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    John Olerud's HelmetCecilia D'Anastasio
    5/23/19 2:59pm

    This is a terrific article. Really well done.

    The whole “What happens when people get bored of Overwatch” thing has always stuck out to me. Unless the people being invested in will just be able to migrate over to the next big team-shooter it seems like it would be impossible to build the sort of brand loyalty you see in things like Baseball or Hockey. 

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      Sildas1733John Olerud's Helmet
      5/23/19 4:04pm

      Right, but you can replace Overwatch with any game. Gamers aren’t a group that sticks with one game forever. It just doesn’t happen.

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      John Olerud's HelmetSildas1733
      5/23/19 4:18pm

      But you can’t just replace Overwatch if people are sinking tens of millions of dollars into Overwatch teams and Blizzard is taking a big cut of that money. 

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    Orlandu7Cecilia D'Anastasio
    5/23/19 3:30pm

    Every time I see (usually wildly inflated) figures on how much money esports pros are making on Twitch, I think to myself, these people were in elementary school the last time we had a recession. They have no idea how fickle a job based on donations, largely donations from kids using their parents’ credit cards or Amazon Prime accounts, can be as soon as adults start losing jobs and cutting back on useless recreational spending. Same goes for all the companies depending on massive amounts of in-game vanity purchases to barely keep them in the black, and all the VC investors lighting eight figures on fire because “esports is the new hotness” and they’re thirsty for any platform they can show ads to 18-34 year-old males on, whether those people have any spending money or not.

    Hope everyone enjoys the good times while they last. They won’t. But as the end of this great article notes, people will still be playing and competing in games no matter what, even if there stops being big money involved.

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      JamesBaxter0Orlandu7
      5/23/19 4:01pm

      There are some kids who are going to make bank off this scene far after it collapses if it does. The majority however will probably get hit very hard. If anything I do hope they have some good people behind them to ensure their money goes far. They have an advantage of tradition sports stars as many of the gamers are more likely from upper to lower middle class families who might have shown an example on proper money management. 

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      hcd4Orlandu7
      5/23/19 4:55pm

      In that they know they’re working for the attention of others, they may be more savvy than the last few generations. You’re right, they’re vulnerable to a recession in recreational spending, but there’s actually some evidence of people and kids who grew up during the crash and later having more realistic ideas about job markets and career choices. I wish I could remember enough to pull up the article I read that brought it up, but it makes sense. It’s the most recent generation of kids that have never had the long term expectation of growth and stability that would paper over anxiety about living costs and college costs and the like.

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    SnotHouseCecilia D'Anastasio
    5/23/19 4:12pm

    Just wanted to say this is really outstanding reporting. I love reading in-depth reports like this and hope we continue to see more in the future here. I know these types of articles are a lot more expensive, time-consuming, and probably not as well-read as some other content, but this is what I come to this site for. Great work.

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      Cecilia D'AnastasioSnotHouse
      5/23/19 5:48pm

      Thank you SnotHouse!

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      ChaosWingCecilia D'Anastasio
      5/23/19 11:02pm

      This cracked me up. Not everyday you get to thank a snothouse

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    Taliesin_MerlinCecilia D'Anastasio
    5/23/19 3:46pm

    One thought kept coming back to me as I was reading the article:

    The direct comparison to sports mixes marketing and assessment measures in a misleading way.

    E-sports at its heart is branding. In a word, it makes the elevator pitch for playing video games competitively: this is sports in the digital age. It draws a direct connection to sports because baseball, basketball, football, and other sports have well-established revenue streams. They seem successful at what they do. Getting people into a stadium to watch a game, organizing the broadcasting and advertising, and selling ad revenue are all understood. Sports do this; E-sports will do this.

    However, forcing the analogy between sports and E-sports into assessment yields less useful data. Setting aside the methodological problems with providing viewership data, such data assumes that viewers of video game competitions can be directly compared to viewers of traditional sports. This neglects differences in both viewing time (many people viewing live streams are popping in and out rather than sitting down for a 2+ hour broadcast) and viewing habits (many people view streams on second screens while also playing a game or doing something else). It’s hard to know whether advertising money is as effective with an audience like that.

    There is also the status of the game itself, as described in the article. What does it mean organizationally to invest in games that may be popular for between two to ten years? It took decades for traditional sports to grow from pastimes to media empires; can one shepherd viewers, professionals, and a player base through multiple successive games without losing even one group? Sports is built around a core of consistency alongside gradual trends and changes in management philosophies; games are built around frequent change in graphics, in design sensibilities, in balance, and even in core mechanics. “E-sports” glosses over what it means to maintain interest either despite those changes (from a traditional sports lens) or because of those changes (from a gaming lens).

    As a result, I think that the E-sports babble has tracked investors and organizers away from some of the growth potential (what makes games special? why do people want to watch) and towards kinds of mimicry that will fail (just lie about the numbers and mimic sports viewership/financing). There may be something to viewership for professional video games, but the investors are misled about the growth potential and how it will grow as long as they’re comparing it to traditional sports.

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      Cayde-6's Unloaded DiceTaliesin_Merlin
      5/23/19 4:48pm

      I think one of the things that really sticks out to me about this is that “esports” advertisers are in a market niche. Hardware manufacturers, accessory manufacturers, soda companies. Things associated with video game players.

      Imagine how much advertising revenue the NFL would bring in if their advertisers were just gyms, sports equipment/apparel makers, and protein powder.

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      RSATaliesin_Merlin
      5/24/19 12:27pm

      The direct comparison to sports...

      You’ve brought up an important suggestive point, for me: Even calling a video game an esport is trying to make that connection stronger. I’m guessing that if not for professional sports, where big money is involved, we’d refer to video games just as video games, and there’d be no such odd expressions as “e-athlete,” for example.

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    AlaryckCecilia D'Anastasio
    5/23/19 5:04pm

    I gotta say, I feel like you’re giving OWL’s attendance figures short shrift. Yes, weekday attendance sucks but you try getting to Burbank during rush hour on a Thursday or Friday. It’s hell.

    But the three times I’ve attended weekend OWL events, the arena has always been close to max by around the second match. That’s really no different than most sporting events in the area (again, thanks traffic).

    Do I see how a team justifies a 30 million startup fee? I do not. But the fact that the league added 8 new teams this year would seem to imply that it's doing better than one might expect. 

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      dirtsideAlaryck
      5/23/19 8:13pm

      “Doing better” is kind of a vague term, though. The money underlying those 8 new teams could be coming from VCs who are hoping for unicorns and know that statistically it’s a losing bet. After a couple of years of this, the VC community decides esports is never going to produce a unicorn and they move on to something else.

      I’m not saying this will or is happening; rather that current expansion doesn’t automatically equate to long-term sustainability. Ultimately, all business ventures have to be supported by funding of some kind (investment or revenue) and if the investing dries up because there’s insufficient revenue, eventually the business contracts or collapses.

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      Alaryckdirtside
      5/23/19 11:36pm

      Oh for sure, it remains to be seen how sustainable it is. I was genuinely shocked by the fact that they grew that fast this year. I mean look at how bad the AAF cratered this year in it’s attempt to be more football. They couldn’t even complete their inaugural season before folding. 

      The fact that OWL continued (and expanded) in year two is likely a more positive sign than not. 

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    KishPrimeCecilia D'Anastasio
    5/23/19 3:12pm

    Fantastic article as usual, Cecilia. Having been active in this space a long time, I’d certainly agree that while the premium properties were in a bubble from the announcement of Overwatch League, there are still a lot of “secondary” esports where the market is still dramatically undervalued. It’s a little stunning to me how hard it has been for Smash Brothers tournaments to find dollars given the eyeballs they attract. Some of this is due to the fact that it’s easier to draw up a contract with Blizzard than it is with a network of independent tournament organizers, but compared to TV money, there are many events that deserve far more sponsorship than they’re getting, even if you account for some potential inflation in the numbers.

    The partnerships with influencers sidestep all of that and was something I did not see coming. That was the solution advertisers found to how transitive eSports properties are, and now we have players like Zero literally quitting his eSport because it’s so much more profitable (and easy, frankly, when you don’t have the entire world gunning for you) to sit at home and stream to the followers he’s already earned. That money is going to come from a lot of game developers, but potential event sponsors are going to find that link as well, and they’ll be appealing to influencers because they won’t have to risk compromising their channel to show games they’re getting paid to cover. At some point, I think it will balance out again and the money will shift back into events (maybe the recent influencer scandals have already done some of that), but it may take a long time. Influencers are easy to buy and still relatively cheap (though that era is starting to end).

    Right now there’s overlap as an emerging market, but at some point the influencer and esport market will get a bit more separation. They’re not the same thing, even if they are treated as such at the moment, and they’ll have overlapping but distinct audiences.

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      TophKishPrime
      5/23/19 3:34pm

      Oh my god it’s KishPrime.

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      KishPrimeToph
      5/23/19 3:40pm

      I’m never far away.

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    Humans are Superior!Cecilia D'Anastasio
    5/23/19 4:39pm

    Fascinating stuff! As a Vegas resident, I often look at the giant advertisement on the Luxor pyramid for its eSports arena and wonder how long it’ll last since everything is pretty ephemeral here.

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      Batista Thumbs UpHumans are Superior!
      5/24/19 1:42am

      I hope it sticks around! I work at EVO every year and stay at the Luxor during that trip, and I greatly enjoyed the arena, if not for any esports thing, but just a giant gaming cafe. Being able to spend a few hours with retro consoles and PC Overwatch for a decent flat rate got me more bang for the buck than hitting the casino tables

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      Humans are Superior!Batista Thumbs Up
      5/24/19 12:15pm

      Oh me as well! Vegas just has a habit of chasing the money so I hope its making them money.

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    thisoneoptimisticCecilia D'Anastasio
    5/23/19 4:19pm

    Amazing article. A real punch in the gut for fans, but an important one.

    I think the answer for people asking “Ok, so what happens when it pops?” is simple: grassroots. If your sport has a grassroots scene, it will stick around. Counterstrike didn’t disappear when CGS died. purely because enthusiasts had built 3rd party infrastructure to support it even when the money disappeared. Valve is very hands-off, and in doing so has allowed small tournament organizers to do their thing (shout-out to Fragedelphia)

    That is probably bad news for fans of heavily centralized games like LoL or Overwatch. If the investors dry up and the game doesn’t attract the same numbers, there is no 3rd party support that will keep the game alive when it gets dropped of the publishers. Also, since they have choked out their grassroots scene in favor of billion dollar buy-ins, there will be no established community to fall back on when the money disappears.

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      blaisemthisoneoptimistic
      5/27/19 7:09pm

      I think LoL will be okay, because it was successful before the franchising madness. It will be a terrible year for the game, but it has the most sustainable grassroots playerbase of any game out there by a longshot. Its playerbase has been vetted by almost a decade and still going strong, it has the most global penetration, and unlike OWL its original rise to power was in fact about as organic as they come within the esports scene. LoL will bounce back from a bubble pop, even if it’s with drastically muted numbers. Also, it’s Riot Game only game, so in terms of development support, LoL will have more T&L care than any other game in the scene when it comes to licking its wounds.

      I guess I am saying that if there remains any genuine demand for esports among the public after a bubble pop, then LoL will be the first to make a comeback.

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    SynCecilia D'Anastasio
    5/23/19 6:24pm

    This article strongly amuses me because my friend and I have looked over the OWL numbers, their techniques to get viewers (muted tabs, anyone?) several times since it started and we came to a simple conclusion long ago; Ponzi scheme. It’s the same as the MCN problem with YouTube; it’s a lot of bravado and showy number flashing with a shaky to nonexistent foundation that in no way can support the greedy behemoth on top. In this case, Blizzard and their ilk are running the con and will absolve themselves of any involvement the moment they run out of victims to fleece. Whatever your thoughts on MatPat are, GT has a fairly good video explanation of what that means and how clueless companies are about the actual worth of such investments.

    The additional fact that, hey, only a very specific age/gender set is apparently welcome here is also a great big ‘go screw yourself’ as far as I’m concerned. I stopped watching OWL for a lot of reasons (Blizzard’s questionable behavior as a company, the inherently stale meta that has less to do with 3/3 and more to do with basic game design, the slowed down releases, everything) but one of the big reasons was the lack of diversity, period. Either you’re a white dude in your twenties in the crowd or a Korean dude in your late teens playing the game.

    How positively thrilling.

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    RBrianCecilia D'Anastasio
    5/23/19 4:03pm

    I think it’s too early to tell whether e-sports will take off. I think some will. I like watching OWL and paid for the better views on Twitch. It’s going to take a little bit for e-sports to find it’s way to making money. 

    You can also look at an established sport like Formula One racing. Not unusual for F1 teams to lose money or not make much money considering the outlay to put up to field a team. 

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