Join gaming leaders online at GamesBeat Summit Next this upcoming November 9-10. Learn more about what comes next.
Esports in the last two decades has become a billion-dollar industry on a trajectory that would make NASA jealous. Players are celebrities, tournaments fill arenas with screaming fans, and sponsors are increasingly injecting real money into the esports ecosystem.
Indeed, the players are like rock stars. Or are they? Esports skeptics would hold that the values of teams and the industry itself may be experiencing a bubble. As more than one observer has noted, the same people who report its success stand to profit from it. And like any startup, enormous investments power PR, which enhances valuations, which lures additional investment and keeps the entire game operating. And so the cycle goes on until, as it always does, the music stops. At that time, invested parties may be looking for a chair to sit in.
It’s also tricky to project the history of, say, the NBA onto esports, because of some of the industry’s unique characteristics and dynamics. First, esports players tend to be younger than physical sports athletes, and so far, peak between 17 and 25. They’re younger, less mature folks with relatively brief adult careers. Second, publishers own esports games. Riot owns League of Legends, but the NBA doesn’t own basketball. These are potentially paradigm-level differences.
Yet while esports clearly differ drastically from traditional sports on many fronts, there are a number of ways that they parallel and indeed mirror traditional sports. These parallels can provide some basis for predicting future problems for the esports industry. Here are some of the issues, many of which are already nascent, that we foresee becoming major concerns in esports in the very near future.
Three top investment pros open up about what it takes to get your video game funded.
The concept of an esports players’ union has been bandied about for a few years. Just as with professional sports, as the industry matures, individual players and teams will become famous and increase their social and economic leverage. So, there will have to be some kind of collective bargaining unit created. How big and powerful this gets depends on how the industry as a whole fares – if esports doesn’t take off, neither will players’ unions. Although the issues are going to be different – professional gamers aren’t likely to suffer traumatic brain injuries – the drive for players to negotiate with teams, sponsors and other stakeholders on a more equal footing is inevitable. Unions are the outcome, assuming there’s a pie to divide.
Esports is rapidly breeding stars, and along with endorsements for products, fame is always a fantastic fulcrum for all kinds of political movements, agendas and so on. Social justice activists on every conceivable topic are going to emerge from the woodwork, and begin to influence esports. A recent example is Ng Wai Chung, also known as “Blitzchung,” shouting out a pro-Hong Kong slogan during the recent Hearthstone Grandmasters tournament. The same pressures are going to come into play again, depending on how big things get.
All the ingredients are there. Esports players are young. There’s money at stake. Cheating scandals have already occurred, as have bans for harassment, allegations of fraud and so on. However, to date this stuff has been (relatively) limited. The StarCraft 2 cheating scandal, for example, or the Australian match-fixing in August in a Counter-Strike: Global Offensive tournament. The potential for really big, systemic scandal is a direct outgrowth of the visibility and money of any form of entertainment, coupled with the immaturity of a sport. The popularity of betting on esports doesn’t help. The more money that’s at stake, the more likely a big scandal will occur.
State-sponsored training programs
In a number of international sports, particularly Olympic sports, winning teams and athletes are seen as a route to greater international prestige for their host country. China, for example, operated Project 119 to identify and recruit athletes who would maximize the nation’s medal count at the Beijing Olympics. It worked. Esports have reached the point where there are going to be similar operations to nurture and develop players who will bring prestige to their home country. Esports are being considered for inclusion in the Olympics too. It just makes sense, and because it’s relatively inexpensive, national teams will probably happen no matter in which direction esports goes economically.
Big-time college programs
In the United States, large-scale sports programs are major revenue sources, and since the passage and enforcement of Title IX, they also underwrite a lot of other sports programs that don’t draw as big an audience. Obviously, the big revenue generators are football, basketball and a few other high-profile sports.
If esports continues on its current trajectory, it only makes economic sense to create similar programs for college esports athletes, with all the trimmings. There is, however, one major difference, which could be telling. A big-time football program requires extraordinarily expensive facilities – a stadium, for starters, as well as training facilities and a big coaching staff. Esports requires none of this. Since profit is revenue minus overhead, low overhead means more profits faster — which can make esports is an ideal platform.
Predicting the future is a notoriously difficult job, and the Law of Unintended Consequences is very, very real. Nevertheless, as George Santayana said, Those who don’t understand history are condemned to repeat it. Noted philosopher Bill Murray made the same point in Groundhog Day. Jimmy Stewart did, too, in It’s a Wonderful Life.
It would be a nice thing if esports could learn some of these lessons from other sports some way other than the hard way, and the shiny, exciting, infinitely promising and rapidly-growing industry could fulfill its immense promise without making a mess at the same time. Just because it’s never happened doesn’t mean it won’t. In the words of ten-thousand local television news stories, the outcome remains to be seen.
David B. Hoppe is the founder and Managing Partner of Gamma Law, a San Francisco-based law firm that represents select esports, gaming, digital media, and tech companies in the U.S. and internationally.
GamesBeatGamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. How will you do that? Membership includes access to:
- Newsletters, such as DeanBeat
- The wonderful, educational, and fun speakers at our events
- Networking opportunities
- Special members-only interviews, chats, and "open office" events with GamesBeat staff
- Chatting with community members, GamesBeat staff, and other guests in our Discord
- And maybe even a fun prize or two
- Introductions to like-minded parties