The Future of eSports

Just before the turn of the New Year we heard about Activision Blizzard’s purchase of the popular eSports tournament organization; MLG.  This raised many questions about MLG’s future and the future of the eSports industry as a whole.

MLG sold their assets to Activision Blizzard for a mere $46 million and did so without a stockholders meeting and without unanimous consent.  This left many stockholders confused…and angry.  As the organization was in a considerable amount of debt, this left very little for the stockholders to benefit from.

Activision Blizzard CEO, Bobby Kotick, has explained that the acquisition of MLG is part of their over all plan to “create the ESPN of eSports”.  Activision Blizzard has also stated that they realize the significance of MLG’s presence and contributions in the US eSports scene.  They plan on keeping the brand intact and bringing it to greater acclaim.  Activision and Blizzard eSports teams, will remain largely independent.

eSports is still a young industry, especially when compared to traditional sports.  However, it is a $748 million segment that has began attracting a large amount of investors and acquisitions of eSports brands are becoming more and more frequent.  Though this is bringing a lot of cash flow into the industry, it has also caused a lot of smaller organizations to cease to exist or lose their independence.  For those without the cash to buy into the industry, the window of opportunity seems to be getting smaller and smaller.  There also seems to be a pattern forming of game developers and publishers either purchasing or influencing third party eSports organizations.

This is an interesting period in the development of eSports.  Where it was once a playground for independent organizations, now developers and investors are making it a much smaller industry.  This of course, has its benefits such as increased funding and theoretically; quality.  However, this also puts the fate of eSports in one proverbial basket.  Progress like this, makes the sustainability of the industry questionable.

It also limits where the industry could go.  Traditional sports bring in considerable dollars with media rights.  These deals basically work as such: the leagues such as the NFL or NBA give broadcasting rights to a network for several years in exchange for incredibly large sums of money.  So, the NFL is providing the content but a network takes care of the broadcast and they both make money.  This isn’t a system that is really found in eSports.  Riot provides the LCS and the broadcast for League of Legends.  Even the schools participating in the uLoL Campus Series give up all their potential broadcasting rights to Riot.  So for the most part, Riot is the only one benefiting from a lot of high profile play.

The industry likely developed this way for good reason: established networks wouldn’t carry eSports and relying on those smaller third party groups does leave you open to questionable quality.  However this is changing.  In a relatively short amount of time, even ESPN has gone from denouncing eSports to majorly investing it.  I think we all still remember ESPN president John Skipper saying “It’s not a sport, it’s a competition.  Chess is a competition, checkers is a competition.  Mostly, I’m interested in doing real sports” but just a few days ago they launched eSports coverage on their site and a whole new social media campaign.

In addition to ESPN’s dive into the scene, TBS has announced that they will be broadcasting professional CS:GO this year.  This, however, is an easier title to negotiate some rights to as Valve doesn’t have as heavy hands in the pro scenes of their games as Riot, Blizzard, or even Hi-Rez does.

From here, it could go either way.  Despite the wild success of developers who maintain all the control in their pro scenes and the investors who’ve flocked to them there are still incredibly successful pro scenes being run for games like DOTA 2 and CS:GO that do take a very different approach.  And so far, both have been successful.

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