Why esports can’t be stopped

This was sent to us by Brian Henry, Assistant Professor of Finance at Benedictine College and listener to the show. Thanks Brian!

The arrival of esports on ESPN properties, and now a whole season on TBS is making it clear that we have reached an inflection point for professional gaming. Watching professionals play video games is not yet on a level with traditional sports, but there is at least some indication that there is potential for Esports to be a lot more mainstream in the very near future.

It is hard to proxy for growth of Esports. I am using two measures, the first being tournament prizes. I went to esportsearnings.com and summed up the top 50 games’ earnings for the years 2012 through 2015 (not 50 games being tracked prior to 2012). The total tournament payouts grew by 56.2%, 73.3%, and 77.1% respectively and a total of 379% (due to compounding) cumulatively from $13.6 million to $65.1 million. That is a rather large change in a very short period of time. I was worried that the top game might be driving and skewing our outcome here since Dota 2 has a tournament called The International which is by far the largest payout. Even without that included, the total growth was 265%.

The top games are taking home way more money than the others, but the distribution is growing top to bottom. The median game earned about $32 thousand in 2012 and the median in 2015 was over $82 thousand. Also, only three games gave out over a million in prizes three year ago, but in 2015 nine games did.

This is just looking at the tournament winnings for the players, but there is plenty of other money going toward the scene through advertisement, sponsorship, and fans, though it is mostly hidden from view. Having financial info on Twitch would be great, but we are unlikely to get a lot of out of Amazon. It is so small relative to its parent that they have basically been swallowed whole, and for the foreseeable future will not be large enough to report on in any detail.

The best I could find is Twitch viewers from quantcast.com and stats.twitchapps.com. Concurrent viewers have risen from somewhere near 100,000 in 2013 up to five to seven times that each day recently. What that equates to is around a million unique visitors each day and over the past month more than 16 million unique visitors. Again, not on par with the Super Bowl or anything, but a lot of people are watching Twitch which is mostly built around live gaming. If you include the incredible number of views on YouTube and of course YouTube Gaming, Google’s Twitch competitor, among other places where VoDs are available after the fact, there are a lot of eyeballs on esports and casual gaming alike.

People appreciate high skill shown by other humans. At one point being a professional baseball player seemed ridiculous and now we watch nine-figure contracts go to young men because they can swing a bat or throw a ball really hard. There is no reason why video games can’t be similarly appreciated, and it looks more and more like we are headed that direction. Judging by the growth in recent years we might not even be that far away. In fact, now that virtual reality is here, maybe we can start combining the two. Who wants to watch some professionals play football against each other in virtual reality? All the sports action, way fewer concussions.

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