Shady Numbers and Bad Business: Inside the Esports Bubble

[Julio Franco]

The mainstream narrative of esports has been lovingly crafted by those who benefit from its success. There's big money in esports, they say. You've heard the stories. Yet there's a reason why these narratives attract lip-licking headlines in business news and have accrued colossal amounts of venture capital. More and more, esports is looking like a bubble ready to pop.

Read the full article here.

https://www.techspot.com/article/1852-inside-the-esports-bubble/

 

[VitalyT]

This is how game manufacturers masquerade AD-s to sell more games, by calling it e-sport. That's all there is to it.

P.S. "There is a sucker born every minute"

 

[Uncle Al]

Probably an age thing but I see NO value or interest in watching people play video games, especially when I can be doing so myself. And to see such large rooms full of people cheering just seems a bit hoke to me, especially with all the hype and BS and the commentators ...... I mean seriously ......
OK, the rest home is calling us for our daily dose of ex-lax now so I have to go ..... literally!

 

[Puiu]

This article has a major flaw. It makes it sound like in 2008 the bubble burst because esports was unsustainable. Wrong, the bubble burst because the entire world economy bubble burst, it had nothing to do with the potential growth of esports and its revenue. Back then everything got destroyed and very few markets escaped.

Comparing the situation today with what was going on in the 2000's is, to quote them, "fraudulent at worst".

Investors are putting money into esports because it is actually working. The viewership numbers are only second to the biggest televised events in the world and the audience is young and easily convinced to purchase whatever they are selling.

 

[stewi0001]

I still don't care about e-sports.

 

[Puiu]

Probably an age thing but I see NO value or interest in watching people play video games, especially when I can be doing so myself. And to see such large rooms full of people cheering just seems a bit hoke to me, especially with all the hype and BS and the commentators ...... I mean seriously ......
OK, the rest home is calling us for our daily dose of ex-lax now so I have to go ..... literally!

The same thing can be said about any other sport. Why watch others play it if you can play it yourself. But reality is different. People want to watch others play and they also want to be entertained.

Ultimately that's all it boils down to: entertainment. And the numbers at big esports events don't lie. People like watching others play their favourite game, especially those that are really good at it, and talk with others in the same community (something which is much much easier than in any other entertainment market).

I don't understand why this is so confusing for others.

 

[Squid Surprise]

And the numbers at big esports events don't lie. People like watching others play their favourite game, especially those that are really good at it, and talk with others in the same community (something which is much much easier than in any other entertainment market).

I don't understand why this is so confusing for others.

I think the whole point of the article is that the numbers DO lie... and the article was also clear to state that there IS tremendous growth potential for esports - but right now, it's based on a lot of questionable numbers and stats...

There is no denying that they're popular, however... whether they'll ever become profitable is a completely different equation.

 

[amstech]

I think eSports will die completely, and you will be left with independent leagues or isolated sponsored events.
There isn't much substance to it and never was, its just kids playing videogames.
You can put a ribbon on it and professionalize it all you want, it's not going to bring in much money or an overwhelming amount of fans... plus, there are so many other sources for watching streamers play games.
Gaming is a very popular thing, millions to billions of dollars are spent & made every year on games, subscriptions, loot boxes, consoles and peripherals, ext, but very little profit is made from competitive streaming (if any at all), and this is at the height of its popularity now, just wait till that subsides.
The author went way overkill in his article, it didn't need to be 1/10th that long.
Sorry kiddies but this isn't complicated, hype doesn't last, only substance, and Esports carries very little. The rich gamers are getting checks from sponsors, not checks from esports. Is there even a systematic employment and labor structure implemented with payroll?
And just to clarify I am not against eSports nor do I care if it succeeds or not. I actually caught a few minutes of Overwatch a week or so ago (forget the TV network it was airing on), pretty boring to watch online FPS deathmatch's over and over and over, don't care how skilled they are. Just my .02

 

[Puiu]

I think the whole point of the article is that the numbers DO lie... and the article was also clear to state that there IS tremendous growth potential for esports - but right now, it's based on a lot of questionable numbers and stats...

There is no denying that they're popular, however... whether they'll ever become profitable is a completely different equation.

Compared to other entertaining markets the money given by investors for the same coverage/views is much lower. They are actually paying a lot less to get the same return in investment compared to other sports/events.

The big prizes and money thrown around in this article are mostly given by the viewers/fans themselves to support the tournaments (by buying in-game items and merch). Nobody has ever taken a loss because of these multi-million dollar prize pools.

Even so, only a few major events have huge prizes with the majority being fairly small and decent (even going past 100k $ is rare).

It's only recently that the esports scene has started to mature and you can see this in how investments are being made. The bubble won't burst because the market has begun to stabilise. Investments and returns are starting to reach an equilibrium and the only variation now should be just how popular an esport title is.

 

[Lew Zealand]

this is at the height of its popularity now, just wait till that subsides. …
Sorry kiddies but this isn't complicated, hype doesn't last, only substance, and Esports carries very little.

Please explain the lack of substance in esports as compared to professional wrestling. Both make money but pro wrestling is approaching 100 years old now and has not necessarily hit its peak yet, as nobody can predict the future.

 

[Ravalo]

I think eSports will die completely, and you will be left with independent leagues or isolated sponsored events.
There isn't much substance to it and never was, its just kids playing videogames.
You can put a ribbon on it and professionalize it all you want, it's not going to bring in much money or an overwhelming amount of fans... plus, there are so many other sources for watching streamers play games.
Gaming is a very popular thing, millions to billions of dollars are spent & made every year on games, subscriptions, loot boxes, consoles and peripherals, ext, but very little profit is made from competitive streaming (if any at all), and this is at the height of its popularity now, just wait till that subsides.
The author went way overkill in his article, it didn't need to be 1/10th that long.
Sorry kiddies but this isn't complicated, hype doesn't last, only substance, and Esports carries very little. The rich gamers are getting checks from sponsors, not checks from esports. Is there even a systematic employment and labor structure implemented with payroll?
And just to clarify I am not against eSports nor do I care if it succeeds or not. I actually caught a few minutes of Overwatch a week or so ago (forget the TV network it was airing on), pretty boring to watch online FPS deathmatch's over and over and over, don't care how skilled they are. Just my .02

Its almost the same with traditional sports, watching some dudes playing basketball over and over again gets boring, the problem is that streaming in your bedroom is more profitable than esports itself

In osu tournaments, people prefer to watch their favorite pro player stream the tournament than the osu tournament’s stream itself

I think its better that esports are not played in big arenas, this will reduce costs and pro players can stream the esports tournament, which might attract more people onto esports

Also srry for my bad english, im not from the US

 

[Evernessince]

I actually caught a few minutes of Overwatch a week or so ago (forget the TV network it was airing on), pretty boring to watch online FPS deathmatch's over and over and over, don't care how skilled they are. Just my .02

You weren't watching very well if you think Overwatch is a deathmatch style game. Anyone who's watched or played the game once would know this.

 

[neeyik]

Probably an age thing but I see NO value or interest in watching people play video games, especially when I can be doing so myself. And to see such large rooms full of people cheering just seems a bit hoke to me, especially with all the hype and BS and the commentators ...... I mean seriously ......

I'm just shy of 50 years old and watching people play video games competitively doesn't interest me, but then again, I'm not particularly interested in watching any competitive sport on TV, web stream, etc. There are a few that I don't mind, but I wouldn't go out of my way to pay for them. However, I fully accept that there is, and increasingly so, a significant number of people out there who do enjoy watching other people play for competition, and I can fully appreciate the passion that this can generate. To me the problem lies in 'outsiders' looking in, and trying to make it more profitable - I'm not entirely convinced that the eSports market is distinct enough from the likes of the Twitch streaming market right now to be easily sellable to the general public. For me personally, I see the former having genuine potential of global growth, whereas the latter sits very much in the 'bubble' - it may pop out but it could go all 3D TV on us...

 

[amstech]

You weren't watching very well if you think Overwatch is a deathmatch style game. Anyone who's watched or played the game once would know this.

Eve, if you feel you need me to clarify my general statement about Overwatch, then I guess were not on the same page as I assume your also very intelligent...I have a lot of respect for your posts/opinion and even though we get into it once in awhile, I enjoy our disputes. When you generalize topics I don't nit pick your lack of detail! Yes it was red vs blue team deathmatch and I get the character roles in the game...good god man!

To me the problem lies in 'outsiders' looking in, and trying to make it more profitable - I'm not entirely convinced that the eSports market is distinct enough from the likes of the Twitch streaming market right now to be easily sellable to the general public.

Agreed.
There isn't anything that much different or distinct about the current genre of PC gaming.
That's not inherently a bad thing, but hard to make money when something is so easily accessible, and rampant.

 

[texasrattler]

Not to mention the cheating that does happen due to the amount of money that players can get.
I still don't get why background checks/vetting aren't being done on players getting money. Tons of them are simply not legit players. Forsaken was banned from Steam in 2017 then got caught at a tournament trying to uninstall a cheat in 2018. Are you freaking kidding me, how the hell was he even allowed in a tournament when he's a known cheater.
To much money is being given to players or being allowed for them to make and they are doing whatever it takes to win.

Pubg banned 16 pro players in like 2 months.

 

[Puiu]

I'm just shy of 50 years old and watching people play video games competitively doesn't interest me, but then again, I'm not particularly interested in watching any competitive sport on TV, web stream, etc. There are a few that I don't mind, but I wouldn't go out of my way to pay for them. However, I fully accept that there is, and increasingly so, a significant number of people out there who do enjoy watching other people play for competition, and I can fully appreciate the passion that this can generate. To me the problem lies in 'outsiders' looking in, and trying to make it more profitable - I'm not entirely convinced that the eSports market is distinct enough from the likes of the Twitch streaming market right now to be easily sellable to the general public. For me personally, I see the former having genuine potential of global growth, whereas the latter sits very much in the 'bubble' - it may pop out but it could go all 3D TV on us...

I understand how you feel about streaming. But it's not exactly a minus for esports. The idea that you can interact with a pro player on a personal stream of his and not just during events is something that you can't find anywhere else. Internet personalities are a really big thing now and during the harder times for esports (if the bubble ever "bursts") they'll be able to lift the scene up and keep it from crashing.

Ups and downs happen to every trend, especially online. Prizes and money will fluctuate, but after two decades we can safely say that esports are here to stay.

Millennial have grown up with it and still watch it and the kids from gen Z are embracing it even harder than them.

It's become normal to watch people play video games. More than just pop culture, it has become mainstream.

 

[Misagt]

The reason professional sports worked was because the bar for entry was insanely high. You needed stadiums, training facilities, massive marketing and influence that took decades to build. Also these were all built in a time during a massive growth in free time as people gained free time and didn't spend 80% of their wages on food. Today the market is totally different, we are dealing with people having less money then they did in the past. Games are constantly changing and moving on to different genres in months. The bar to entertain people is now basically a couple grand.

I could go on but I think this covers the basis of why this isn't going to become a multi generational cash cow.

 

[Puiu]

The reason professional sports worked was because the bar for entry was insanely high. You needed stadiums, training facilities, massive marketing and influence that took decades to build. Also these were all built in a time during a massive growth in free time as people gained free time and didn't spend 80% of their wages on food. Today the market is totally different, we are dealing with people having less money then they did in the past. Games are constantly changing and moving on to different genres in months. The bar to entertain people is now basically a couple grand.

I could go on but I think this covers the basis of why this isn't going to become a multi generational cash cow.

it already is multi generational and I don't get how got to the conclusion that ppl have less money now when spending on games is generally up. the number of gamers is also going up.

 

[Squid Surprise]

The reason professional sports worked was because the bar for entry was insanely high. You needed stadiums, training facilities, massive marketing and influence that took decades to build. Also these were all built in a time during a massive growth in free time as people gained free time and didn't spend 80% of their wages on food. Today the market is totally different, we are dealing with people having less money then they did in the past. Games are constantly changing and moving on to different genres in months. The bar to entertain people is now basically a couple grand.

I could go on but I think this covers the basis of why this isn't going to become a multi generational cash cow.

With that logic, how come professional sports STILL work?
I'll give you a hint: your so-called "data" is false. Yes, pro sports began during the industrial revolution, when leisure time for SOME began to rise.... the owners were the same people who owned factories and treated athletes much like their factory workers (ie: like crap).

But, despite your nonsensical "data", people's incomes and leisure time have only continued to RISE, allowing pro sports to become the multi-billion dollar enterprises they are today.

E-Sports are merely the continuation of this - while those of us over 40 might complain that "this isn't 'real' entertainment", the fact remains that plenty of people do. And the definition of entertainment is simply this: "anything that ENTERTAINS people".

While financial models might not be feasible - yet - there is no reason to believe that they won't be in the future. People point to "bubble bursting" events as if they are the death knell of things... did the housing crisis end housing (or banking)? Did the dotcom crisis end the internet? No! These events merely bankrupted some - and made some people huge fortunes! They ended up as just a blip in the long-term futures of these commodities.

While e-sports might be in for a "bubble burst" soon, this does not mean that e-sports is "dead". While our generation may be complaining about these people getting off of our lawn (reference check anyone?), there are millions of people who really find watching people play video games entertaining.

Is it really any stranger than watching someone use a stick to hit a ball into a small hole?

 

[amstech]

While our generation may be complaining about these people getting off of our lawn (reference check anyone?), there are millions of people who really find watching people play video games entertaining.

I think that's already dissipating.
My generation (80's kid) enjoys watching folks destroy games from our childhood in speedruns, hence AGDQ's popularity. But they are almost out of material, as you can only watch the Super Mario 64 run so many times before you just don't care, at all, to ever, ever, watch that game get played again. They've been changing up/making up categories to keep things fresh but that candle is almost out.
It will still be popular for years as its fun to watch, but I believe that's hit its peak or will be hitting its peak, even with newer titles being ran.
This same methodology applies to game streaming, and is why this article is being written.
How long will this last? Will E-Sports ever be a primetime gig? Is it growing beyond what they've built?
No.

Is it really any stranger than watching someone use a stick to hit a ball into a small hole?

Not all entertainment is created equal.
Reality is still the best entertainment.
While its [Esports] real folks playing each other, its still a fictional setting, or the word/phrase gamers don't like, your living in a world of 'make believe' like your 5 years old, and calling something professional because it can bring in money.
News flash! Making money doesn't validate something or any entrenched entity within its deployment or execution.

While I don't care for Golfing much, atleast it has substance.
I don't believe competitive gaming will ever get thaaat popular, and like I have stated I think its already hit its peak.
It sounds like I am rooting against E-Sports and I am not, but there is one word I am real big on, and its a word all folks should live by. Truth.

 

[Squid Surprise]

I think that's already dissipating.
My generation (80's kid) enjoys watching folks destroy games from our childhood in speedruns, hence AGDQ's popularity. But they are almost out of material, as you can only watch the Super Mario 64 run so many times before you just don't care, at all, to ever, ever, watch that game get played again. They've been changing up/making up categories to keep things fresh but that candle is almost out.
It will still be popular for years as its fun to watch, but I believe that's hit its peak or will be hitting its peak, even with newer titles being ran.
This same methodology applies to game streaming, and is why this article is being written.
How long will this last? Will E-Sports ever be a primetime gig? Is it growing beyond what they've built?
No.


Not all entertainment is created equal.
Reality is still the best entertainment.
While its [Esports] real folks playing each other, its still a fictional setting, or the word/phrase gamers don't like, your living in a world of 'make believe' like your 5 years old, and calling something professional because it can bring in money.
News flash! Making money doesn't validate something or any entrenched entity within its deployment or execution.

While I don't care for Golfing much, atleast it has substance.
I don't believe competitive gaming will ever get thaaat popular, and like I have stated I think its already hit its peak.
It sounds like I am rooting against E-Sports and I am not, but there is one word I am real big on, and its a word all folks should live by. Truth.

Naturally, you're entitled to your opinion... but none of the numbers back you up - even the suspicious ones that are posted online...

There is no evidence that this "trend" is fading - all evidence points to it growing; at an almost exponential rate.

Will it continue under its current model? Maybe not... but we have zero evidence to suggest that it will disappear.

 

[amstech]

There is no evidence that this "trend" is fading - all evidence points to it growing; at an almost exponential rate.
.

It's not about growing or getting more streams, its about assuming profit to keep things afloat...heck at this point I think ESports would be happy to break even. Very little folks involved are getting paid good money other then the organizers and premier players (who get most of their $$ from sponsors).
They are losing money and the current model of streaming services does not do much to help that. It's more then just corruption as the article states, that's prevalent in every facet of life, from cops to doctors. They need to bring in revenue to meet the currency/time invested...that's the line on the graph that needs to be addressed.
The AAF was getting more average viewers then many shows that do well, but it didn't even come close to breaking even, considering payroll, adverstising, medical support, insurance, venues, and the dozens of other little things (esports also needs internet service + hardware, setup, support technicians, travel, broadcasting, ext ext ext ext ext) they need to take care of and account for. ESports is now at bat in this regard and needs to address all of these expenses, and the only way to do that is to make profit, one way or another.

 

[Squid Surprise]

It's not about growing or getting more streams, its about assuming profit to keep things afloat...heck at this point I think ESports would be happy to break even. Very little folks involved are getting paid good money other then the organizers and premier players (who get most of their $$ from sponsors).
They are losing money and the current model of streaming services does not do much to help that. It's more then just corruption as the article states, that's prevalent in every facet of life, from cops to doctors. They need to bring in revenue to meet the currency/time invested...that's the line on the graph that needs to be addressed.
The AAF was getting more average viewers then many shows that do well, but it didn't even come close to breaking even, considering payroll, adverstising, medical support, insurance, venues, and the dozens of other little things (esports also needs internet service + hardware, setup, support technicians, travel, broadcasting, ext ext ext ext ext) they need to take care of and account for. ESports is now at bat in this regard and needs to address all of these expenses, and the only way to do that is to make profit, one way or another.

Yes... and while you feel it will never happen, you have no evidence of this...no one does... only time will tell whether E-Sports will become profitable in the future.

All evidence points to YES - it's hard to believe that no one will find a way to monetize a "trend" that envelopes millions and millions of people.... but it's certainly possible that you're correct... Time will tell...

 

[SolidSneak]

I think the inflation of an eSports bubble that is definitely primed to pop comes from the introduction of games that are FORCING some sort of eSports scene instead of letting it develop naturally. If anything, the bubble may have already been popped and it is slowly deflating because no one has realized it and keep trying to pump into it.

DotA and LoL are pretty successful because tournaments existed were ran and prized before developer support. They just put money into it to make it more accessible and lead to the high viewership of these events. The same applies to fighting game communities like Melee where almost all competitive events are player organized.

However, HotS and OW stumbled a lot because so much was pumped into it up front. But HotS is now a dead game and the OW team was scrapped completely earlier this year. So many of these players, as far as I know, have scattered to more established games to scratch their competitive itch.

Most recently in the MtG Pro League debacle which branded itself as the next eSport. Even though the game will continue strong due to years of enfranchised players, this is a obvious example of a company putting little effort into the eSports support only because they thing the turnover will be enough.

 

[Black Paper]

the Tekken event’s Twitch viewership spiked from 6,000 to over 50,000 within the course of thirty minutes.

Praise Lord Arnis