The Impact of Disproportionate Power and Immaturity in the Esports Industry

Esports and gaming are not the same thing; esports relates to the professional competitive gaming scene, either online or at live events, and typically for prize pools.

For all the glory the esports industry promises, it may seem to the majority that the only way is up. But do the majority know to what extent? It’s 2019: everyone craves entertainment of some form. Whether it’s Netflix, YouTube, Twitter, Twitch; people cannot get enough. Considering this, it may seem almost heroic that esports appears to bring together all of these joys and serve them up in an action-packed, highly-dynamic, constant-stream of entertainment. There’s a reason that giants like Amazon, Apple, Google and Netflix are trying to get into gaming and esports.

“We compete with (and lose to) FORTNITE more than HBO.”
Netflix.

Whilst it would be difficult to argue against this due to current trends, we must realise that there are certain factors that are hindering the growth. To reiterate, it is almost impossible that these barriers will destroy the gaming culture so prevalent today, but if we do not identify and respond to the main issues immediately, we face the possibility of a market correction.

Whilst there are numerous issues we can focus on, we will focus on two distinct areas:

  • The Power of Game Developers and Publishers
  • Immaturity of the Esports Market

The Power of Game Developers and Publishers
Game developers and publishers have far too much power as they own the intellectual property of the games that the esports revolve around. If a tournament host wishes to organise, or broadcast an esports event, they must first seek permission from these game companies. In some cases, game companies have taken advantage of this, and have kept rights in-house, which has contributed to the perception of esports as elitist. It is important to note that some tournament operators continue to host tournaments in specific esports titles without prior consent; however, this opens up the risk of legal action or tournaments being shut down or facing legal action if it becomes a huge hit. At the very least, tournament organisers open themselves up to the potential of having to relinquish complete ownership over their leagues or tournaments. Game publishers are predominantly in the business of selling games and so are content in not taking action, particularly considering the growth of the competitive scene around their game serves as free advertisement.

Drawing comparisons between esports and traditional sports works both ways. It would be impractical for the English Football Association to have to sanction every local league or tournament organised; the same for the NBA, NFL and other sporting governing bodies. First and foremost, it would heavily dilute grassroots progression, losing valuable talent, but also limiting the total number of teams competing at professional level. Many publishers are realising this and looking for independent tournament operators to support them in their competitive ecosystems.

Take Activision for example. It has a huge fanbase, and has proven to be hugely popular in the realms of esports. However, last year, Activision were reluctant to grant tournament licenses to third party Overwatch event organisers. Many contend that the intention here is to eradicate competition for their own in-house Overwatch League, but game companies doing this is not uncommon. Many game companies are guilty of this, and the more companies that follow suit risk stalling esports’ progression; if rosters cannot compete, they cannot generate revenue. It has been recorded that on average, half an organisation’s budget will be used for players, and most teams operate on a loss as it is!

For those that are fortunate enough to gain access to these exclusive leagues, their bargaining power is, for the most part, neutralised. Not only can game companies determine who participates in the esports ecosystem, but also what proportion of the revenue share they receive. Because of this, teams often find themselves struggling to distribute income from prize pools, potentially preventing them from paying player salaries or strengthening their rosters. It must also be noted that prize pools only cover player costs, the team as a whole does not explicitly benefit. Again, this results in teams being forced to dissolve their organisations, but arguably more concerning are the rifts it creates between game companies and the players of their titles.

Using Overwatch as an example again, the community makes no attempt to hide their contempt for Activision. They openly criticise the astronomical franchise fees, lack of competition and Activision’s “take it or leave it” attitude when it comes to funding for teams. This friction between the two essentially makes esports less desirable for outside investment, which will prevent the industry from maturing.

The current esports and gaming industry is heavily divisive with communities reluctant to open up to other communities. As such, your DOTA community and market is entirely different to FIFA, which again differs to the NBA 2K community. This is an issue that was covered in our LitePaper and pertains to the fact that the esports industry has many segments. Firstly, the majority of games are not cross-platform, which initially divides communities. Furthermore, these individual communities will have their unique nuances, and as such, the current “one-size-fits-all” approach does not work, as we would see it enforced in Football or Basketball. Game companies must take responsibility for establishing and formalising esports communities, providing central authoritative governance that will support the evolution of this nascent industry.

Another apparent issue that suggests these game companies have too much power is evidenced by the friction caused by changes sanctioned in game dynamics. Most gamers despise the fact that game mechanics are frequently subject to change, just when players become accustomed the game. For example, Epic released the Infinity Blade for the Winter Royale last year, which was available in a separate mode. Despite the power this sword possessed, it was closed off to limited players, providing some with an unfair advantage. What’s more, the item was shortly removed after, only to be reintroduced in February of this year. Whilst this is not the worst case of fans becoming disillusioned with game companies, the onus here is undoubtedly on these companies who must ensure a balance between gamer retention, and replay value without upsetting the dynamics of the game, or competition in an unbalanced way.

Immaturity of the Esports Market
Many regard the esports industry as immature; unruly gamers that shout and swear a lot. Talented as they may be, there is a reason that the average player’s esports career is short. Now more than ever, we will begin to see more casual gamers take the journey to the professional stage. These may not necessarily be the very best, but are very entertaining. As outlined in the introduction, esports will find itself permeating all fields of the entertainment industry, and so a big part of esports now, in part, relies on streaming. Effective gamers are those that can entertain their viewers constantly, and thus would prove to be valuable assets for esports organisations.

Esports enthusiasts first witnessed this when Tyler Blevins, or Ninja as many will know him as, stated that he earns seven figures per month. Not only this, but he has also managed to secure several high profile sponsorship deals and a partnership with Red Bull Esports. Most recently, it was reported that Electronic Arts had paid Ninja $1,000,000 to endorse Apex Legends when it first launched via Twitch and Twitter live streams. Ninja is undeniably the modern day esports athlete that organisations yearn for.

No matter how skilled, or entertaining a gamer is, professional immaturity can be detrimental to the individual, the team or organisation, and to esports. With the power of social media, things travel fast, and we have come to learn that the internet can be very unforgiving. As most esports organisations do not have the funds to adopt traditional hierarchal structures, with designated executive roles, social media and PR management, confident “trash-talking” can turn horribly wrong in one Tweet! This also includes adhering to any contractual agreements in place that organisations may have with non-endemic entities. With the industry relatively young, esports organisations have been susceptible manipulation from much larger companies, often leaving them subject to legal fees.

As more money begins to flow through the esports ecosystem, and the number of stakeholders increase, the friction between game publishers and players will become increasingly polarised if we do not begin to think of a viable solution. This distrust on behalf of the community is exacerbated by gaming companies failing to provide adequate resources for their players to fully enjoy their titles, both casually and competitively. If we can begin to change this, then the industry will live up to its promises. As you will come to know, our competitive gaming platform will attempt to mitigate many of the issues pertinent to the esports scene.

Based on the current issues explored in this piece, we will follow up by discussing the potential market correction the esports industry may soon face. This will lead us naturally on to our solution, which will involve the establishment and proliferation of teams within the IGGalaxy, alongside the benefits of doing so.

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