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The Esports Phenomenon Brings New Challenges

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White Paper: The Esports Phenomenon Brings New Challenges and Opportunities in Media Tech

There are few current trends in media and entertainment as exciting and fast-growing as esports (an umbrella term encompassing competitive gaming across a number of distinct games). Growing out of the humble origins of arcade tournaments and online-game play-throughs, esports has experienced a meteoric rise recently, although tournaments have been broadcast by such channels as GIGA since the early 2000s.

Still, the growth that media organizations have witnessed in the past half decade has been immensely impressive. In 2018, Newzoo predicted that, by 2021, esports will become a bigger industry than traditional professional athletics, and the industry will see its first $100 million media-rights deal (an incredibly ambitious forecast). In a follow-up piece published in early 2019, it predicts an audience of 645 million viewers by 2022.

With this evolution comes a wealth of opportunities for organizations driving growth across media technology, especially those that better enable remote production and help facilitate fast, global multichannel distribution. This dynamic vertical combines the broadcasting opportunities of live sports coverage and entertainment with exciting differentiating factors that demand the aforementioned capabilities. If media-tech enterprises want to seize on this boom, understanding the unique nature of esports production and distribution is important: there are some different challenges and opportunities compared with traditional sports productions.

Esports’ Rise on the Leaderboard Explained

Although gaming tournaments have been around since the 1970s, esports as we know it bloomed in the 1990s, in the time of games such as DOOM, Unreal Tournament, and Starcraft. Still, the rate at which esports has gone from niche hobby to mainstream phenomenon in more recent years is impressive, to say the least.

In a 2013 PCWorld article, writer Andrew Groen argued that the state of professional PC gaming could be attributed to its massive “economic rise of Asia.” Although esports had looked like a dying industry in the early 2000s, he suggested that the availability of free PC gaming centers and the prominence of competitive PC gaming in countries like South Korea not only helped to rescue esports but to position it for the mass appeal it’s currently enjoying.

Today, pro gaming is a dynamic and lucrative business on nearly every continent and shows no signs of slowing down. With a wide range of games — such as League of Legends (LoL), DOTA 2, the aforementioned Overwatch, Counter-Strike, and Fortnite — competitive-gaming enthusiasts can easily find a challenge that suits their individual tastes.

With the introduction of streaming-community services like Twitch, professional-gaming competitions are as accessible as the largest sports events (for example, the 2017 LoL semifinals had a viewership of more than 80 million people), and major brands like Mercedes-Benz, Toyota, DHL, Coca-Cola, and Spotify have arranged sponsorship deals with global leagues like OWL, ESL One, or IEM. And Disney XD, ESPN, and ABC have teamed up with the leagues to form broadcast partnerships. Brands are beginning to recognize esports as one of the best ways to market to younger demographics, who might otherwise be harder to reach, and it’s likely that these sponsorships will only increase in prevalence.

Bringing Content to the Masses

Now that it’s clear that esports is a big deal and only getting bigger, it’s essential that media-technology businesses understand what this means for them: how they fit into the emerging puzzle.

Recently, VentureBeat published the transcript of its esports panel at the 2019 National Association of Broadcasting (NAB) convention. The wide-ranging conversation explored the nuances of broadcasting esports competitions and how they superficially resemble regular sports broadcasting while exhibiting some fundamental differences (more-complex technology, the integration of additional workflows such as social-media promotion, etc.) in the production needs.

Matt Edelman, chief commercial officer, Super League Gaming, suggests, “If you’re interested in esports [and] relatively new to esports, it will help if you think of esports as sports.”

Although this is definitely a helpful way to consider its current cultural import, from a production and broadcast standpoint, there are some crucial distinctions. Certainly, some of the same technology and production equipment is used, but we see critical differentiators in production workflows. Esports events are often much longer, so that logging and metadata become key for postproduction and social-media teams. Furthermore, we have to consider the in-game workflows and the different limitations coming from the observer itself.

Although traditional sports and other live events have started to adopt at-home, or centralized, production, esports seems to be pushing that model further and faster to reduce production costs and streamline global workflows. Additionally, at-home production makes central archiving easier, allows postproduction and social-media teams to stay at home, involves less opex, and ensures that employees don’t have to travel unnecessarily.

With this model, much of the editing, creation of graphics, and addition of audio effects is done predominantly at a home facility away from the venue. This means that every single one of these massive events requires solutions that can facilitate constant, complex workflows that depend on swift and secure file transfers to and from the venue in near real time over public and private IP networks.

Furthermore, we see much faster adoption of cloud-based workflows in the esports industry as well. That isn´t really a big surprise, when we consider that all the multiplayer games are living in the cloud already. With major publishers operating their own private WANs around the world, it´s just a natural step to shift more and more traditional broadcasting jobs into the cloud. A good example is Blizzard’s OWL production. Blizzard uses AWS Services to add localized graphics for different MRLs and regions and to transcode up to 37 individual video streams.

The ability of broadcasters to handle all these components and production conditions as quickly as possible is absolutely essential for, as VentureBeat notes, the battle for eyeballs, which is particularly hectic with esports. In addition, social-media relevance demands deployment of content ASAP. Even posting content five minutes late can make it less desirable.

Moreover, although a football or basketball game might be broadcast only on a single channel because of exclusive media-rights deals, esports events are often broadcast on multiple channels across multiple platforms without geo-blocking. Therefore, being able to move content quickly and create dynamic and attention-grabbing coverage under the real-time pressures of a given tournament is vital.

The final component that makes esports such fertile ground for media-technology businesses is the timeframe in which events take place. Since the debut of Twitch, gamers have been able to stream uninterrupted for days, and esports competitions can last an entire weekend or longer. Gaming fans are used to tuning in for extended periods, and, whereas a basketball game might just take up a solid three hours of someone’s afternoon, esports enthusiasts tune in and out or even watch for an entire day. This means broadcasters are constantly moving files over a long period of time, and they demand solutions that can handle such conditions.

Gaming Around the World

Another crucial element for media-technology organizations to consider is that esports is a global phenomenon (the 2019 Newzoo article estimates that 57% of esports enthusiasts are in the Asia-Pacific region), and the way in which fans tune in reflects that.

Whereas football fans might have a favorite local club or cricket fans a regional rivalry, esports fans largely follow individual players. Geographic loyalty or team obsession is much less prevalent in this vertical, so, even if you live in Dubai, you could be dedicatedly following a gamer based in Tokyo (although organizations like Blizzard are trying to get fans invested in local teams through leagues like OWL). Compounding this, beneath the esports umbrella, there are enthusiasts who care about only one game out of the dozens that currently drive esports’ popularity.

Esports also serves the purpose of educating or engaging new gamers with the mechanics of games at which they might still be novices. Said EA Head of Broadcasting Joe Lynch, speaking on the NAB panel, “Going by all these stats that we’ve looked at, the vast majority of the people who are watching are watching to learn. … As broadcasters and storytellers, we have to spend a lot of time teaching. NFL football games don’t do that. … They’ll do a little to explain the basic rules so you can enjoy the game, but they’re not going to go into the minutiae. … Those are the things we have to do as storytellers, and that part is really different.”

What does all this mean for distribution? Well, on a basic level, the distribution net for esports is far wider than for any other type of sports. If I’m an Overwatch super fan, I’m going to tune into OWL competitions no matter where in the world they are, time difference be damned. And, if I can’t check out a tournament because that time difference is a factor, I’m going to want (or expect) that I can watch that tournament at a different time, at my convenience.

Esports Is Here To Stay

The bottom line is simple: esports isn’t going anywhere. In 2018 alone, the industry saw $4.5 billion in investment.

The market, as it stands, is experiencing immense growth and a heretofore undreamt-of level of legitimacy, and with that comes a trove of needs and opportunities that media-technology businesses should be paying extremely close attention to.

At-home production and global distribution are elemental to esports, and with that comes an incredible demand for solutions that can support the workflows and the omnichannel content push that defines the industry. This will continue to be a growth driver for media technology and, certainly, for Signiant, as we provide intelligent file-transfer solutions to the entire value chain, including the game developers themselves, the broadcasters, and online streaming services.

No matter what your niche is, it would be absolutely foolish to dismiss esports as a fad. In the past, pro gaming might have been seen as a temporary craze or a fringe hobby, but the past half decade has done wonders to disprove that assumption. Dubai even announced construction of the first esports-exclusive stadium in the Middle East.

The esports wave is sweeping the world, and media-technology organizations should be paying attention. When it comes to production and distribution, the chances are immense.

If you’re committed to innovation, you’ll go where the innovators are.

British eSports Association Vision 2022

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British Esports Association outlines vision for next three years

Not-for-profit organisation British Esports Association has outlined its plans for the next three years in an online booklet.

The association aims to drive forward with three key strategies: increasing awareness of esports in the UK, improving the standard of UK esports, and inspiring future talent.

Andy Payne OBE, Chair of Advisory Board at British Esports Association commented on the booklet in a release: “This document aims to outline the next three years of British Esports, up to the end of 2022. What will we be doing, what have we learnt so far and how can we work better? What will success look like and how do we measure that? These are the questions we’ll aim to answer in this report.”

During its first three years, the association has developed the British Esports Championships for school and college students, launched its esports & physical sports crossover activity week with West Ham United Foundation and other partners, and launched a number of guides aimed at parents on its website.

The British Esports Association also announced plans for its Women in Esports campaign, aiming to raise awareness and improve inclusivity in esports.

Alice Leaman, Schools and Colleges Liaison Officer for British Esports Association discussed the campaign: “By celebrating and supporting women in esports we can help raise awareness of the accessibility and inclusivity of esports. Competitive videogaming is enjoyed by diverse audiences worldwide, and by learning about different women involved, and how many have overcome challenges, we can help support wider UK talent to get involved from the grassroots up.”  

Esports Insider says: The association has made some solid strides in its first three years. With plans in place for the next three years and new announcements already being made, things look promising moving forward.

eSports G2 League Of Legends

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How to become one of the world's best professional gamers

(CNN)Luka "Perkz" Perkovic still remembers the first time he picked up a computer mouse and keyboard.

He was a toddler and had been watching his older brother enjoy the virtual world of video games before he finally got his turn.
"I thought it looked really cool," the 21-year-old told CNN Sport. "I didn't really know what to do."
From that moment, things changed for the Croatian who has gone on to become one of the best League of Legends (League) players in the world.
Now representing gaming powerhouse G2 Esports, Perkz is playing in the final of the lucrative Worlds 2019 -- a global tournament that sees the planet's best League teams come head to head.

'Next level addiction'

Perkz really became hooked during a spell off school after a period of health issues when he whiled away the hours gaming in his bedroom.
Little did he know that this new hobby would soon become his profession.
It wasn't an easy path though. As he spent more and more hours honing his skills online, his grades at high school began to suffer which began to concern his parents.
"I was waking up when my parents would go to sleep, to go play some more League. So they had no know idea that I was awake during the night," he laughed.
"You know, it really sounds like real next level addiction or something right?"
Even so a professional career playing never seemed doable with the esports boom seemingly so far away from his hometown in Croatia.
It wasn't until he spent a summer playing a challenger series that both he and his parents realized the Perkz's potential.
Having joined G2 Esports in 2015 he now travels the world and his talents have seen him acquire a social media following reaching into the hundreds of thousands.

'Always seen it as a job'

It's a route to the top that's not unfamiliar to Perkz's current teammate Rasmus "Caps" Winther who joined the team just last year.

For Caps, 19, the idea of a professional esports career was always in the back of his mind having grown up in a gaming mad family in Denmark.

His older brother was a professional Dota player which meant his parents were more sympathetic to his ambitions to make it in the competitive world of League, a game which he loved as soon as he picked it up.

"I think I've always seen it as a job," Caps told CNN Sport, from the Red Bull Gaming Sphere in London.

"Just because I've always aimed to be the best. I always knew that it takes."

Even before turning professional, Caps was having to sacrifice a lot at a young age to maintain his level.

Like Perkz, his grades began to suffer and Caps' free time outside of school was spent in front of a screen but all the hard work paid off as soon as he stepped on the big stage.

It was during a summer spent in Turkey where the Dane convinced both his parents and himself that this was where he belonged.

"It was kind of like a surreal experience. I still remember the feeling of making [the first] big play onstage," he reflected.

"You play so many League games [...] and then to play a game where you actually hear people clapping and you can see people at the back of the PC. It just feels different."

Online hate

Although both young men are enjoying life as a professional game, such a career hasn't been without its pitfalls.

Just as fledgling soccer players have to adapt to life in the limelight, esports stars must learn to cope with criticism from an often volatile online audience.

It's a lesson that Perkz learned the hard way after facing a tirade of online abuse as he began to make a name for himself.

Now adopting a slightly more considered online persona, there was a time when the 21-year-old was notoriously outspoken. He blames his "trolling" for the backlash he received after enduring a difficult run of form in his first year as a professional.

"It really backfired on me like really, really, hard, in ways that I think many people can't even begin to imagine," he said, saying the abuse had made him reconsider a career in esports.

"I was getting blamed by thousands and thousands of people. I couldn't even go on the internet because it would be such a mental devastation every time I would read a comment.

It's a reality that Caps has also come to accept but fortunately for the players at G2 Esports, they can seek advice from its charismatic owner Carlos "ocelote" Rodríguez who, as a former pro, has helped his young gamers adapt to life in the limelight.

Elite esports is very much a mental game and players are often encouraged to take time away from the screen to allow their minds to reboot.

For Perkz, music is the tonic he needs to switch off. Having followed in his sister's footsteps, he is a trained classical guitarist and is grateful to have a hobby so different from his career.

"It's kind of really changed me in a way," he added. "It's really relaxing for me to be able to have something [other] than League."

Eyes on Worlds

Both Caps and Perkz are now on the verge of doing something very special in the world of League of Legends.

The current team has won every tournament it's played in this year and is now the favorite to win the Worlds final on November 10 against Chinese team FunPlus Phoenix.

However, neither player is worried about the extra pressure that comes with the lofty expectations and both are aware they'll be the ones to beat.

"Yeah I can imagine, I think about it sometimes," Perkz said when asked whether he thinks about lifting that glittering trophy on Sunday.

"I think about it more of like a motivation to just keep going. Because seasons are long for me, every season is very long and very taxing."

UK Esports Partnership

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UK Esports Partnership Begins to Take Shape

NEW YORK (Nov. 12, 2019) — The University of Kentucky’s vision for developing an esports program is bigger than games and sport.

“The main motivation … is our belief, our fervent conviction, that games will really bring the entire world together … and it’s going to be led by the young people of our next generation,” said Chris Park, CEO of Gen.G sports, a global leader in esports. “Today is really a celebration of games. It’s a celebration of students.”

Park was referencing the first public event, held last week in New York, designed to showcase the recently announced partnership between UK and Gen.G, which manages esports teams around the globe from its offices in America and Asia.

Through the partnership, the idea is to create an innovative esports program — unlike any other in the country — that maximizes student success and the potential for career opportunities in what is now a global, multibillion-dollar industry. At the same time, UK officials, as part of a larger Smart Campus initiative, are looking for ways to use esports and other technologies to build a stronger and larger sense of community on campus.

In New York last week, the two partners held an event at Samsung 837, the company’s high-tech event space in the city’s Meatpacking District. The event featured a panel discussion, moderated by esports personality and UK alumna Erin Ashley Simon, in front of more than 200 people. Participants in the event also tried out some of the latest games and gaming hardware from Samsung.

Against a backdrop of a colorful blur of games playing on a theater style digital media board, the panel consisted of Christine Harper, UK’s associate provost for enrollment management, Park, and Wally Johnson, a UK civil engineering senior who is president of UK’s esports club.

While in New York, UK officials from Student and Academic LifeEnrollment Management and Information Technology Services also visited with startup companies at ERA, the city’s premier tech incubator and accelerator.

“We need to meet students where they are,” Harper said. “Who knows where the jobs of tomorrow are going to be?”

For example, Harper said UK is distinctively positioned to take advantage of an esports partnership in which a synergy can be created from the university’s more than 200 majors and an industry where jobs and careers are possible in areas such as computer science, business, media and marketing, among others. To that point, Simon cited the engagement of large media companies — like ESPN and The Washington Post — in esports.

“Events like today and this partnership can help create more opportunities for students to find avenues to get into,” Park said.

But panelists quickly noted that esports — and the partnership between UK and Gen.G — is not only about career development. Both UK and Gen.G want to explore how esports can help build community in all its dimensions — whether it helps create a sense of belonging or can contribute to wellness and well-being. Harper said one of the reasons, in fact, that UK ultimately chose Gen.G as a partner is their focus on wellness and well-being. Indeed, Park cited a recent partnership that Gen.G has implemented with LA Fitness that is about promoting and prioritizing fitness.

Within the next few weeks, UK officials are planning campus forums — and focus groups — with faculty, staff and students to discuss the challenges and opportunities associated with esports. In spring 2020, UK is working with Gen.G to plan an academic conference to discuss the issues associated with the growing industry and its involvement with universities. The potential exists for academic research into expanding opportunities in esports, but also challenges such as equity and diversity, repetitive motion injury and other concerns.

UK officials also will be working with faculty leaders for the appropriate review and approvals as ideas for academic programs and certificates are created.

For more about the esports initiative in New York, you can view this video: https://youtu.be/FH_kmG3U51E.

The University of Kentucky is increasingly the first choice for students, faculty and staff to pursue their passions and their professional goals. In the last two years, Forbes has named UK among the best employers for diversity, and INSIGHT into Diversity recognized us as a Diversity Champion three years running. UK is ranked among the top 30 campuses in the nation for LGBTQ* inclusion and safety. UK has been judged a “Great College to Work for" two years in a row, and UK is among only 22 universities in the country on Forbes' list of "America's Best Employers."  We are ranked among the top 10 percent of public institutions for research expenditures — a tangible symbol of our breadth and depth as a university focused on discovery that changes lives and communities. And our patients know and appreciate the fact that UK HealthCare has been named the state’s top hospital for four straight years. Accolades and honors are great. But they are more important for what they represent: the idea that creating a community of belonging and commitment to excellence is how we honor our mission to be not simply the University of Kentucky, but the University for Kentucky.

 

Esports Stream Aggregator

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Esports stream aggregator, calendar Juked launches

 

A new way to stay up to date on esports called Juked, which aggregates esports streams across Twitch, YouTube, Mixer, and others into a streamlined schedule, provides statistics and enhances viewer experience and encourages cross-game viewing, launched into open beta Wednesday.

The company was co-founded by entrepreneur Ben "Fishstix" Goldhaber -- who was the first gaming-specific hire at Justin.tv in 2011, months before it launched Twitch -- and programmer and show producer Chris "ChanmanV" Chan. The company first announced its intention to launch on July 1 and underwent private alpha and beta testing stages throughout the late summer and early fall.

Juked will cover more than 20 esports titles, including League of Legends, Counter-Strike: Global Offensive, Dota 2, Overwatch and more. The product is similar to TV Guide, outlining the schedule for all esports events and providing embedded live streams and video-on-demand replays to create a game-based and global directory. Juked also provides tournament standings, brackets, and statistics for each event it covers.

"When you talk to anyone in the industry or anyone that's just a hardcore fan of esports, they know that there's been a problem with discovery that you have to go to five different sources just to find what you need to understand what's happening, even just in the top couple of esports titles out there," Goldhaber told ESPN. "So as esports fans, this is a pain that we felt many, many times throughout the years. There's a lot of people like us who want to know what's happening across many different titles, but you can't do that in any meaningful way right now with the existing products that are out there."

The new project spawned from a site Goldhaber started prior to beginning at Justin.tv. Over the past few years, Goldhaber and Chan have worked on talk shows on Twitch, primarily one that centered on competitive Overwatch. After Goldhaber was laid off by Twitch in March 2018, he and Chan began brainstorming together and coined Juked.

Goldhaber and Chan did not disclose user numbers from the early and alpha and beta stages, but stated that feedback had been incredibly positive and that the company hoped to grow organically through word of mouth, search engine optimization and leveraging their personal contacts and networks. The company also hopes to roll out premium features via a subscription model in the future, Goldhaber and Chan told ESPN.

"The value proposition for the subscription will be a blend of features that make people's lives easier just to follow esports," Chan said. "Things like our newsletter, things like a summary of this past weekend, the highlights you should watch, some of the results that you should know, if you can only spend five minutes or 10 minutes getting caught up. Then content for sure.

"I think ads at some point will be something we consider as well. Maybe first, to be honest, maybe we can serve some ads, just while we're trying to get users, just have the free experience and then have this subscription."

The launch of Juked comes as competitors to Twitch have begun investing significantly in the gaming and esports spaces. In the past three months, Microsoft-backed Mixer, Google-owned YouTube and Fox-backed Caffeine have each signed exclusive contracts with influencers, with some also entering the live event esports space.

Juked Creates an Easy Way to Watch Your Favorite eSports

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Juked.gg creates an easy way to watch your favorite esports broadcasts

 

Juked.gg is launching an open beta for its platform that makes it easy for fans to watch esports broadcasts for their favorite teams or personalities.

Juked is a guide to the wide world of esports that makes it easy to stay on top of every trending match from popular games and teams, featuring support for over 20 titles. In addition to showcasing content, Juked is designed to provide answers to the most common issues esports fans face on a daily basis.

If you’ve ever missed an epic moment in esports because you didn’t know when to tune in, where to find the broadcast, or why you should care, Juked is for you, according to the pitch from founders Ben “FishStix” Goldhaber and Chris “ChanManV” Chan. I interviewed them about the business at the recent Esports BAR event in Miami.

“We want to create essentially the best way to watch esports,” said Goldhaber. “As much as esports has grown over the last decade, it’s incredibly fragmented and super difficult for any outsider to understand what’s happening. Even if you’re someone like either of us who’s embedded in the community, it’s a pain to stay on top of what’s going on.”

Juked anticipates what fans need to know and puts it in one place. This includes aggregating and indexing every esports broadcasts (live, upcoming, and VOD) and related data (brackets, standings, schedules, results, player profiles, and teams) into one viewing app, so fans can easily stay on top of their favorite games, teams, and players.

The Juked beta also features an industry-wide esports events calendar which allows users to set reminders for when individual matches or tournaments go live. It can be sorted and filtered by favorite games and teams.

The founders started San Francisco-based Juked because they were frustrated by the lack of a good way to follow the biggest leagues, tournaments, and events in esports. Casual fans and hardened insiders alike feel this problem on a daily basis—with dozens of relevant leagues, tournaments, and events happening every single week, staying in the know has become a constant chore. And this problem is only getting worse as new esports games continue to launch every year.

“When you land on our homepage, you’re going to instantly see all of the live streams, all the live events that are happening right now,” Goldhaber said. “It can be filtered by game by team or by your favorite player. So when you’re watching on Juked, you’re also getting all this context that you wouldn’t necessarily see on Twitch, YouTube, or any other platform. You’re going to get the brackets, you’re going to get the standings, you’re getting the player profiles, the team profiles, the prize pool, the schedule.”

Goldhaber was previously the director of content marketing at Twitch, where he worked from 2011 to 2018. His roots in esports began in 1999, and he played first-person shooters competitively for a decade. He then began doing commentary and streaming in 2008, and in 2010 he launched GamesCast.tv, the first aggregator of live esports content.

This project led to him getting hired at Justin.tv as the first full-time gaming employee, just four months before the launch of Twitch. His initial role at Twitch was as a partnership manager interfacing with and managing relationships with the biggest esports leagues and events on the platform, before moving up to his director position. GamesCast.tv was both a precursor to Twitch and Juked.

“The problem that we’re trying to solve is the fact that there is no central resource to stay on top of all of the biggest tournaments from across all the major titles,” Goldhaber said. “So that’s what we’re trying to build.”

Chan’s background includes 15 years of experience in software and product engineering. He was also a top-rated WarCraft 2 and NBA 2K competitive player and created several of the most popular podcasts in esports over the last seven years. This includes Value Town, Unfiltered, and The OverView, the latter of which Goldhaber was a co-host.

Most recently, he was the head of product, marketing, and strategic partnerships at Hearthsim, an esports analytics company which created HSReplay.net, and is the CEO of Visual Core, creator of popular online game show Streamer Showdown.

The company started in March and it has raised $500,000 in funding. It has begun hiring its staff.

Esports games supported on Juked

  • League of Legends
  • Counter-Strike: Global Offensive
  • Dota 2
  • Overwatch
  • Rocket League
  • Smash Bros. Ultimate & Melee
  • StarCraft 2
  • Call of Duty
  • Hearthstone
  • Fortnite
  • Street Fighter V
  • Tekken 7
  • Mortal Kombat 11
  • World of WarCraft
  • Rainbow 6: Siege
  • StarCraft: Brood War
  • FIFA
  • Apex Legends
  • Teamfight Tactics
  • Magic: The Gathering
  • Quake Champions

Over time, the company will add a premium subscription model.

“First and foremost, we were focused on tackling this problem, which we think is discovery, making it easy to discover the best content in esports,” Goldhaber said. “And we’ll be creating additional features where our pro users can pay extra to access pro features on the site. So that’s primarily what we’re looking at for business model content.”

Why Esports Profits

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Why Esports Profits Might Be Further Away Than Activision Investors Hope

As Activision Blizzard (NASDAQ:ATVI) winds its way through a transition year, the company continues to invest resources in its esports initiative. Estimates by market researcher Newzoo and Goldman Sachs expect esports to grow into a multibillion-dollar industry within the next three years.

At the front of this emerging form of entertainment is Activision Blizzard's Overwatch League, which has been driving much of the momentum in esports. Since the league was launched in Jan. 2018, Activision has sold 20 teams -- in addition to broadcast deals with Twitch, ESPN, Disney XD, and ABC, as well as major sponsorships with some of the biggest brands in the world.

With the worldwide esports audience expected to nearly double to 645 million by 2022, it remains a compelling growth opportunity. But it will take time to turn a meaningful profit for Activision Blizzard. CEO Bobby Kotick recently told CNBC during Overwatch League's Grand Finals event in Philadelphia that he "looks at things on a 10-year time horizon." Esports is a relatively new business model for the game company, and there's a lot of work to be done to raise awareness and interest. We'll look at some recent signposts that show Activision's esports efforts are progressing well, and what needs to happen for it to scale into a major business.

Where do esports currently stand?

Unfortunately, revenue from esports is still not registering in the company's financial results. The Blizzard segment, which includes revenue from Overwatch League, has experienced a 25% decline in revenue through the first half of 2019. Part of that is due to strong sales in 2018 of the World of Warcraft: Battle of Azeroth expansion, with no comparable sales of the franchise this year. Still, this means that, despite the team sales and sponsorship deals announced over the last year, esports isn't moving the needle for the company.

Furthermore, profits are likely nonexistent at this point, given that the company spent $50 million last year on personnel, facilities, and equipment associated with esports broadcasting and online games. On the bright side, Activision Blizzard reported double-digit growth in viewership during the second season of Overwatch League based on average minute audience, a metric that calculates the average viewership for a program at a specific interval during the broadcast. The average minute audience for season two of the Overwatch Grand Finals increased by 16% year over year. It's estimated that 1.12 million people tuned in to watch the championship match.

Additionally, Call of Duty World League saw a 50% year-over-year increase in viewership for two events during the second quarter earlier this year. The numbers for Overwatch and Call of Duty are showing progress, but there's potential for much more growth.

Stepping stones for a profitable medium

Esports for Overwatch and Call of Duty feature a city-based league structure, which lays a solid foundation with which to grow a large audience. Like traditional sports, teams in both leagues will begin playing home and away games in their respective cities starting next year.

Cultivating local fan bases for teams is crucial to realizing Kotick's vision for esports. During the first two seasons of Overwatch League, local watch parties started to pop up in different cities, which helped drive merchandise sales. And there was a good turnout for the few games hosted in Dallas and Atlanta earlier this year. Perhaps the greatest challenge to build a large audience is to improve the viewing experience, which won't be easy for a fast-paced game like Overwatch. The in-game camera is mostly focused on one player's point of view during a match. That leaves viewers mostly relying on the commentators to know what's going on amidst all the chaos.

During the second-quarter conference call, CFO Dennis Durkin said, "There's still a lot of room for further improvement in the viewing experience, and this is a key focus area for us as we think it's critical to continuing to make the broadcast not only compelling but easily digestible for mass-market audiences." Management has made some adjustments, but this will be an ongoing trial-and-error process.

A long road ahead

Ultimately, what drives revenue is people watching games. One indicator that the esports industry is rapidly growing is the rate of increases in player salaries, which have been doubling every two to three years since 2010. Player salaries for any sport come out of the total revenue generated primarily from ticket sales, merchandise, and advertising. The more viewers there are, the more partner brands will line up to put their logo in front of those eyeballs.

As revenue in esports grows, it will attract additional investment. This is how Activision Blizzard was able to sell eight additional teams ahead of season two of Overwatch League. And in August, the league announced a multiyear co-marketing deal with Kellogg, which will kick off next year with Cheez-It and Pringles products featuring Overwatch League branding.

Investors should also keep in mind that professional gaming is new to mainstream entertainment, whereas traditional sports have been around for decades. It's likely going to take several years for team owners to develop a profitable business around local advertising, ticketing, and merchandise sales. The first thing that must be done is to cultivate a large amount of local support around each team, and that won't happen overnight.

Coffee with Creatives

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Coffee with Creatives: Tapping Into the Esports Ecosystem with XR Sports Group

Hosts Erin Patton and Tyler Kern were joined on this episode of Coffee with Creatives by Kedreon Cole and Dom Bookman of XR Sports Group to discuss the growth of esports. “[Esports] is this really unique mix of sports culture and pop culture,” Cole said. “The difference in 2020 versus 1980 is that now it’s cool…I really think we’re at an exciting time where going forward you’ll see more unique activations.”

They also discussed the value for brands in finding ways to integrate themselves into the gaming landscape. Bookman explained how XR Sports Group is making it easier for companies of all sizes to create communities within the esports ecosystem. Listen to the full episode of Coffee with Creatives and stay tuned for more insightful episodes coming soon in this series.

Comcast Spectacor

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Comcast Spectacor targets lucrative esports market, launches venture with Korean partner

Comcast Spectacor and SK Telecom of South Korea on Tuesday officially launched T1 Entertainment & Sports, a global esports joint venture aimed at capitalizing on the fast-growing world of competitive online gaming.

Joe Marsh, most recently chief business officer for Comcast Spectacor's gaming division and its Philadelphia Fusion Overwatch League team, has been named CEO of T1. He will be based in Philadelphia. John Kim, founder of Akshon Media and former CEO of Meta Gaming, will serve as chief operating officer based out of Seoul. The new venture also has operations in Los Angeles.

Founded in 1996 as a sports and entertainment partnership involving Comcast Corp. and entrepreneur Ed Snider, Comcast Spectacor is headquartered at 3601 South Broad St. in Philadelphia.

Plans for the new 30-person venture were first disclosed in February when the companies agreed to create a global esports organization supporting competitive teams as well as events in the online-gaming space. The deal comes amid predictions the esports industry will top the $1 billion revenue threshold this year.

T1 Entertainment & Sports' portfolio includes the SK Telecom T1 League of Legends (LoL) Champions Korea team currently competing for a fourth title in the LoL World Championship. In addition, T1 owns and operates teams in competitive gaming segments that include Fortnite, Dota 2, PlayerUnknown’s Battlegrounds, Super Smash Bros., Hearthstone and Apex Legends.

“T1 immediately becomes one of the premier esports organizations in the world," said Dave Scott, chairman and CEO of Comcast Spectaor, a division of Comcast Corp. "We are looking forward to strengthening its presence in this dynamic space as we move forward.”

The Philadelphia Fusion Overwatch League franchise is not part of T1 and will remain fully owned and operated by Comcast Spectacor. Earlier this month Comcast Spectacor, which also owns the Philadelphia Flyers and the Wells Fargo Center, hosted a ground-breaking ceremony for its $50 million esports arena being built in South Philadelphia at the stadium complex.

How Latin American Esports Is Poised For Growth

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Espotrs is going to be a global phenomenon, but most of the attention has focused on North America and Asia to date. The rest of the world is in love with multiplayer gaming competitions as well.

To get a feel for the regional markets, I spoke with Juan Carlos Cortizo, CEO of Pro Play Esports, based in Mexico City. He believes that mobile gaming will be the primary platform for esports in Latin America, and that 5G will be a game changer when it arrives.

But Cortizo said that his company isn’t focused only on creating tournaments in Latin America. Rather, he’s seeking to create a global company as well. Pro Play Esports runs its events in both Spanish and English, helping it capture Spanish-speaking and English-speaking audiences on multiple continents. In the coming months, Pro Play Esports will launch is streaming network, broadcasting everything across mobile networks.

Here’s an edited transcript of our interview.

Origins

GamesBeat: How and when did you get the company started?

Juan Carlos Cortizo: The company was the evolution of the business we used to run in past years. It’s marketing agencies in Latin America. We’ve been working with developers like Rockstar, like Activision, like Electronic Arts, all of them, for the past years. We’ve worked with almost every major developer.

Since we’re gamers and we love gaming and we love competitive gaming, it was a natural process. Brands were asking us to run local tournaments and do these types of marketing initiative around esports. It was a natural evolution to say, “This is the moment, so let’s give it a go.” That process started almost two years ago, around 2017.

GamesBeat: What was the first thing you focused on at that point?

Cortizo: We wanted to develop the business model. You know how business models run. You have an idea. The first thing we did was approach developers, the licensors of esports games, to see what they thought about our ideas. Sure, they liked it, so we decided to give it a go. “Start working on it, and when you’re ready let us know.

It was about a year and a half that we spent developing the business model, the marketing, the communications, everything around what we are today. By May of this year we started doing closed tournaments on our platform and seeing what the community thought, what we could improve. After that we had another flash round, three months of working and making improvements. By the end of July we announced our first season and what we’ll be doing with that.

A global focus

 

GamesBeat: And the focus is on esports in Latin America, then?

Cortizo: No, actually, we went all the way. Right now we’re running tournaments in Europe and North America as well as Latin America.

GamesBeat: I see you have different kinds of competitions. Can you describe some of those?

Cortizo: It’s run in two ways, because the business model is a bit more robust than just doing tournaments. The first thing we do is divide–first, you have the base of the pyramid. 97 percent of the people who play esports games do it for fun. Maybe they’re on the edge of going competitive, or maybe they’re just part of the community. Competitive gaming has been around for a lot of years, but people pursuing it as a career is relatively new. In the U.S. and parts of Europe we’re seeing development centers and colleges trying to professionalize and educate around competitive gaming. But for us, that part of the market, the first–let’s call it the first pillar that we’re running. That’s what we call arenas.

Arenas covers 18 titles right now that are running in these three regions every week. We’re running around 37 weekly tournaments. It’s about educating and empowering that market. We have a good plan for people who join the platform, to start giving them a lot of education, a lot of insights around competitive gaming. If you want to just do it for fun, it’s fun. But if you want to pursue it as a career, we want to empower you. Arenas is that part, where we look at players and what they’re doing, and we help them. It’s like the training element of the platform.

The other part is the major leagues. These major leagues are running for this first season, from 2019 in 2020. That’s going to have just five titles. It will have higher prize pools. We’ll have an opening season and a closing season. We’ll have tournaments for qualification and then playoffs by region, and the champions and runners-up for each region will travel to a different location for the finals. At the end of that road is what we’ll call the Grand Champions, where we’ll have the champion of the opening season versus the champion of the closing season for each title.

GamesBeat: How many players do you think you’re already serving or touching in some way?

Cortizo: Right now we’re reaching 25,000 users. We’re trying to get to the goal of 100,000 users in all three regions by December of this year.

GamesBeat: Are these events run in different languages?

Cortizo: We’re running it in Spanish and English right now. The more we grow, we’ll be having more localized events that are going to be in local languages. With North America and Latin America, it’s easy. You have English and Spanish and that’s it. When you go to Europe it gets more interesting. [laughs] And then other parts of the world, Africa and Asia, you have a lot more languages. Right now most of our userbase knows English or Spanish, so we’re focusing there.

GamesBeat: Is there a local element or a regional focus to your events, or are they all online, where people can compete against anybody anywhere?

Cortizo: It depends on the game and it depends on the type of event, whether it’s arena or major league. For example, Fortnite has global events. Rocket League has local events online. League of Legends is impossible to play competitively between certain regions, because of the pings and all of that. So some games are local to a particular region and some of them are global.

With major leagues, you’ll have the chance to just go and face people from those tournaments. Timing is the other part of this. We’ll be launching our own streaming network in the coming months. We’ll be broadcasting everything, building shows around our games.

One of the things that’s happening today is that you have a lot of players trying to reach these goals, and there’s nothing to see around their stories and who they are. Right now, what esports needs is to give this ability to not only the sponsors and companies behind it, but the players that empower and all those companies and developers that are pushing their content. The network will help us give this ability to all of those thousands of players.

Right now one of the things we’re planning to do weekly is what we call challenger stories, doing the backgrounds on players. We’re working on players’ stories that they send to us — who they are, what they do, what they want to achieve. This network will help us in a lot of ways, to empower not only the storytelling we have around our tournaments, but their stories as well.

Aspirations

GamesBeat: Are there companies that you see in this space that you might admire, esports organizations in other parts of the world, and you’re bringing that example to Latin America? Or do you have a different kind of business in mind?

Cortizo: One of the things you do–the big companies, I admire them because they open up the pathways to what the industry is starting to become. We’re not trying to emulate. We’re going to be pushing a lot of what we do in this globalization of the sport. At the same time we’re going to be doing a lot of storytelling around all those players. We’re going to be pushing a lot of new technology that’s in development for our live events.

Esports is going to be the world’s game. Right now we’re seeing esports present itself as a sort of lookalike to traditional sports. You have an arena and you have guys in jerseys. But it’s video games. We love video games because they’re totally different from any other kind of thing that people play. One of the main things we’re going to be showing when our major leagues start launching is the aspiration that–a kind of entertainment that we want to deliver to people that goes into our live events. It’s a different experience from traditional esports, an amazing technological spectacle.