eSports now has a global audience of 380 million - here's how it can now upend the traditional model of monetisation

Picture: Getty Images

In 2008, I sat in a conference room in Washington with a major, high-technology company talking about competitive gaming and games as a spectator sport.

Consider at this time – Twitch didn’t exist in its current form, and gaming videos were just starting to pop up on YouTube, but not live. The question that drove the conversation in the conference room, was how much and in what ways should this tech client invest in this burgeoning live gaming as a sports market?

We all had strong opinions, but the consensus was that “no one would ever sit in front of their computer and watch people play video games”.

We considered watching gameplay as a secondary choice for anyone interested in games; you might watch it on the bus or on your work break, but if you were sitting in front of machine capable of letting you play games, you would choose that over watching people play.

Fast forward to August 2018 and we were wrong by 380 million people – the current estimate of the worldwide audience of eSports, of which 215 million are classified as “non-gaming” enthusiasts.

I also had just visited the high-performance training facility at at the SCG, where the Sydney Drop Bears eSports team trains. It’s clear to see that eSports has well and truly taken this sporting nation by storm, with the Australian eSports fan base more than doubling in the last two years and with major broadcasting, media and entertainment companies like NOVA, and traditional sporting clubs, buying into the lucrative market.

But in the 10 years since that meeting, live-streaming has scaled to new heights and this audience has grown to be 300 million strong, but very little has been fundamentally innovated in the world of eSports. The industry is still relying on tried and true business models, drawn from decades of traditional sports, split exactly as you might expect – advertising, sponsorship, merchandising, media rights and ticket sales.

This leaves tremendous opportunity to create a distinctly new experience with eSports, with three key innovations that haven’t landed into mainstream yet – relevance, value and choice.

Monetisation evolved

Retirement option? Picture: Twitter/Sydney Drop Bears

The first innovation is machine learning and how it can enable personalisation – and relevance – at scale.

A few years ago, we could make an assumption that most people watching eSports consume or are players of the game they’re watching – we now know this isn’t the case. To ensure long-term profitability and monetisation, we need to target the new audience appropriately with ads. Through platforms like Twitch and YouTube, digital ad platforms can combine scale with machine learning, to customise and tailor campaigns to what the viewer is doing in that moment.

Machine learning can also create new models of broadcast in eSports, through image and context detection.

The visuals of eSports tournaments can be stale and generic; watching the same game played by 10 different teams is unexciting, compared to traditional sports like basketball where you can recognise and follow your favourite player. Adding machine learning will enable more intelligent camera switching and decision making about what content you’re showing to the audience.

The second innovation is creating an exchange of value, through new technology like blockchain.

Today, the eSports model involves streaming, sponsorship and traditional sports compensations. But as blockchain becomes more prevalent, we could see a shift towards a decentralised model of compensation and sponsorship.

Not only could blockchain create a direct link between players and the companies that sponsor them, where revenue models favour players, but it could also establish a direct value exchange between viewers, content creators and advertisers. Such is the case for blockchain-powered video player Verasity – that allows advertisers to put in money to the system that can be then used to pay broadcasters independently, depending on how much content is being viewed by the audience.

This system also gives eSports viewers the power of control; allowing payments in the form of credits or in the form of time value to be transferred to viewers. A viewer can make a decision about how much advertising they want to watch, in exchange for the right to watch a certain amount of content.

For example, if you watch five minutes of ads, you can be rewarded 10 credits that can be converted into two hours of match play.

This element of control aligns with the final innovation of “choice”.

Would you pay to help Ninja out of a jam? Picture: Getty Images

At the E3 conference in Los Angeles, I met and spoke with a company called Genvid. Genvid’s platform enables developers to create and deliver interactive broadcasts to live streaming audiences, so eSports viewers can actually be participants in the game. Not “just sit-back observers”, but where viewers can take actions and shift the dynamics of the game as its playing out.

Just like in The Hunger Games, the audience can pull together money in the form of tips that could deliver a crate of supplies or in an eSports tournament, spawn a player versus environment (pve) in map, to help players solve complex tasks.

It’s not hard to see the untapped potential of eSports in Australia and around the world, with these three innovations.

If organisations buying into the eSports market – media, advertisers, sports clubs – can implement real innovation into their business models to better target, lower the costs of transactions, and give viewers the power and control of the experience, over the next 10 years eSports will become a dominant force in all sport and redefine what Australians will come to expect.

Nelson Rodriguez is Global Director of Media Industry Strategy at Akamai Technologies

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