Is eSportsThe New Gold Rush?
Published 26th June 2015
There is no doubt eSports currently resembles a tsunami, sweeping everyone along in its path. Which is hardly surprising, as video gaming is a multi player, multibillion dollar business of the kind iGaming executives and affiliate marketers dream of. And of course, watching people play professional eSports is already popular in Asia, one of the most lucrative betting regions for many years now. But why so much fuss over eSports at the moment? Well, competitive video gaming looks to have finally come of age in America, where it’s no longer suffering from its previous image problems, of stereotypical computer nerds or hackers playing in their basements in unlicensed tournaments, eking out a questionable living. eSports is being given the Hollywood makeover big-time, basking in the razzmatazz, branding, glamour, aspirational lifestyle, fast cars and all the other trappings of fame and fortune.
It’s the new American Dream. Previously chastised and downtrodden video gaming Millennials can now realize their dreams – they are the new ‘rock gods’ of this social economy and now generation. Of course, let’s not forget for the more cynical of you out there, it’s all about the money, and there is lots of it swirling around in this fast-growing industry. It’s hard not to get swept away with the market numbers for eSports. In 2014, Riot Games’ League of Legends world championship boasted a reported 27 million streaming views. To put that into perspective, it was more than the average number of viewers for individual games in the World Series of Baseball, which is the second most viewed sport in the land of the free. The number of eSports tournaments worldwide more than tripled from 430 in 2013 to 1,485 in 2014. These 1,485 tournaments got viewed by more than 100 million global viewers, demonstrating how huge a spectator sport it has become. eSports viewing is therefore now on a par with other traditional broadcast sports.
Twitch, the world’s largest video game streaming platform, acquired by the behemoth Amazon for near to $1 billion last year, recently reported that the average Twitch user spends around two hours a day on the site, with some spending upwards of five hours watching the major players and events. What is more, Twitch generates more than 100 million unique views per month, with Twitch viewers racking up some 20 billion minutes of viewing time of the more than 11 million streams which are broadcast on the platform. The Twitch app has been downloaded more than 23 million times since its launch in 2011. That is a volume of eyeballs and potential advertising revenue that a traditional television network executive can only dream of being able to sell to brands. Several factors are combining to form the perfect storm and drive this rapid growth. Gaming is second only to music on YouTube in terms of viewing and engagement.
There is a growing social trend of people enjoying watching each other’s content or day-2-day life activities, instead of professionally created content. This is reflected in the success of RudeTube, Goggle Box in terms of programming content and of course something that has been prevalent in video gaming for several years – namely POV or point-of-view, where the game experience is viewed through the character’s perspective or an embodied second person point-ofview. Nowadays, everyone is creating and sharing content – it’s now innate behaviour in the social economy. Perhaps a more deep-rooted or primal driver can also explain its growth and popularity. eSports is the new Gladiatorialstyle spectator sport that exhibits the same or similar ‘Tribal’ culture and behaviours epitomized in other sports, by athletes and fans of football, NFL etc. alike. Perhaps also reflective of the era of the Third Industrial Revolution popularized by Jeremy Rifkin, where there is widespread disruption of traditional industries and the masses, no longer wishing to be subjugated by the current regimes, are turning in droves to other forms of alternative entertainment such as eSports.
We also know eSports attracts a predominantly male audience, a muchsought-after demographic for many brands both within the eSports ecosystem and outside, namely betting companies. Let’s look at the potential demand curve for eSports betting. Sports betting, and in particular betting activity, is now very much linked to live sport. You only have to consider the growth of in-play betting and mobile usage around televised football as an example. Secondly, television content even on multiple devices is still viewed as a trusted medium by consumers, and therefore brands are able to influence consumer behaviour via this medium.
An example of this was provided when the UK Gambling Commission allowed gambling advertising on terrestrial TV from 2007. It exploded, and those betting companies that could afford sponsorship and 30-second ad spots rapidly gained brand awareness, new customers and increased market share over other pure play, digital-only operators. There is no doubt the latent demand for eSports betting already exists. Established UK betting brands are already allowing users to bet on eSports matches. William Hill takes bets on Counter-Strike and DotA 2, and provides a selection of eSports markets, with Paddy Power offering odds on the larger event tournaments.
Indeed, Pinnacle Sports, an early first mover in the space, started offering odds as early as 2010, and reported last year that it had taken its millionth eSports bet and is now on track to reach two million bets in a much shorter time frame. The market is certainly now taking shape, with several well-funded eSports start-ups such as Vulcun, AlphaDraft, and Unikrn entering the battleground. US-based operator Vulcun has reportedly raised over $13.4 million, with its model being to offer fantasy-based eSports, given that traditional fixed odds wagering isn’t currently allowed in the US. They are purported to have now paid out over $1.1 million in prizes for some 117,000 players in only a few months, which represents a staggering level of growth. AlphaDraft, a competitor to Vulcun, raised $4.2 million and has stated that it plans to pay out around $5 million in prizes in its first year of trading, and to acquire one million active players by the end of this year! But what about the eSports betting product?
As for its mechanics, eSports is no different to any other head-2-head betting event such as tennis or golf. It therefore offers several options in terms of the product, from a fantasy-style betting experience where players use their skill to select players and teams, to fixed-odds betting against the house or operator, where the odds may not be particularly attractive given you will likely have a fancied favourite and the underdog. Also, P-2-P exchange betting, where the more sophisticated bettors could trade the inevitable markets which will develop as more data points are created around historical tournaments and individual player and team performances. So, who stands to win big in this war? As a betting man and avid gamer myself, I believe it’s a level playing field, whereby the new dedicated eSports betting franchises just may win the first few rounds.
Why? Perhaps because the nascent eSports customer base appears anti-establishment in their behaviour, initially not wishing to offer their custom to established betting brands they have never heard of, instead giving their patronage to eSports-sounding brand franchisees in the early mover phase. Ultimately the size of the eSports betting market will be determined by the customers themselves.
After all, the games themselves are akin to other games of skill such as chess, being highly strategic and complex. Therefore from a consumer betting standpoint, these are not for the uninitiated bettor who hasn’t even heard of the likes of StarCraft 2, Dota2, League of Legends and Counter Strike Global Offensive. Therein lays the opportunity for affiliate marketers. The nascent eSports marketplace is in need of education and simplification of the betting options around the eSports events. As after all, these Millennial gamers have probably never seen a traditional betting interface nor placed a standard sports bet. Let the battle commence!
“P-2-P exchange betting could see the more sophisticated bettors trade the inevitable markets which will develop as more data points are created around historical tournaments and individual player and team performances.”
“The nascent eSports marketplace is in need of education and simplification of the betting options around the eSports events.”