eSports is one of the fastest growing digital markets with a 33% annual growth rate. Its opportunities are endless: esports will have over 1Bn enthusiasts & viewers by 2023, which is one third of all gamers, and will become the #1 sport of the future.
eSports is a form of organised, multiplayer video game competitions, particularly between professional players.
Esports developed from an underground movement and in less than 15 years, has become one of the most fast-growing digital markets. The gaming industry, in general has been rapidly developing since early ’90s. In the last 20 years, the gaming industry has taken steps as a developing market with a yearly revenue of under $200M and roughly 100 million players. Back in the ’90s, players enjoyed hits like Super Mario, Legend of Zelda, DOOM, Duke Nukem and Half-Life – all immensely entertaining despite their limited single-player mode.
According to a report by NewZoo, the global Esports Economy will grow to $905.6 million, a year-on-year growth of 38%. The majority of this percentage, 77% of it, will be generated directly through sponsorships and advertising and indirectly through media rights and content licenses. Investments made by endemic and non-endemic brands will spend $694 million, an impressive 48% increase since last year.
How Did Esports Start?
Historically gamers joined gaming clubs. According to the Rise of Esports, the earliest known video game competition took place on October 1972 at Stanford University. Gamers were invited to place Spacewar with the winner receiving a years’ subscription to Rolling Stone magazine. Early gamers were limited by their desktop PCs and with the hardware and software evolutions, games became more sophisticated. In the 90s, internet connectivity changed everything and allowed the gamer to connect with a whole new world. This resulted in the creation of eSports and the first tournaments.
In 2004, the World Cyber Games was held in San Francisco, with a prize pool of $2.5m and 642 players playing in the grand final. The estimated 20,000 to 40,000 spectators to the WCG Grand Finals, watched some of the matches on five large screens hanging from the ceiling. Closed-circuit radio broadcasts were also available within the venue as announcers provided play-by-play and analysis of featured matches.
How Does It Look Today?
Hundreds of thousands of fans are attending gaming events every month and hundreds of millions of people are watching gaming events online through platforms like Twitch, Facebook, and YouTube Gaming. The second wave of development for Esports competitive gaming must attribute to the technologically enhanced game platforms and the live broadcasting of those games.
Last year the audience reached nearly 200 million people compared to one-hundred million five years ago. This means that Esports is growing at a rate of 25-30% per year. If we were to compare viewership of the most prominent Esports events such as the League of Legends World Cup, the event has out performed the viewership numbers of the NBA Finals or Stanley Cup Final.
In terms of prize money, last year more than a hundred million dollars was paid to players and teams in the eSports market, which represents a six times growth factor when compared to 2012 with some gamers reportedly earning $2.4m per year.
Sports Clubs like Paris Saint-Germain, Philadelphia 76ers, Miami Heat, Schalke 04, Spartak, Roma, Valencia, and Manchester City have already joined eSports. One of the most prominent eSports deals by a traditional sports team is the Dallas Cowboys‘ acquisition of Complexity Gaming.
Recognising the opportunity, an increasing number of the world’s highest-profile companies are making plays to position themselves for big profit. A long list of the world’s biggest brands — Red Bull, Coca-Cola, PepsiCo, Bud Light, T-Mobile, Audi and Toyota — have thrown their hats in the ring. Sponsorship spending in the eSports industry is forecasted to reach $655 million by 2020, while ad spending will grow to $224 million.
It’s a New Digital Frontier.
Big-name brands are raising the profile of the Esports market on the global stage. Amazon, Tencent and Alibaba are investing hundreds of millions into the sector.
Tencent, the world’s largest mobile gaming developer and the parent owner of Riot Games, has revealed a five-year plan for their eSports ventures. The investment holding company announced at a press conference last Friday that it would create a 100 billion yuan ($14.6 billion) industry within China. This would be complete with new leagues, tournaments, associations and its previously announced Esports-themed industrial parks. Amazon recently announced its latest cloud-based gaming service, GameOn at the 2018 Game Developers Conference on stage with its early adopters, including Eden Games, the game studio arm of mobile video game publisher Millennial eSports. Eden Games is the developer behind some of the world’s most successful racing games, including V-Rally and Test Drive Unlimited.
The GameOn platform is designed to complement Amazon’s streaming service, Twitch, and will allow game publishers to reach wider audiences through seamless tournament organisation. The platform offers daily competitions, detailed leaderboards, and real-world prizes. By 2020, the Esports fanbase will reach roughly 380 million people; with the majority of fans in Asia, North America and Europe.
Analysts are projecting significant growth on a global scale for the Esports industry. According to Newzoo, an Esports research organisation, the global Esports market is expected to grow to $905.6 million in 2018 — a year-on-year increase of 38%— and reach $1.49 billion by 2020.
Esports appears to be the biggest sporting category in the planet, however it has some real problems.
So What Does This All Have To Do With Blockchain?
In order to solve Esports’ biggest challenges, a blockchain-based startup called DreamTeam has created a platform and payment gateway specifically for Esports games. DreamTeam uses blockchain technology and smart contracts to achieve three main goals:
- to provide fair and timely compensation to esports players in the form of digital tokens,
- to help organise and manage esports teams on a single platform,
- to open esports up to advertisers, sponsors and tournament organisers.
Looking at Dreamland’s white paper, Esports has significant ‘Insecurity and Fraud’ issues with even top-tier teams facing fraud and non-payments of prize money. The same goes for sponsors and advertisers that face non-delivery. This is even more so for amateur teams and small to medium-sized sponsors and advertisers.
DreamTeam has created a payment ecosystem that is free from the risks of fraud and non-payment.
In March 2018, DreamTeam announced the launch of its Blockchain User Wallets & Compensation Smart Contracts, which will enable gaming teams to pay their players’ compensation in DreamTeam Test Tokens. The use of smart contracts on the test Ethereum blockchain allows players and team owners to sign contracts, negotiate and set the player’s compensation payout dates and amounts, and the network will enable users to view and verify all transactions. This process encourages credibility within the entire Esports industry: as players, coaches, teams and tournaments will all be held to a high standard of trust through verified transactions. Abuse of the system will be nearly impossible and those who try will have a track record as the information can always be traced and verified across the blockchain.
The Test Blockchain User Wallet & Smart Contracts network is just the first step on a long list of options and features. DreamTeam users will be able to monetise just about every aspect of their game; from media rights and sponsors, to tournament winnings, transferring players, etc.
Another Major Issue Facing Esports, is ‘market fragmentation.’
Esports is not fulfilling its revenue potential. According to research by IHS, roughly $280 million was generated from Esports advertising last year and this will rise to $1 billion by 2021, but this will still be less than 1% of the more than $115 billion digital advertising market that eMarketer expects will exist then. The big thing holding eSports back is audience fragmentation, as different sets of viewers tune in for a wide array of gaming competitions.
When sponsors and advertisers want to enter the Esports industry they have to do complex manual labor to search for the teams and tournaments that meet their requirements. For example, Kingston/HyperX (a Fortune 100 company) employs over 50 people who search for and deal with eSports sponsorship and advertising agreements. As you can imagine, such investments run into the millions, but that’s not attainable for your ‘Average Joe’ that wants to sponsor a local team and advertise their business during a local tournament. And for the up-and-coming teams and amateur tournaments, the inability to secure such a sponsor or advertiser is a key stumbling block in their development
DreamTeam is connecting all of the market players under one roof and acting as an entry-point for Esports and competitive gaming: from professionals (players, coaches, analysts managers, etc.) to teams, tournaments, and businesses (sponsors, platforms, and advertisers).
DreamTeam marketplace wants help Esports, namely to unite teams, sponsors, tournaments and advertisers. They want to become the business gateway for all Esports. DreamTeam will let sponsors with different needs find teams with diverse backgrounds: small, regional, or large international ones and make sure that all of this can be done with a click of a button.
Limited Universe and Business Tools Is Also A Major Issue Facing Esports.
Very limited market knowledge and expertise, due to the small number of insiders and very few business tools. Hundreds of millions of gamers are struggling, owing to the lack of management, recruitment, coaching, media, sales and marketing instruments.
For example, gamers are faced with challenges when creating an Esports club or team. It is difficult to perform team recruitment, creating a bank account, doing all the legal paperwork, and dealing with a variety of third-party services. Millions of gamers want to spend money to develop their teams, hire coaches, psychologists, and other supporting personnel but don’t want to do it all manually.
DreamTeam promises to provide a set of advanced business tools which can help monetise the eSports industry and open up the Esports market to millions. For teams, DreamTeam are offering recruitment functionality with options to search and analyse players, their ranking, game stats, and tournaments played. DreamTeam are also providing management tools – practice games, tournaments, performance tracking and analytics tools to develop teams. Moreover, tournaments organisers can track the performance of the teams and players they want to invite. They can create and showcase team-listings. The same goes for coaches allowing them to check their team’s progress, adapt their strategy, and train their team to esports success.
DreamTeam is aiming to provide every possible tool for Esports mass adoption and the company wants to unlock a $50b market for hundreds of millions of gamers and thousands of advertisers and sponsors. DreamTeam has also attracted the interest from leading investors. The company announced it had received investment from Mangrove Capital Partners and has so far raised half of its target of $21m for the second phase of its token sale, which is due to expire on the 19th of May.
As the Esports industry continues to rapidly grow, the current systems in place are broken. Fortunately, blockchain technology has the potential to transform the entire Esports industry; giving power back to the players, coaches, regulators, fans and other key participants. Will DreamTeam be one of the next generation of sports gaming platforms?