© Oliver Wyman

The eSports environment

September 29, 2015

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Agenda

1. Intro

– What is eSports?

2. The different models

– Leagues

– Tournaments

3. The participants– Players– Teams– Game companies– Casters, announcers, analysts

Intro1

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What is eSports?eSports is the term for the competitive gaming scene, recent growth is enabling the participants to be full-time professionals

Image: http://esportsmoments.com/wp-content/uploads/2015/01/worlds1-1024x512.jpg

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The games people playPeople have found ways to compete in games across many different genres

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MOBA (Multiplayer Online Battle Arena)League of Legends, Dota 2, Smite, Heroes of the Storm, Heroes of Newerth

FPS (First Person Shooter)Counter-Strike: Global Offensive, Battlefield, Call of Duty, Halo, (Destiny)

RTS (Real Time Strategy)Starcraft: Broodwar, Starcraft 2

OtherHearthstone, fighting games, racing games, speedrunning, RPG leaderboards

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The growing sceneGrowth has been massive in recent years, owing the majority of success to the rise of MOBA games

• As of 2015, player winnings for eSports events now eclipse winnings in the PGA tour, Super Bowl, Tour de France2

• Events have sold out the Staples Center in an hour3

• 67 million players play League of Legends every month, and each player on average has spent 939 hours playing4

• “We used to play for a case of beer and some food money”

1. https://en.wikipedia.org/wiki/Esports2. http://www.gamespot.com/articles/10-million-dota-2-international-exceeds-super-bowl-masters-and-tour-de-france-prizes/1100-6420785/3. http://www.forbes.com/sites/insertcoin/2013/08/24/league-of-legends-finals-sells-out-las-staples-center-in-an-hour/4. http://wasted-on-lol.com/

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The Hype

• TI2, “The play”1:– https://www.youtube.com/watch?v=Ldq1afiKQb8

• TI5, largest tournament:– https://www.youtube.com/watch?v=Tv2OHtLDKxI

1. http://www.redbull.com/us/en/esports/stories/1331640322249/breaking-down-the-greatest-play-in-dota-2-history

2011 2012 2013 2014 2015$0.0 $2.0 $4.0 $6.0 $8.0

$10.0 $12.0 $14.0 $16.0 $18.0 $20.0

Total prize pool – The International (Dota 2)Annual tournament, all 5 years

• Free to Play:– https://www.youtube.com/watch?v=UjZYMI1zB9s

• Jeremy Lin:– https://www.youtube.com/watch?v=DM25HIflfqo

Models2

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LeaguesLeagues such as the League Championship Series (LCS) draw parallels to organizations such as the NBA, MLB, NFL, etc.

• Regular seasons exist with weekly matches between teams

• Each geography (e.g., NA, EU, Korea) competes within itself during seasons

• Players live in gaming houses and practice all week before heading to the studio to play

• Annual championships culminate in a tournament called “Worlds”

• The LCS and related media are run entirely by Riot Games, the company that developed LoL

Earnings tend to be more stable for LoL players in the LCS than other eSports, which give lumpier earnings from tournament purses

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TournamentsThe traditional model, in which third parties raise money to put on tournaments and make money from viewers and sponsors

• The majority of games outside of LoL and the LCS follow this model

• Tournament counts and prize pools grew organically as interest in the scene grew

• Many companies and “LAN events” exist solely to host tournaments: DreamHack, MLG, ESL, RedBull

2007 2015

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Tournaments – majors systemValve sponsors one tournament per year in DotA 2, and sanction third parties to run other tournaments, similar to pro tennis.

• New system this year

• Still allows for 3rd parties to organize and grow the scene organically

• Addresses problem with the majority of total prize pool earnings coming from one tournament

• Forces “roster locks” in advance of each major to solve player shuffle problem

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eSports in KoreaThe environment is more mature in Korea, with pro gaming being an accepted career path for over a decade

• Worst slide of all time

• Took off with Starcraft: Broodwar in early 2000’s– Many early players earned celebrity status

• Began tradition of team houses with full-time players and coaches

The participants3

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DotA context

• DotA 1: created as a custom map in Warcraft 3– Became more played than the original game

• Ice Frog took over development in 2005– Last in a chain of devoted developers– Current Valve employee

DotA 2005 - 2011

DotA 22011 +

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Players

• How do they make money?– Tournament winnings– Streaming ads & donations– Sponsorships– Team contracts

• 10 players have broken over $1m in tournament winnings only

• Notable: Fear, Sumail, BurNing– Player narrative:

- “Old man Fear”- High school prodigy: https

://www.youtube.com/watch?v=CoX_-eX2ByM

– Trash talk, “drama” over twitter

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Teams

• How do they make money?– Percentage of player earnings in exchange for

stability– Sponsorships

• Many teams are larger organizations that compete in multiple games, but get their start in 1

• Notable: Evil Genuises, Natus Vincere, Invictus Gaming

• Teams are notoriously unstable

• Teams have started to hire full time coaches, managers, communications consultants and stats analysts

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Game companies

• How do they make money?– Freemium– “Hats”, music packs– Community-created content– Virtual tickets, compendia

• Notable: Valve, Ice Frog, GabeN

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Casters, announcers & analysts

• How do they make money?– Paid LAN gigs (similarly lumpy to players)– Youtube & Twitch subscriptions

• A game is typically cast by 2 people– Play-by-play “hype” announcer– Former pro player analyst

• Casters have started to form “studios” with many parallels to teams

• “Sabermetrics” equivalent is a growing field

• Notable figures: Tobiwan, Synderyn, LD, Merlini

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What’s next?

• Game design has changed– The most popular games are the most profitable– Freemium model– Focus on balance

• Interacting with athletes has changed– Streaming: Twitch, YouTube Gaming– Twitter

• Longevity of games has changed

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Learning more

• Play!– Dota 2: http://store.steampowered.com/app/570/– LoL: https://signup.na.leagueoflegends.com/en/signup/index?realm_key=na

• Watch!– Free to Play: https://www.youtube.com/watch?v=UjZYMI1zB9s– www.DotaCinema.com– http://www.twitch.tv/

• History of Dota– http://www.gosugamers.net/dota/features/2791-history-of-dota