The Future of e-Sports: Boom or Bust?
The last 3 years have seen e-sports rise from a dying industry, to an incredibly lucrative form of entertainment. Since the release of Starcraft 2 in the summer of 2010 e-sports has grown in ways that long time fans could only imagine in their wildest dreams. Not only has the resurgence of real time strategy games(RTS) occurred but even long standing favorites such as first person shooters(FPS) are experiencing a significant boom in popularity. Old companies and events such as Major League Gaming(MLG) New professional leagues and events such as the IGN Proleague(IPL),North American Star League(NASL), and The DOTA 2 International have exploded out of the gates offering prize pools anywhere from $100,000 to 1 Million dollars. One might think that future of e-sports is bright.
There is however a growing concern within the e-sports communities that the current situation might not be as good as what they were led to believe. From unpaid winnings, to entire teams shutting down after financial troubles, and one of the largest providers of revenue for players and teams Own3d.tv cutting costs and filing for bankruptcy.
Throughout e-sports history there has always been the question of how to make it profitable. Events cost hundreds of thousands of dollars to set up and implement. Not only this but the companies need to pay for the incentives and prize money for all the professional players. Usually this money comes in the form of sponsorships and advertisements from hardware and software companies such as Intel and Blizzard. Traditionally though, after paying employees, venues, and other miscellaneous bills, there isn’t enough money to go around for the winners of the competitions. It wasn’t un heard of for professional players to go 6 months to a year without ever seeing their prize money. The Electronic Sports League(ESL) came under attack by the community several months ago when professional players expressed their displeasure with how the prize funds were being disbursed. In response to this, viewer boycotts were enacted and a player withdrawal was announced from the ESL Pro Series Cup by professional player Goody. However on February 12th ESL came forward with this statement.
“Over the last 12 years the ESL has paid out over $12,000,000 in prize money. Historically, there have been issues with some prize money being paid late. We have worked hard to eradicate these issues over the last 18 months and are now working on the final, remaining backlog of overdue prizes. We can announce today that this process will be completed by the end of February and there will be no overdue prize money at that point.
If you or your team have not been paid prize money by then, please use our ticketing system available here: http://www.esl.eu/eu/prizemoney
We apologise(sic) for any inconvenience you may have gone through during this period.
We are taking this topic extremely seriously and to address any further concerns our CEO Ralf Reichert will conduct a Reddit AMA about this topic early next week.”
Financial troubles seem to be the biggest plague within the e-sports world. Last month saw two large names within the industry fall and file for bankruptcy. In the last week of January, both online streaming company Own3d.tv(popular with MOBA genre players) and professional team mTw closed their doors for good. Both shut down due to issues in sponsorship, payouts to their players, and monetizing their brands. Own3d released this official statement on January 30th.
“Dear own3D business partners,
own3D and its management, having evaluated the future of own3D, have decided to cease operations on January 31st, 2013. After efforts to sell the company fell through and after much deliberation this seems to be the best course of action.
As the first livestreaming portal for gamers own3D had a turbulent start with unexpected growth. We have tried to drive the company into profitability but due to the capital intensive nature of our industry and increasing competition, we have not been able to reach sustainability despite our best efforts.
This is a difficult decision for all of us at own3D given the impact it will have on partners who have helped build this business.
Over the next 2-3 weeks own3D will be assigned an official liquidator by local authorities who will then reach out to all partners directly. In the meantime please send all your inquiries and requests to [email protected]
Your own3D Team “
Own3d.tv’s demise was ousted a week earlier when professional players who used the site to stream their daily practice revealed to the community through their emails with Own3d that they had not been paid their contracted salaries, or their ad revenues. This wasn’t even the biggest blow to hit e-sports that week. A few days earlier, the professional team mTw , a household name in Germany and one of the most successful teams around. It was founded in 1998 and soon became a powerhouse in the Counter strike, Quake, and Warcraft 3 scenes. In an effort to bring in more money, the team took a gamble and played the fake it till you make it game. Hiring big salary players in an attempt to bring in more sponsors. When this tactic failed, the team began shedding its most expensive players. First Super Nova left over unpaid salary in December. Then Dimaga’s contract was terminated and he became a free agent. Five days later the team came forward with this statement hoping to return in the future when investors and sponsors can be obtained.
“We are sad to announce today that – after 15 successful years – mTw will be closed down for now. The last weeks shows that the business model of eSports clans do not work anymore in its current form. Running a sustainable and stable business was no longer possible under these circumstances. That is why we have reached the decision to close the chapter (sic!) mTw for now. If and when the next chapter will be written remains to be seen. As soon as we can guarantee again that a sustainable existence is possible and that we can offer the support to our teams that they deserve, mTw will return. Until then, we wish all the best to our former teams and partners. We want to thank all our fans who have made mortal Teamwork something special over the years.”
With two of the largest e-sports companies shutting down within days of each other, unpaid salaries and prize pools, it is only expected for fans to be worried about the future of e-sports however, the future of e-sports looks bright. Large teams such as Navi, Dignitas, Evil Geniuses, Team Liquid, MVP, Incredible Miracle, Team 8, Woongjin Stars and many more are all looking healthier than ever. Larger sponsorships, larger salaries, and bigger prize pools across the boards show that this fledgling industry has staying power and a strong future.
Outside of the financial arena, a quick look at recently passed and upcoming milestones/events will show the true nature of the industry. Within the next month the new expansion for Starcraft 2, “Heart of the Swarm”, will be released and provide much needed rejuvenation to this classic franchise. The Iron Squid finals was one of the most watched Starcraft 2 events of all time. Major League Gaming will be hosting its Winter season Championship on March 15th-17th with some of the top Starcraft and League of Legends players around. IGN will also be putting on its next season finals event in Las Vegas on March 28th. If anything e-sports is looking better than ever and its future is bright. While there have been a few setbacks in recent months, the overall health of our favorite pass time is looking good. The future is secured, and with new games on the rise, I look forward to welcoming new competitors and new friends into the fold. Long live e-sports.