get engaged in esports, and great facilities, like the Barclays Center, where we made a long-term agreement. The media side, as well. We have all the different elements necessary for success.
GB: How do you think player behavior is evolving or improving? The whole PewDiePie thing that just happened made me think about personalities in gaming. It’s always a wild card.
Roberts: That’s part of the community, yeah. You look at traditional sports, it’s those personalities that make it interesting. That’s, frankly, good and bad. It brings interesting storylines and interesting directions to where people start caring about what happens to individuals and teams. That’s the millennial, right? They don’t necessarily have the same restrictions and constraints as normal sports. In some ways you have to embrace that.
GB: What do you think about mobile gaming and esports?
Roberts: There’s two elements in mobile. One, the consumption of esports on mobile, and two, mobile games as esports. On both levels it’s the area to watch over the next, say, three years. We know that the consumption of video about esports — even though the games themselves take place on PC or console — is being consumed on mobile faster than on any other platform. Esports games have great potential, just because of the mass orientation and how broad that market is. You may not be able to see a lot of the intense shooter types of games, but you’ll have a greater market share and some interesting competitions using mobile platforms.
GB: What do you think as far as what smaller ecosystems are interesting? The 76ers coming in and having an esports team, as well as an NBA team, that’s an unusual system. Are there particular variations that you think make more sense?
Roberts: That ecosystem, in professional sports, makes a great deal of sense. When you talk about the localization part, the city element, that will help people care. The fact that people in Philadelphia care about the 76ers as a basketball team, that gives them the best shot at making people in Philadelphia care about an esports team.
Some of the work we’re doing with the NFL and Madden is interesting, partly because of the legitimacy and credibility that they add to that ecosystem, and again, the focus. Those ecosystems that are growing and emanating out of what is esports today, becoming a bit more broad — I think that’s really interesting. I think they’ll continue to grow on a global basis.
You’ll start seeing a lot of interesting matchups. You have the Shaqs of the world entering. Rick Fox, on one level, and Chernin on another. We brought David Hill in, the former chairman of Fox Sports, to add his creativity, what he did so successfully in traditional linear media, bringing that into esports. You’re going to see a lot of interesting connections.