A sold-out crowd packed into Seattle's KeyArena in August to watch the world's best compete at an elite level. The scene inside the arena was exactly what you'd expect at a premier, traditional American sporting event. Jersey-clad patrons screamed with anticipation, florescent spotlights shot around the arena, a hype man revved up the crowd with hyperbolic excitement. But the crowd's eyes were fixated on giant LED screens rather than the stadium floor, and the competitors they paid to see never left their seats—their eyes, too, focused on a screen.
The main attraction? The International Dota 2 Championship, the richest esports tournament in the world. To gamers, Dota 2 is known as a multiplayer online battle arena (MOBA) game. For many, "computer game" is the more appropriate moniker. But to the 80 gamers who qualified for The International, Dota 2 is their livelihood,and an increasingly lucrative one at that.
The purse for the event, the sixth edition of The International, was $20,770,460. That's roughly double the total payout of The Masters. The International's winning team, a Chinese side called Wings Gaming, split the $9,139,002 grand prize among its five gamers—each team member took home $1.87 million for his triumph. For his Masters win in April, Danny Willett won $1.8 million.
Esports, which is loosely defined as professional competitive gaming of any kind, is experiencing a meteoric, seemingly exponential rise in worldwide popularity, particularly among young men. According to Newzoo, a market research firm specializing in digital gaming, there are 148 million "esports enthusiasts" around the globe. Newzoo estimates that 22% of American male millennials watch esports, putting it virtually equal with baseball and hockey in terms of viewership among that demographic. In 2016, esports events comfortably sold out KeyArena, Nationwide Arena in Columbus, Staples Center in Los Angeles and Madison Square Garden in New York.
Last year, the industry produced an estimated $493 million in revenue—a growth of 51.7% from 2015—and that number is projected to surpass $1 billion by 2019, per Newzoo projections. This could be the year esports secures its place in the mainstream sports world.
Increased sponsorship revenue
The majority of the current industry valuation comes from advertising and sponsorships—71% ($350 million) of it, to be exact. These sponsorship dollars come from game publishers, who use esports as a means to increase the shelf-life of their own games' popularity and to appeal to players of other games, as well as other gaming companies and, increasingly, non-gaming ones. Marketers in a wide variety of industries see esports as a medium for reaching younger, digitally-oriented consumers.
The list of household-name brands banking on esports' continued ascension is swelling. Coca-Cola sponsors the League of Legends World Championships. Buffalo Wild Wings and Arby'sattach their name to The "ELeague," a competition/reality show that broadcasts games of Counter-Strike: Global Offensive. Geicohas a "pro-tip" series on Major League Gaming's MLG.tv. Red Bull, a brand synonymous with cutting-edge sports marketing, has made a massive commitment to esports.
Partnerships between traditional sports franchises and esports franchises are happening with increasing regularity. The Philadelphia 76ers bought Team Apex and Team Dignitas in September. Last month, the Miami Heat announced a partnership with Misfits, an esports club whose teams compete in multiple games. The Houston Rockets hired a director of esports late last year. Milwaukee Bucks co-owner Wes Edens' Fortress Investment group recently announced that it would launch a new esports franchise called FlyQuest. Top European soccer teams, including Paris Saint-Germain (France), Manchester City (England), Schalke (Germany) and Ajax (Netherlands), have each signed gamers to represent them.
Today, the NBA announced a partnership with videogame publisher Take-Two Interactive Software Inc. to form the NBA 2K eLeague. The plan is for five-man teams to represent every NBA team and compete in a five-month season that aligns with the NBA season. "Think of the eBulls against the eKnicks," NBA comissioner Adam Silver told the Wall Street Journal.
As of now, advertising on esports's multiple platforms—sponsoring teams, tournaments, individual players, streaming services, TV broadcasts and more— remains much cheaper than doing so on more traditional sports. Should esports continue on its trajectory of increased viewership and influence, exposure to the esports fanbase is going to get more expensive.
"I’d like to see esports maintain that attention and cement itself as more than an interesting topic to check-in on for the mainstream audiences," Justin Dellario, head of Esports Programs at Twitch, told SI.com. "Regulation and organization at all levels will help take esports from more than just an exciting prospect, to an identifiable opportunity with a clear return on investment.
"It is at that point that we will begin to see investments turn from millions into billions."
More ways to watch
Given the youth of its fan base, it comes as no surprise that most who watch esports live-stream it on sites like Twitch, Youtube Gaming, Hitbox and Mirrativ. Twitch, which Amazon acquired in 2014 for nearly $1 billion, receives 2.1 million unique streamers a month. It's 84th on the Alexa ranking of the world's most popular web pages—one spot ahead of The New York Times' website.
By allowing viewers to interact with the gamers they're watching, these sites push the viewing experience a step further. Unlike traditional sports broadcasting, it's a two-way transaction.
"People enjoy watching others who are good at what they do when it involves a shared interest," Dellario says. "The appeal is no different than watching a cooking show or someone playing poker or football, if that’s what you are interested in. Twitch, however, is more than just watching others. It is live social video where the broadcaster is interacting with the viewers, who in turn are interacting with the broadcaster and other people in the chat (section)."
Now, cable television networks are starting to try to capitalize on the growing swath of Americans who watch esports, a group Newzoo says already numbers almost 20 million. Turner broadcasted The ELeague on TBS and its digital platforms on Fridays this past summer. The first season's ratings were impressive—it averaged 271,000 viewers per episode—so the network aired season 2, which concluded with the ELeague Major final on Jan. 29. That broadcast averaged 228,000 viewers, 144,000 of which were among the crucial 18-49 demographic. It's also reasonable to assume that more of the remaining 84,000 were under 18 than over 49.
"There's no doubt in our mind that this is a sport—these are athletes," Lenny Daniels, president of Turner Sports, told Variety in 2015.
ESPN aired the Evolution Championship Series of fighting games (including cult-favorite Super Smash Bros. Mellee), and ESPN.com launched an esports vertical on its site last January. BBC, SkySports and Yahoo are among the companies that have also started broadcasting the sport and its tournaments.
After making inroads into the cable television world, virtual reality seems like the natural next frontier. Esports and virtual reality are a match made in electronic heaven: VR gives fans the opportunity to transport into the virtual realm—often the entirely different universe—of their favorite games. VR platform Sliver.tv partnered with esports company ESL in November to produce the first–ever live 360-degree broadcast of an esports event. This year, Sliver.tv is partnering with ESL and esports tournament organizer DreamHack to broadcast 14 events live in VR.
Professional gamers almost exclusively play first-person, PC-based "hardcore" MOBA games like Legends and Dota, but these games comprise a small portion of the international recreational gaming community. There's a growing, mobile-oriented competitive esports scene that offers gamers of all skill and commitment levels the opportunity to monetize their abilities using a cell phone or tablet. There are competitions in massively popular, more intricate games like Vainglory and ClashRoyale, but also in casual games like mini-golf and bowling.
"There are roughly 2.1 billion mobile gamers in the world, but as of right now there is such a tiny number of players participating in esports," Skillz CEO Andrew Paradise told SI.com. Skillz is a platform for mobile esports tournaments that has handed out more than $60 million in prize money.
"To use a football analogy, right now there's only the NFL. What we're doing is building out these tiers—like pee-wee, pop warner, high school," Paradise said. "We are democratizing esports."
More than 10 million players across 180 countries participated in Skillz events last year, and the company's top game in terms of prize money was a bubble-popping game called Bubble Shooter. The platform's top earner, Adam Heitman (gamertag: LLW999), won more than $390,000 last year. Not bad for a side gig—Heitman owns a carpet cleaning business.
Surge in prize money
The current state of professional gaming mirrors the beginning days of the NFL and NBA. In those league's inchoate stages, players often had to work other jobs to supplement their seasonal salaries. Even today, some professional athletes—like pro lacrosse players—hold other jobs to bolster their income. The same is true for most professional gamers.
Still, 18 gamers made more than $500,000 in esports prize money alone last year, and 195 made more than $100,000. Similar to professional golfers and tennis players, prize money makes up only a portion of the top gamers' yearly income. Some are paid salaries by their teams, and many parlay massive followings built from live-streaming their gaming sessions into sponsorships with game equipment and manufacturing companies.
The number of full-time professional gamers is, as of right now, modest. But if esports stays on its path toward mainstream appeal and the sponsorship and TV dollars continue to flow in, it won't be long before dozens of gamers are making more than $1 million every year. In 2017, we'll take a step closer to that reality.