Thoughts on esports in 2016

Here we are. Another year with high expectations for the esports industry leading to the inevitable question of whether esports has finally “made it.” There is no doubt in my mind the industry continues to grow as we’ve seen more and more big names enter the market. Whether or not this constitutes esports “making it” is irrelevant in my mind. Like any business and industry, I think its important to focus on growth, sustainability, profits and other similar markers. The events of the past few weeks have been particularly interesting to me, raising questions about the current state of esports as it heads into 2016 and beyond – both good and bad. I’d like to kickoff this blog in 2016 by highlighting some of the major themes and trends I see becoming more relevant to the discussion of esports in 2016.

Acceptance and Respect

These seems like soft topics for what many are trying to make a serious industry, yet in many ways esports is mirroring current trends in society when it comes to discourse of these issues. One of the supposed attributes of the esports industry is the acceptance of the non-standard because esports itself is a non-standard. Yet very early in 2016, we have been reminded that this is very much not the case. Three weeks ago at the Starladder i-League StarSeries finals Dota 2 and CSGO shared a stage for playoff matches, rotating one match between the different games each day. This was met by some with much vitriol with comments such as “why are they showing this crapping game instead of  mine?” and “this game stinks put my game back on.” On the talk show Unfiltered several days ago, Richard Lewis and Duncan “Thorin” Shields spoke about numerous times various individuals within the industry actively try to negatively effect the work and success of others. And this is not even the first time these types of comments have been made this year. Finally, do we even need to mention the abrasive language that continues to be used throughout the industry, even by some of the more respected individuals.

Ultimately these types of situations remind us that despite our best efforts, esports is not as accepting and open as advertised. Much like current society, I don’t think these issues will be resolved directly or quickly. It will take time and effort. That being said, one sentiment that I found particularly apropos on this topic was that of respect. As individuals, we may not care for one esports game over another, but we can still show it some modicum level of respect with descending into mockery. Similarly with people, we may not care for everything a person does or says, but we can still show respect for them and their work.

Growing While Shrinking

One of the common misconceptions I think many people have about the industry is that it is growing rapidly everywhere and in every direction. While it is true the industry as a whole is growing, there are signs that it is also shrinking. Three weeks ago, Deloitte predicted a global esports revenue of $500 million, a number significantly lower than other estimates. In the report, the authors touch on a number of topics I won’t rehash, but I found it to be a very honest and sensible assessment of the industry as a whole. Elsewhere, the industry lost one of its oldest tournament organizers when Major League Gaming sold nearly all its assets to Activision Blizzard. ESL and ESEA continue to remain the dominant tournament organizer with DreamHack, Gfinity, FaceIt, Starladder and others fighting for viewership. When assessing each game’s competitive scene, many game’s publishers continue to exert and increase their control and influence over the professional scene with both positive and negative effects. In StarCraft 2 specifically, the game is going through somewhat of an identity crisis and potentially shrinking talent pool. See the aforementioned Unfiltered episode for further discussion on the topic. Finally, we’ve already mentioned some of the difficulties newcomers and outsiders face from those already within industry. As esports continues to move forward in 2016, one of my greatest concerns is that this consolidation of resources continues without seeing new businesses emerge in key sectors of the industry.

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Streaming as a Service

I recently finished reading the book Outliers: The Story of Success by Malcom Gladwell. In the book, Gladwell attempts to understand what makes certain businesses and people extremely successful. One of the key conclusions he makes is that extreme success is a result of hard work, a great product, and opportunity. As such, he contends that in certain industries, no matter how much work you do, your success will always be limited if there isn’t a large enough opportunity. While Gladwell has been criticized for oversimplifying his conclusions, this line of thought has led me an interesting prediction heading into 2016:

Twitch will remain the dominant streaming platform for both gaming and esports until such a time the streaming as a service market and what we understand to be gaming viewership changes, if it ever does.

Put simply, I don’t believe any company out there, regardless of how much money they invest or how good their product is, will be able to compete with Twitch unless they radically change our understanding of the streaming as a service business. In my view, Twitch has achieved that perfect mix of hard work, a great product and opportunity described by Gladwell. Twitch’s infrastructure, product, and most importantly their network effect is just too substantial at this point in time. Early efforts by Twitch’s competitors this year to break Twitch’s dominance have been met with significant backlash from various communities. For example, during the MarsDota 2 League (MDL) this weekend, an unofficial stream on Twitch by a group of pro players and their friends had 3.5 times more viewers than the official tournament stream with professional casters on Azubu. The result of all this? I would not be at all surprised if one or more of these rival platforms dissolved in 2016.

Esports Betting and Fantasy Games

I’m going to be very honest when I say I have significant dislike for most esports betting and fantasy esports games. Disregarding the ethical and potentially illegal nature of these activities, especially when it relates to minors over the internet, I view them as extremely harmful to the scene. At some level, I am comfortable with betting “skins” and “rares” on games as seen in CSGO and Dota 2, but I think what concerns me most is the extent to which these betting and fantasy companies have grown both in size and number over the past two years. Realistically, there just isn’t a large enough market to support this growth. Case and point is Vulcan, one of the hottest esports betting and fantasy sites of 2015. They rocked the industry last year with big investments, sponsored tournaments, teams, and more. Come January 2016, however, Vulcan shut down its paid fantasy and cut a quarter of its staff.

Disregarding the companies themselves, these activities promote behavior counter to professional competitions. Nothing could be a better example than recent news that top Korean StarCraft 2 professional gamer Life (Lee Seung Hyun) was arrested on match-fixing charges. Obviously the situation is still developing and we need to learn more, but this is not some middle-tier player accused of throwing games for extra cash. This is a GSL, WCS, and IEM champion; arguably the greatest player to ever play the game that we’re talking about being accused of match-fixing. If the esports industry needs more proof of the potential harm of betting and fantasy games without sufficient protections and regulations, I don’t know what more would convince you.

Breakthroughs and Market Disruption

It is my firm belief that if esports is going to continue to grow over the next 1-3 year span, it’s going to have to look for new and innovative products and services that disrupt the market. I do not believe solely continuing to finesse and improve what we already have (tournaments, streaming services, etc) will result in a trajectory of growth many are hoping for. At some point, what we have is going to reach its peak and we’re going to be left asking what’s next? I have a few thoughts on this, but without going into all of them, I will say that I believe statistics and real-time data will be a big part of esports in the next year or so. In my view, we are going to need to expand our various technologies and APIs to become more robust and comprehensive than what they currently are today. “Companies that successfully aggregate multiple services in a single interface have a chance of really shaking up industries,” wrote Scott Belsky, VP of Products and Services at Adobe back in 2014. I believed that to be true then and I believe it now. There are many individuals already working on various products and services around data and a year or two from now, I suspect at least one of them to breakthrough with real market disruption.

Outlook and Conclusion

While some of my comments above may lead you to believe I have a negative outlook of esports heading into 2016, nothing could be further from the truth. I am extremely excited to see how the industry develops over the next 11 months. We’re going to see insane plays, awesome entertainers, and better products and services in 2016. Will there be problems? Sure, absolutely. But enjoy it now, because from fan to professional, this is the best time to be involved in esports at any level.