Within the world of digital media, there are so many exciting segments that are collectively moving the ball forward in their own unique way, contributing to what can only be described as a consistent trend of exponential innovation. In terms of current examples, the options to choose from are vast. Take your pick. Whether it be the proliferation of immersive experiences as a next-gen interface, advancements in AI/machine learning or the diversification and ubiquitous nature of social media in general, these individual subsets all underscore an ongoing evolutionary trajectory that is significantly compounding the interconnected nature of human beings and the digital technology we create. And while there are multiple contributing facets to this progression, nothing exemplifies this trend and the shifting paradigm, at least in my eyes, as perfectly as the explosive growth that is occurring right now in the realm of eSports.
Having long been a point of discussion for our team here at Manatt Digital, eSports are an area of focus that we have spent considerable time examining. And while we make it our business to remain abreast on a substantial array of facts, figures and trends, it wasn't until fairly recently that I truly appreciated eSports' imminent future. As the saying goes, sometimes seeing really is believing.
For those unacquainted with the industry, the 2016 League of Legends World Championship was held in Los Angeles this past year at Staples Center. It is one of the biggest events of the year and boasted the fourth largest prize pool of 2016 at a cool $5.07 million. That being said, there was still a part of me that was unconvinced from an overall viability standpoint. For whatever reason, I had a hunch that the event would ultimately struggle to fill seats. I'm just being honest. It was Staples Center after all and, while I knew there was undoubtedly a passionate cadre of eSports fans out there, I was harboring doubts that the fandom had yet reached a level that was comparable to what I will term 'traditional' sports. I looked at the LoL Championship as a simple case study: Are eSports for real or not?
What I learned is that they are without question for real. My colleague Jake Carlson and I both purchased tickets to attend the finals event well in advance. This turned out to be a critical decision as it quickly sold out—in early August, which was well before the event was slated to take place at the end of October. Then some time in September a quick peak on StubHub revealed that ticket prices had surged to roughly 3X what we had originally purchased them for! It was in that moment that three things happened: 1) All my doubts regarding the legitimacy of eSports were quelled, 2) Jake and I might have stumbled onto a new side hustle, and—most importantly—3) I finally witnessed the voracious market appetite for these events firsthand.
Since that time, I am more convinced than ever that the most substantial opportunities are yet to come. As I see it, eSports are in the early stages of a coming of age moment, and they will only continue to become more ingrained into everyday life as technology and the human experience continue to converge.
Arguably the most telling sign that eSports are poised for dramatic growth can be found in the range of investment activity that is occurring. If you follow the money it reveals some important patterns. Certainly there are significant maneuvers that are taking place amongst your typical "institutional" heavyweights (such as BamTech's LoL licensing deal worth $300 million), but a much more attention-grabbing trend, in my estimation, is the flurry of investments that are taking place on the part of professional sports entities. TNL Media counts twenty one instances from roughly the past year where professional soccer, basketball and hockey teams have invested in the space. Furthermore, there is a growing list of former athletes who have also begun betting on this burgeoning industry. I expect that these organizations and individuals alike are attempting to get in on the ground floor of what they recognize as the next big opportunity in sports and will play an active role in applying their knowledge of the industry to help shape and grow its newest emergent digital category.
In its latest market forecast, Newzoo predicts that revenues for eSports will reach $696 million in 2017 and grow to $1.5 billion by the end 2020. While there are a number of factors that are driving this growth, I believe the most crucial to understand is the simple fact that the possibilities in this field are limitless. Where 'traditional' sports are bound by both the laws of physics and the extent of human athleticism, eSports are bound only by our ability to digitally create new constructs for competition. Furthermore, given our advancements in the realm of graphic rendering and immersive experiences alike, there may even come a day when our concept of 'traditional' sports amounts to nothing more than a detailed simulation. It is a mind boggling and frightening thought, but it is grounded in the simple truth that digital is the future. As such, the question then becomes not whether eSports should be considered sports, but rather how quickly will they come to supplant them?