The One Thing Esports Can Learn from All These Sports Investments

The granddaddy of trading card games, Magic: the Gathering, had a slogan that used to go with its popular global Grand Prix and Professional tournament circuit: “Play the game, see the world”

It’s a lovely sentiment, and one that captures the imagination of spectators who tune in to watch matches on the weekends. However, despite M:tG being a satisfying and lucrative competitive outlet for the millions of players who enjoy it worldwide and to the thousands of pros who fly around the world to make it to the Pro Tour, one thing is certain: its competitive ecosystem is still largely a marketing vehicle to sell cards.

The world of eSports, since the beginning of recorded history, seems to have done just that: largely a marketing vehicle to get fans and audiences buying the latest in digital hats, colorful skins and icons. A way to market games.

In fact, Riot has stated repeatedly that it loses out money supporting the LCS and Worlds tournaments…and yet continues to post high returns year-over-year, thanks no doubt to the many legions of fans buying into whatever latest skin Lee “Faker” Sang-hyeok used in his latest trouncing of an enemy midlaner.

But with the latest string of high-profile investments coming in from the world of traditional sports and venture capitalists, what can esports truly get out of all the attention from outside forces? Is there a lesson here, other than the industry is filled with ripe advertising audiences?

A short history lesson

Strangely enough, the early days of eSports were the complete opposite of the M:tG method. Fan-developed titles like Counter-Strike and DotA served little to no monetary benefit for their developers as they were bootlegged by fans and competitors who only wanted to get better and compete in these games.

Even in Korea, where Brood War rose as the first modern esport, sales of StarCraft did not improve as dramatically as sales of the latest batch of Magic cards after a big tournament; the StarCraft competition scene became huge in Korea largely because StarCraft was already a popular title.

But towards the end of the 2000’s and the beginning of the 2010’s, a shift happened: eSports competitions became marketing selling points for events and conventions. The focus was shifted to the joy of pure competition and into tapping into the marketing segment sought after by most industries: the coveted 15-25 year old male demo, with its lack of familial obligations and vast reserves of expendable incomes.

It wasn’t uncommon then for a bunch of eSports events to come up, fail in the execution and be called shams. That was the world of eSports in 2008 up until 2011.

But when Riot Games and Valve, developers for some of the world’s biggest esports titles came into the scene however, an even subtler shift happened: esports as a way to sell microtransactions in these games.

The World of Traditional Sports, Looking In

There’s no secret to the problems of the eSports industry so far. Contract problems, monetization and sponsorships, even VISAs continue to plague an industry that by now should already be solved.

But yet, investments continue pouring in. Why are all these organizations, investors and sports icons buying in?

In 2016, we’ve seen buy-ins from:

• the Philadelphia 76ers
• Peter Guber, co-owner of the Golden State Warriors
• Ted Leonsis, majority owner of the Washington Wizards
• Boston Celtics forward Jonas Jerebko
• Brooklyn Nets’ Jeremy Lin
• Manchester City
• West Ham
• Wolfsburg

Basketball legend Rick Fox came into the eSports picture by founding Echo Fox.

In 2015, the following icons bought tickets into the esports train:

• Former NBA player Rick Fox
• Sacramento Kings minority partners Andy Miller and Mark Mastrov
• Shaq Attack himself, Shaquille O’Neal
• Alex Rodriguez
• Jimmy Rollins
• Steve Kaplan, a co-owner of the Memphis Grizzlies, who also increased his stake and became a member of the company board of Immortals this year
• German soccer team FC Schalke 04
• Various VC’s and investors

That’s not even counting the media giants that have entered which include ESPN in 2015, Yahoo! (despite their woes) and Turner Broadcasting System, whose ELEAGUE endeavors have become a runaway success.

But while these names and the money coming in are all fine and dandy, exactly how can sports teach eSports how to become its own behemoth?

Marketing the Experience, Not the Game

The 2014 League of Legends World Championship managed to fill up Korea’s Sangam Stadium

The reason why eSports have served mostly as a vehicle to market games and their shiny baubles lies largely in the fact that developers have controlled most of the power.

And when a new, shinier game comes along, developers fold up support for older titles. No new skins. No new items. Interest wanes. Events dry up.

But sports like Basketball, Football and Hand-egg have been around forever, using a technique we reference in the beginning of this piece, and one that the sports world has seemingly perfected: they’re not marketing basketballs, or hoops, or the type of hardwood floor used for events.

The heart of their message is that competition = good. Competition = worth watching.

Sure, the shoe endorsements, the jerseys, all of those are part of the ecosystem that continues to power the NBA, NFL, FIFA—everything.

But before any advertiser can make money off of the next Brazilian football superstar, there already exists an infrastructure that allows for beautiful competitions. For compelling displays of human effort against human effort. For the drama of adversity to be followed.

That’s what people tune in for. Not the shoes. And that is something that the fragmented eSports industry seems to have lost sight of.

During the scuffle that was the three-peat victory of the LA Laker’s Kobe and Shaq before the duo broke up, no one cared about whose shoe endorsements were locked in. We tuned in for the games. To see Kobe and Shaq one-two punch their way to their last title together before splitting up because of some truly intense locker room rivalries.

Looking Ahead

Take the recent spate of dissatisfaction for Riot Games in the last few months. Instead of focusing efforts to proper balancing and allowing for a tournament metagame to evolve on its own, focus has been redirected to new particles on recent skins.

In Hearthstone as well, instead of fixing both the competitive circuit (the HCT is atrocious) and the format of competitions (Conquest is a dumb format) and the overall balance of the game (Yogg-Saron, although that will be addressed soon enough), Team 5 is busy with vague pronouncements that an answer to Shaman exists in the aether (like how there was a unicorn Priest deck that’s still MIA).

The entrance of these investors into the eSports space should still be treated as outsiders making their first forays into a new frontier. They shouldn’t be heralded as industry leaders for simply forking up the dough.

But with them they bring important insights into solving eSports’ perennial problem: How does the world’s fasting growing spectator sport industry evolve into its own stand-alone juggernaut instead of a flashy ad sign for the latest hotness?

Overwatch is the epitome of “latest hotness” in the eSports world today.

How do we turn competition into the main product of esports?  

The traditional sports world has had at least 50 years of resolving stake-holder concerns by navigating through broadcasting rights and revenue shares. Decades worth of experience in placing the game in front of the industry; of making sure that every night on TV—to the best of their ability—a battle worth tuning into is on.

In this way, esports as an industry will transcend the developers’ power over the games; as long as the attention and interest is shifted to the players, their skills and the demonstration of said skills, then developers have a reason to keep the industry moving.

Peter Gruber might not solve it overnight, but his input would still be appreciated.

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