The Rise of Esports: Evolution of eSports Industry

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The Rise of Esports: Evolution of eSports Industry

Hey everybody the Esports Industry has been accelerating at a pace that has ever been seen before in 2017 itself. According to super data gaming video has more audience than hbo netflix espn and hulu combined.

Gaming and twitch according to kpmg gaming became the biggest earning media Sector in 2020 with a revenue of 180 billion dollars and what blew my mind is that this is more than the revenue generated by movies and sports combined and that too during the pre-covet times in 2019.

This clearly states that the Esports Industry is soon going to be bigger than olympics bigger than ipl and perhaps way bigger than the most prestigious sports leagues in the world.

let’s try to understand How does the Esport Industry Work? What are the paradigm shifts happening in the business model of these esport giants? 

Most importantly as students and investors into the Esports Business what are the factors that you need to keep an eye on to understand the Esports Industry better on this post. 

Esports Industry Work

The first thing you need to understand is the difference between Video Gaming and Esports. This is something that most people get confused about people while video gaming simply includes anyone and everyone who plays games using an Electronic Gadget Esports.

Esports Industry Work

A special category of gaming wherein just like nba laliga and ipl the players involved in the game compete against each other. And are focused on using their skills to win the championship.

It is as simple as the difference between playing hide and seek and playing Cricket and ipl and just like ipl the Esports Industry has several stakeholders who invest their resources to get good returns in terms of money visibility and entertainment in total there are 11 major stakeholder groups in the Esports Industry that exist within its ecosystem.

Let’s try to understand who they are using the simple analogy of conventional sports.

The first set of stakeholders who actually bring the game to life are Publishers and developers they are either the same organization taking on Both, rules.

They share a principal agent relationship wherein the developers work for the publisher in case of cricket brits were the inventors and obviously there is no analogy for a publisher.

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But, in Esports we’ve got Companies like epic games. Which developed and published the iconic fortnite whereas pubg was developed by the pubg corporation but it has multiple publishers all across the world like hot Cool games and tencent games then below.

These two we have the third stakeholder which are the leagues and in case of Cricket it’s nothing but ipl and just like the indian premier league.

The esport league share a symbiotic relationship with the publishers wherein The publisher gives these league organizers an asset to do business with And at the same time these leaks they give the games the popularity which Eventually gives them more fans more players eventually generating more Revenue in case of conventional sports.

Wimbledon uses tennis the sport as an asset and then it attracts players like federer and nadal. Hence, increasing the popularity of the game of tennis nba does this for basketball laliga? Does this for football and ipl? Does this for cricket.

In case of esports we’ve got leagues like the World Esports League which is a global tournament series organized by the International Esports Federation And League Of Legends world championship was one of the most popular esports Event in 2021 with a peak viewership of over 3.5 million.

This is how leagues and publishers share a symbiotic relationship by which they benefit each other in terms of viewership and revenue and then we have the fourth type of stakeholders who are the players. 

Physical Sports

These are the ones who play these Esports eventually to win Prize Money to Gain profile and to generate sponsored interest and just like physical sports.

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Esports has two types of players small players who get an identity by playing the esport and established players who give identity to the esport a simple example of the same is virat kohli and ruth raj gaikwan if players like virat kohli play the indian premier league.

The league itself largely benefits both in terms of visibility and revenue and at the same time players like ruth raj gaikwad at this point get their intd and visibility.

Due, to the indian premier league in case of gaming we have gamers like richard tyler or ninja who’s so popular that when he plays the game in twitch the game itself shoots to fame and just like uttaraj’s gayakwad.

We are small players in the Esports Market who are now gaining intt. Due to the Esports that they play if this is very very clear to you.

Let’s move on to the most influential stakeholders in the group who are the Streaming platforms and broadcasters of Esports and the reason.

Why they are so powerful is because they help the leagues and players get directly in contact with the lifeblood of Esports? Who are the fans and the members of this stakeholder group includes twitch, youtube gaming etc and for broadcasters.

We’ve got espn in case of ipl you must have guessed it already star sports and set max are the broadcasters and now hotstar is the streaming service.

In case of esports due to almost zero entry barrier the streaming platforms Have become so powerful that the entire industry has been accelerated merely. Due to the power of influencers and this has turned even normal video games into Esports Sensations.

And finally we have the most important stakeholders of the Esports Industry and those are the fans who play the games and watch Esports for Entertainment. These are the primary stakeholders in the Esports Industry.

Rise of Esports Industry

Now this is where the second phase comes in as the Industry evolves and grows there are four more secondary players who come in initially fans are just viewers. 

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But, as the number of fans and the attachment of these fans of the game increases the Esports Industry attracts two more stakeholders 

And they are the sponsors and complementary businesses like merchandise makers for example when manchester united started playing.

It was just another club but as soon as iconic stories got associated with it like the busby boy story or the alex ferguson story the fan base became so strong and so, loyal that in 2019 itself manchester united made 102 million pounds just by selling merchandises.

Similarly nike was not a powerful player on the Market until michael jordan came in and today jordan shoes are a sensation even decades after his Retirement.

Just like that today some esports have reached the level.

Wherein fans not only watch esports content but, also engage with ads which gives an insane return investment to the sponsors. Learn More Hidden Startup Secrets Of Delhivery | Delhivery Business Model

Therefore more fans equals more visibility which means more sponsors Eventually more money for the leagues publishers streaming service and Developers.

This is how the gaming industry operates but, then the question over here is where do Tech Giants like facebook, amazon and google come in well this is where the third phase of Esports come in wherein the entire dynamics of the gaming industry is undergoing a paradigm shift.

Just like any other paradigm shift companies that adopt to the new age models will go on to become the next big giants in the industry. So, the question is what is this paradigm shift all about?

The answer to this question lies in the fundamental statement that we derived. Which says more fans equals more visibility. 

Which means more sponsors eventually more Money for the leagues publishers Streaming services and developers.

Business Models Esports Industry

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If You Need More Fans You Need Two Things

1. The Accessibility To E-Sport 

2. The Visibility 

The esport visibility is obviously the streamers who play these games and Entertain and engage the viewers.Here’s where we’ve got legends like richard blevins or ninja raul alvarez and turner tenny.

These other mega influencers who stream games in front of millions of Viewers eventually these viewers go on to become players and fans.

But, accessibility is something very very special because this is where the Disruption is happening and the catch over here is that accessibility in spite of being the most important attribute of gaming 

The Esports Industry it is by default being limited by the existing business models.

The question is how is that even possible? And what does it exactly mean To tell you about it if you look at the gaming giants like playstation and xbox.

Which are popular games like call of duty and fifa until now these Companies Have been making money primarily by selling game cds and recently through The cloud and after you buy these games you’ve got subscriptions in-app Purchases etc.

But, the biggest problem over here is that in order to play these games the Customer has to spend rs. 30,000 just to get the console and then spend another three thousand to 5,000 rupees to get the game.

Then only she can access the game so if you see the number of people who are interacting with the game is decreasing by a large extent merely because of the entry barrier.

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Which is about affordability and just like physical sports unless you play the game you will not be able to appreciate the skills of the players at The professional level as a result.

You will never become a viewer of that sport for example:-

If you’ve never played fifa you will never be able to appreciate the fact That your younger sister can hit a solo goal that to add legendary level Difficulty.

If you have not played counter strike you will never be able to understand how difficult it is to hit 10 headshots in a row.

Therefore, more entry barrier means less players which means less viewers eventually less viewership meaning less engagement and less money to the stakeholders of the industry.

This is the reason why new business models and new processing models are on the rise in the Esports Industry.

Cloud Gaming

The business model is nothing but the freemium model and the processing model is what we know today as cloud gaming.

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We’ll talk about cloud gaming later because for now it’ll be too much for You to digest. But, freeman model is something that you’re already familiar with a classic.

Example of the same is none other than pubg people when we were children we all have known call of duty as the most iconic competitive game of our Generation right.

It has dominated the space for 10 long years. But, as of 2019 while call of duty generated a revenue of 1.1 billion dollars surprisingly in the same year pubg in spite of entering the Market in just 2017-18 generated revenue of 1.5 billion dollars.

The obvious reason why this happened is because while people needed a pc or a console like playstation and then a cd to play call of duty pubg eliminated the entry barrier by giving it out for free.

Most importantly it increased the accessibility by a large extent through Mobile compatibility and instead of making money by charging for cds.

They made money just through in-app purchases and advertising and today it is standing toe-to-toe with a legend like call of duty.

This metering rise of pubg is the reason why even call of duty launched its Mobile version and in just 1.5 years.

The mobile version got 500 million downloads and generated revenue of 1 billion dollars this is how both call of duty and pubg are now making money through the freemium model. 

Which increased both the scope of revenue and the context of esports it drastically increase the number of potential fans who can then go on to become viewers and players in the Esports Tournament.

This is how the business models are now transitioning from a razer blade or a console cd model to a freemium model now the question is does this mean that all the games will now be free and accessible through mobile.

Well not yet and this is where the Tech giants come in the challenge over here is that mobile gaming is still a very 

Very big obstacle because it limits the scope of the games by a large extent so, developers still have very limited things to offer in their games because of the processing capability of your devices.

And at the same time like we saw high-end pcs or consoles are entry barriers to the customers so the million dollar question over here is that how Can we increase the accessibility of these heavy games like fortnite without Getting people to buy expensive devices like consoles or pcs.

The answer to this lies in nothing but cloud gaming which is now causing a business war between amazon,google,facebook and apple.

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