The incredible acceleration of eSports
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The incredible acceleration of eSports

Computer games have been played competitively since the 1970s – sometimes even in local tournaments, or for prize money. But compared today’s professional and semi-professional gamers have taken it to the next level and beyond: it’s the difference between two kids knocking round a balloon for fun, and the Brazilian soccer team playing at the World Cup. That might sound like an extreme statement, but it’s true: today’s players compete for multi-million pound prizes, audiences in the hundreds of millions tune in to watch the action, and everyone from professional sports leagues, to billionaire investors, to powerful media and gaming companies is involved.

Dominion’s video game holdings are outperforming spectacularly this year

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SOURCE: Yahoo Finance

Alex Lim, secretary general of the International e-Sports Federation, is eager for the pastime to rank as an Olympic event by 2024. He told the Financial Times that: “Perception is everything. One generation grew up kicking a ball in the back yard, the next grew up with choices that included games. We live in a digital culture that most people accept is redefining a whole range of things: sport is one of them.” It’s hard to argue with him: this year, several forecasters expect the global games industry to wrack up more than £100 billion in revenue.

ESports revenue will make up a fairly modest portion of that total – just $693 million. But it’s still one of the most important areas of the industry: it’s forecast to double in size to $1.5 billion by 2020 (outpacing the wider video games industry, which itself is outpacing the wider entertainment sector), and last year alone saw 11.1 billion eSports videos streamed in China (the U.S. managed a respectable 2.7 billion).

The young men and women taking part in these games are becoming stars in their own right. Noah Whinston, a 23-year old college dropout, has enlisted the aid of a variety of unlikely investors to become the first team owner in Activision Blizzard’s Overwatch League. To get that spot, Whinston paid $20 million in franchise rights to the company – a concrete sign of how fast the industry has grown over the last couple of years, when start up funds in that range would have been unthinkable.

Bruce Stein, a former Mattel executive whose company owns a team in the wildly popular League of Legends League, explains what’s driving the growth: “Everybody is looking at an audience base that is 300 million people and saying there has to be a way to harness the commercial part of this. We see this as a sea change in the way people interact with content.”

This new professional world is a world away from the 70s-era pong-playing couple in the bar, or the group of kids organizing a Street Fighter Two tournament in someone’s bedroom in the mid-90s. This is a world where players are cultivated from a young age, live in practice houses rented by eSports moguls, and spend 8 hour days playing the most popular titles in the world in the hopes of becoming a millionaire. For some, it’s a dream come true.

Whinston’s set up is amongst the most professional in the world. He makes use of a 20,000 square foot property, and uses “a mix of data and human dynamics” to pick teams. Nothing is left to chance. He says: “We’re not looking to go out there, sign the biggest name free agents, and just try to throw them in a room and hope it all works out. We’re not the New York Yankees of eSports. We’re not trying to be.”

Disclosure

Dominion holds Activision Blizzard, Electronic Arts, and Take Two Interactive in its Global Trends Ecommerce Fund.


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