Esports has grown rapidly in the OTT streaming era to join the big league of global sports, ahead of American Football and closing in on the top 10. Naturally, broadcasters and operators are keen to tap a field still growing faster than almost any category of content and challenge the few established dedicated eSports streamers, notably Twitch and YouTube Gaming.
The challenge lies in entering a field where games are often too long and intricate for traditional TV, lasting several hours with sometimes excessive violence. But there are also opportunities because eSports streaming has focused naturally on performance and low latency, which are critical for both playing and viewing in competitive games, while being relatively primitive over other aspects of the user experience.
While say the National Basketball Association (NBA) League Pass in the US or Sky Sports in the UK offer customizable experiences with team preferences, additional content and archives, eSports streaming is still essentially linear with lack of content diversity, while recommendation and personalization are much less advanced than on Netflix, or for that matter Youtube’s main service. There is scope for greatly improving eSports streaming and at least one traditional player, Turner’s TBC, now owned by AT&T, has weighed in successfully. Turner airs its own eSports league called ELEAGUE (EL), which runs a championship over a regular season between teams with playoffs.
This league has already been criticized by some serious gamers for “dumbing down” to a more casual TV audience by for example cutting length of game analysis, lacking post-match interviews or highlights in some cases. But it has also won praise for innovation in presentation through incorporation of Augmented Reality (AR) and mixed reality, which are themselves being stimulated by their good fit for eSports, where innovation centers around combining aspects of real sports with virtual images to create a blend of pseudo reality and fantasy. AR could enhance events such as Rocket League, developed by independent video game publisher Psyonix and staged by Turner, a kind of soccer game where the players are vehicles.
Basic AR has been applied for some time in real sports coverage to overlay scores and data over the actual video, as well as graphical features like the “first down line” on American football broadcasts. In eSports, its potential is greater still, for example to blend digital characters or objects with the real world in a mixed reality environment.
Turner has taken a lead here, starting in May 2017 by placing 3D images from games live on stage and then integrating the objects into its system. This was then enhanced by features such as creation of virtual debris in the event of collisions.
The idea now is that characters or virtual sets can be inserted at a single click into games with near instantaneous feedback, accelerating innovation and enhancement to egames. This in turn, according to Turner, will create new monetization opportunities, where again there is room for improvement.
Currently, eSports content producers or streamers that distribute via the principal platforms can make money in three ways – virtual tipping, fan sponsorships and at least in the case of Twitch by selling games or accessories. Tipping operates by selling say animated icons to fans who then post the sums as virtual tips to the streamer. In the past, platforms retained some of that tip but now Periscope at any rate has revised this so that streamers keep it all. This is a fast-growing source of revenues, estimated in a report from Streamlabs and Goldman Sachs to be have been worth $129 million within the US alone in 2017, set to reach $372 million by 2020.
Then the major platforms support sponsorships where fans pledge say $4.99 a month to their favorite creator, while on Twitch steamers can sell games or promote other gear through an Amazon extension that pays them a commission when buyers click through.
Then the platforms themselves earn revenue through subscriptions and also advertising, with the latter offering opportunities through targeting and also analytics to identify products or services related in some way to the nature of the games, or that are likely to appeal to a given audience segment. Ultimately there is scope for 1-1 targeting. Traditional gaming audiences have so far shown willing to engage with relevant ads but also have great antipathy to those that miss the mark. Some leading US brands, such as Coca-Cola, Arby’s, Gillette and Bud Light, have reported success in promoting brand awareness or affinity through judiciously targeting to gamers. Some of them are now looking at sponsorship of virtual game characters along the same lines as real athletes, again for exposure and brand promotion.
Currently, eSports are on the cusp of adoption by major broadcasters, even if not for their mainstream channels. There is already a global fan base or audience of 400 million, rising fast and set to double by 2024, while annual revenues will approach $1 billion by 2020, including these aforementioned sources of income. It now has representative bodies, notably Major League Gaming (MLG), a professional eSports organization in New York along the lines of the NFL and MLB, now owned by video game publisher Activision Blizzard.
The field is still dominated by the big two of Twitch and YouTube and especially the former, which accounted for 1.76 million or almost 75% of the 2.4 million active streamers at the end of 2018, according to the latest quarterly report from livestream tools developer Streamlabs. The total was 8% up on the previous quarter, highlighting the continuing rapid rate of growth, with YouTube now closing the gap on Twitch. Its active streamer total was up 21% on the quarter and 75% over the whole year, ending on 755,000, or 31% of the total. The only others to register on the radar screen were Microsoft Mixer on 69,200 and Facebook Live on 87,100, having risen 23% over the quarter. The Facebook gain is in spite of the negative vibes around privacy, although that has probably dashed hopes of making much more rapid inroads on the big two’s share.
For broadcasters and operators there appears to be a dilemma because experience so far has shown that only a major commitment such as Turner has made seems capable of attracting substantial numbers of viewers to eSports on conventional channels. There is also the question of whether to go for dedicated gamers whose numbers are still rising fast, or more general viewers, again with experience so far indicating that there may not be so many of the latter. Dedicated gamers are a specialist bunch with concerns over latency and also picture quality.
However, Turner’s experience has shown that, given sufficient commitment, new audiences can be attracted to simpler, shorter and less violent egames, such as Rocket League, indicating that broadcasters can score by cutting the length of games from hours to minutes to suit the time constraints of conventional TV. But egames are in any case much better suited to streaming with demands for interactivity, given that fans tend to engage more in Esports and are sometimes players themselves.
One way in for legacy operators could be by collaborating with conventional leagues in their bids to enter the eSports market. We have already seen the NBA doing this, followed by the English Premier League launching its ePremier league allowing participants to represent their clubs via the FIFA 19 football simulator, which kicked off in January 2019. An obvious advantage of this approach for broadcasters is the ability to tap into huge fan bases, on top of well-established and mature games such as FIFA. They can also exploit the same storytelling techniques used to amplify the human aspect of real sports and encourage audiences to root for an individual or team.
Not surprisingly, the strongest moves so far have been made by those operators already with a finger in the eSports pie, as was the case for Turner given its involvement with Eleague. That is also the case with Tencent in China as the world’s largest gaming company, which last year invested $461.6 million in game streaming platform Huya and $632 million in that firm’s erstwhile rival Douyu TV. This has given Tencent a dominant position in eSports broadcasting in China, with plans to expand overseas from that base.
All the signals then are that eSports is a field major broadcasters and operators cannot afford to ignore and that now there is a window of opportunity that may soon close. There will be growing overlap between eSports and conventional sports, or even other content genres, as AR technology and ultra HD come into play.
The one constraint for the field as a whole though may be the speed of light, which means effectively that even given end to end fiber connections, latency precludes inter-continental gaming, at least according to OnLive, one of the few providers of a cloud gaming service. It has found that the speed of light limits the distance between a user and cloud gaming game server to around 1,000 miles, which means it can only provide a regional service.