Fifteen years ago, film executives had a dark secret. It was a secret they wanted hidden from the public. Despite their impressive numbers, it seemed the video game industry was five times larger than the film industry. Today that same industry has swelled to a staggering size; and shows no signs of slowing. If you need proof look no further than the booming video game tournament industry.
The formal term for competitive gaming is now ‘eSports’. Typically eSports center around a single game and are setup in either single or double elimination tournaments and are played by teams of usually four players. Some of the biggest tournaments are the League of Legends World Championship, The International, Intel Extreme Masters, Call of Duty Championships, and many others.
eSports Tournament History
eSport tournaments have been around for a long time, but it wasn’t until the late 1990’s that they hit the main stream. In the early days, video game tournaments were held in relatively small venues and were only attended by the most hardcore fans. That all changed when on June 22, 1997 the Cyberathlete Professional League was founded. While the league was relatively short lived, it served as a template for other leagues and was soon copied by more successful tournament organizations like Major League Gaming. At the same time in the late 1990’s in response to the financial crisis that had been suffered in South Korea, the South Korean government began to install high speed internet all throughout the country. This fact coupled with the high rates of unemployment and the large numbers of people looking for something to do caused the industry to take off across the region. This served as a launching pad for the movement. By 2000, there were ten major eSports gaming tournaments and ten years later in 2010, the number was 260. Today, the major tournaments are held in the largest sporting venues on earth including Wimbley Stadium, the LA Staples Center, and Madison Square Garden, all of which have sold out with ease.
Yearly, the video game industry adds about $11.7 billion to the US GDP. This year alone, eSport revenues are predicted to top $695 million. By 2020, the number is projected to reach $1.5 billion. And these numbers across the industry look to keep rising. In 2015, in order to enter a team in Riot Games’ League of Legends Championship, the cost for entry was $2 million. This year alone saw the same tournament increase its entry fee five fold to $10 million. And still sold out. It is also estimated that by 2019 over 300 million people will be viewing eSports online on sights such as, Twitch. But perhaps even more attractive to advertisers and sponsors is the fact that the audience so heavily skews toward that most sought after male 18-34 demographic. In the United States 61% of the audience is under 25 years old and 85% of them are male. But the opportunity is on both sides. This year’s largest tournament The International, saw $24 million in prize money paid out to the teams.
It has long been the dream of many wealthy individuals to own a sports team. And owning an eSports teams seems no exception. eSports teams have already been purchased by some of the wealthiest individuals in the world. In 2015, Russian billionaire Alisher Usmanov invested $100 million in the team Virtus.Pro, who compete in several tournaments. In 2016, one of the most successful eSports teams, Team Liquid, announced they were selling the ownership stake in their team to the aXiomatic group. This group who includes Peter Guber, Ted Leonsis, and Magic Johnson also own six other major league sports teams, including the Golden State Warriors, the Washington Capitals, and the Los Angeles Dodgers. Even Mark Cuban invested $7 million in the Series A funding of the eSports betting site UniKrn. With double digit revenue growth seen in the industry over the past ten years it’s easy to see why these investments are so attractive to so many high end investors.