Gaming in the more general sense has almost always been a social endeavor, and one where the socialization was shaped by competition. Some of the earliest known games, dating back as far as thousands of years ago, generally revolved around the concept of capturing game pieces from an opponent.¹ The first commercially successful electronic game, Pong, was likewise a competition between opponents. And while some of the most popular games to follow would occasionally pit the player against a computerized opponent, recorded high scores on these machines allowed for human opponents to measure themselves against each other in an asynchronous way. Importantly, the proliferation of arcade games in the 1970s introduced the norm of spectating video game play—teens would huddle around machines to compare skills while putting down a quarter to claim who was next in line.

In short, one shouldn't be terribly surprised that the professionalization of competitive video games, colloquially known as esports, has become a worldwide phenomenon. It was a bit of an inevitability—witnessing high levels of skill in any given endeavor is interesting in and of itself, but potentially more so when it is an area of personal interest. As video gaming becomes increasingly ensconced in popular culture, the interest in demonstrations of skill at the highest levels followed. The ludicrousness of the mere prospect of playing video games for a money became a fixation of popular media, occasionally buzzing in and out at the tentpole moments of a larger and complex history.

And yet for every (typically older) person who gives a lighthearted chuckle at the headlines outlining million‐dollar prize pools with a dry joke that they should get into gaming (or more likely, have their kids game more), there looms the larger reality that these million‐dollar prizes and larger commercial successes are exceedingly rare. There are billions of gaming fans out there and yet only a few thousand will ever make much money professionally—even fewer enough money to live on. The flow of money into esports is significantly more unpredictable than comparable media outlets or competitive endeavors (those you might consider “legitimate” sports or otherwise).

As a result, the formalized business of competitive gaming is reasonably new and occasionally unstable. At the onset, few got into professional gaming to get rich, but as the eyeballs accumulated, the opportunity scaled. The more that the industry scaled, the further it found itself from the grassroots passion‐led tactics it was built on. The word “passion” is used a lot in the description of esports, particularly as a means to describe what makes the industry a special stand‐out among more traditional sports or competitive entertainment offerings (and indeed, we'll get into whether or not “esports” are truly a “sport”).

Depending on your vantage point, “passion” can easily be seen as a code word for naivete. While to many the word “esports“ represents a new type of media filled with exciting professional opportunities, to others it's little more than a more structured way for folks to waste time—yet another path along which younger generations have lost their way instead of getting “real” jobs. The constant articulation of passion is not only a defining attribute of the fans and evangelists, but for many years that's all the entire industry had to run on.

The modern esports industry is experiencing growing pains. The patchwork scaffolding of the early business is slowly being replaced with enduring structures. More directly, the industry is in the midst of the hard work of translating from a bedroom operation to a boardroom one. And for all the worries of the industry operating as a bubble about to burst, one must recognize the fact that it is an industry built on an already burst bubble.

Perhaps somewhat obviously, this is not without tension. It's an industry that strives for stable revenue and legitimization in popular culture, and often finds both in the form of outside investment (particularly from blue chip brands or legacy sporting organizations). Yet there are concerns that the outside business interests and professionals carrying through such deals are overriding and stomping out the grassroots community. The misunderstandings on either side of this divide are quite high, and intentions are equally mixed. Passion alone certainly won't build the industry, but neither will applications of business practices that don't understand or respect what makes this form of media unique.

Nonetheless, esports is one of the most exciting and attractive sectors of the larger gaming ecosystem, albeit with a heavy dose of hyperbole. As you might glean from the account above, we will lean towards objective judgment as much as possible—outlining opportunity while acknowledging that the industry is very much in the process of finding its footing among larger cultural, societal, and business pillars.

So, what is esports? It's passion. It's competition. It's hype. It's a tug‐of‐war between grassroots fans and business folks. It's the expression of generations looking to legitimize and capitalize on their pastime. It's the complex weave of opportunity tempered by very real business challenges. It's emerging, yet it has a history dating back at least 50 years. It's worth your time and attention, because in many respects it has evolved beyond simply emulating traditional sports frameworks to pioneering a framework for commercialization that more traditional sports are emulating. Whether or not you buy into the concept of professionalized and competitive video gaming in the general sense (though you should!), it is nonetheless (one way or another) the future of competitive entertainment.

Watching Games, Together

To many outside the industry, the emergence of esports as a cultural phenomenon seemingly happened overnight. As noted above, the history of esports can be traced back at least 50 years—so why the sudden hype? The following chapter provides a more thorough overview of the essential history of esports—for now, the important takeaway is that the seemingly sudden rise of esports is (like so many other phenomena in modern business) due to the internet, and those darn kids (though maybe not in the way you might think).

Competitive gaming as an industry or personal endeavor was previously quite localized—the internet allowed the competitive landscape to evolve from a given city or block to essentially the entire world. Network effects across various games, chat platforms, social media, or other venues allowed smaller individual groupings to develop into a massive audience. Competitive gaming took root culturally and socially at much higher rates within regions where high‐speed internet is readily available (the exemplar being South Korea). In essence, it was raised to the level of media, meaning the apparent opportunity was clearer to a larger group of potentially interest parties.

The potential to scale a previously niche audience is of particular importance to esports because it (like gaming) is incredibly fragmented. The modern esports industry can be described as a rough assembly of dozens of game publishers, game titles, competitive teams, league structures, tournament series, technological platforms, and partnering institutions (both endemic and nonendemic). Saying you are an esports fan is not more specific than saying you are a sports fan. Esports fans can therefore be fans of a particular team, individual, genre, publisher, a tournament, or some combination of the above. Though the esports industry has, at various times and in various spaces, attempted to structure itself in ways that are similar to more traditional sports (including localized teams to foster regional affinities or loyalties among fans), the makeup of the fandom is profoundly diversified. With a few notable exceptions we will discuss here, the industry is entirely reliant upon unifying a dispersed audience via the internet, not only because distribution through traditional media channels is problematic, but to capitalize on the endlessly diverse pockets of the fandom.

The eventuality of competitive gaming becoming mainstream is, like gaming, woven into generational patterns (or depending on your POV, experiential patterns). The most salient reference point comes from classic psychology in the form of the “mere exposure” effect.² Intuitively, the effect represents the idea that we are more comfortable with an experience that we've had before, rather than a new one. Younger generations are both more likely to play games and have more balanced feelings about the impact of games on negative connotations such as real‐world violence.³ Put simply, we either fear or misunderstand the unknown, and gaming both as a pastime and a vocation tends to be proportionally less known by older populations but is well within the comfort zone of those exposed to gaming throughout their lives. As discussed before, now‐adult generations have grown up gaming, and affinity for the pastimes of youth such as video games has increasingly been carried forward to the heads of modern households.

Much in the way that gaming more generally has been increasingly socialized as being a “normal” or “non‐fringe” media activity, so increasingly goes the concept of watching someone else play a videogame. The gaming research firm Newzoo estimates that global viewership of games being livestreamed will reach 921.2 million by the end of 2022, and will be in excess of 1.4 billion by 2025. Esports viewership is estimated to reach 532 million by the end of 2022, and reach upwards of 640.8 million by 2025.⁴

But even if esports are familiar and have a growing fan base, why watch at all? Esports, like more traditional sports, have the same features that tend to drive audiences: competitive stakes, drama, and unknown outcomes are universal motivators for viewership among virtually any formalized competition. Above and beyond these commonalities, esports are unique insofar that they are a place of community on what was the fringes of popular culture, one where spectatorship and participation are intimately linked—virtually all spectators of a given esport tend to be players of the game in question, and improving their own skill drives engagement. Sure, I'd wager that most NFL fans have played football at some point in their life, but how many of them are doing so on a daily basis? Not many, and the extent to which practice, play, and viewership are intermingled in the majority of esports fandom is both a key point of differentiation and driver for the uniquely high levels of fan engagement that are common within esports.

However, the question has officially been begged—is this a fair comparison when it's not clear that esports are an actual sport? One of the most fundamental questions leveled at esports among those seeking to understand the space has the fundamentally flaw of not really mattering all that much.

Defining Esports: Are They More E or More Sport?

More traditional sports have had the benefit of being ingrained within popular culture for, at times, hundreds of years. While the history of esports is quite a bit longer than most would expect, we're still only talking about a handful of decades. The newness of esports therefore makes it equally exciting and confusing to the uninitiated.

The games that are successful as esports have several commonalities fundamental to competition: one or more persons facing off within a set field, with defined rules and goals, and a clear winner. This can range from which team eliminates the other with gunplay, scores a goal, or wins a card game. Put simply, a game where an esports community can potentially calcify is often designed with the intent to pit human components against one another. While there are ways in which individually oriented games have been turned into a competitive platform (a phenomenon we will discuss more in the chapter on streaming), the first key component is that it is a PVP (player vs. player) vs. a PVE (player vs. environment—i.e. a level, game AI, etc.) challenge.

Above and beyond the competitive aspect, esports industry fixture William Collis notes that the most successful titles are those that are:⁵

• Viewable: Can be watched/understood easily, though this is far from a given and a particularly acute challenge in esports, which we will unpack.
• Uncertain: Implementations of chance as a mechanism to increase drama and tension in what could otherwise be a machine‐perfect execution in a virtual environment.
• Skill‐based: Put simply, there is a high degree of differentiation between good and bad players.
• Transferable: The skills required to play the game can be applied to others in a similar genre.

A consequence of the rise of esports as a revenue‐generating vehicle has spurred the development of titles that were essentially built to be good vehicles for professional play and therefore tick most of the above boxes. A recent example would be Riot Game's Valorant, which essentially smashed two of the most popular competitive first‐person shooter (FPS) titles in the form of Counter Strike: Global Offensive and Overwatch together. That said, many of the most popular esports titles were not necessarily designed to be esports, and some others have roots via fan modifications within the broader gaming community. While much in the esports industry will intrinsically be controlled by the game publishers (either directly through esports outreach or indirectly through control of the game titles), the extent to which the fandom has had (and will likely continue to have) an influence on the core structure of the industry is a unique artifact of the modern and connected age.

The constant reference to community and community adoption is deliberate—no person or entity can declare on high that a game title should become part of the esport ecosystem. It is certainly the case that publishers have fostered a competitive community via the creation of a formalized “league,” but such formalization was predicated by the title having a large fan base. In other (less happy) cases, the game publisher might be semi‐hostile to the competitive community built around a given game (with the evergreen example being Nintendo with respect to their Smash Bros. series of fighting games, which only very recently started to become more accommodating to formalized competition),⁶ yet a competitive community still thrives.

At the highest levels, players can be entirely professionalized in their game play, thereby often spending hundreds of hours practicing and honing their craft. The route to professionalism is, like fandom itself, fragmented yet occasionally exceedingly elegant—most esports titles include competitive “ladders” upon which any given player can assess their skill and relative ranking against others within the game. The best are, quite literally, at the top of the game. More traditional paths to professional play (high school teams, to college, to pro, etc.) are becoming more common, with hundreds of high schools⁷ and colleges⁸ developing esports teams that mirror the format of professional play.

Professional‐level play requires an intense amount of strategic thinking, teamwork, practice, and dedication. It is not surprising, as a result, to see that traditional professional sports players tend to overindex as individuals that play games. This isn't simply because they are within the demographic that plays games more heavily (young males, classically), but rather much of the same mentality and personality traits that allow one to thrive in a competitive physical environment translate to a virtual environment. And while mindset is perhaps the most important and defining feature of a professional who competes in a virtual environment, like traditional sports there is a high degree of differential physicality required to be the best of the best.

It's right about here that I suspect the esports cynics are raising an eyebrow. Playing a game is physical? Yes, and moreover, as is the case in traditional sports, the highest‐performing esports professionals are often physically gifted above and beyond most folks. A recent study has shown that the reaction time of an esports player is not entirely different from a more traditional athlete, and in many cases superior (and both were significantly faster than the control).⁹ Games such as Starcraft II, which require immense and highly complicated strategizing around the economies and development of an army to defeat an opponent, also require lightning‐fast capabilities to input commands at the highest level. Measured in actions per minute (APM), an amateur or causal player might register 60–100 (which, to be clear, still represents one or two commands in game every second) whereas professionals are often within the 300–600 range (upwards of 10 actions every second—try hitting even a single key on your keyboard 10 times in a second, to get an idea of just how fast those commands are inputted).

The defining physicality of esports is thus one of control over the technological interface that the player interacts within. Traditional sports are defined by the laws of physics, whereas esports often entail in‐game avatars untethered from the rules of reality. This occasionally includes pros assuming the same avatar with the same abilities—ostensibly a great equalizer in gaming—everyone can have the same abilities to move and manipulate the competitive space in the same way. The esports professional is simply “piloting” one of these avatars at a high level. While it is fair to argue that the kind of physicality required to (say) pilot an FPS avatar at a high level is quite a bit different from what is required for a good jump shot, physical control of the keyboard, mouse, or controller, with lightning‐quick reaction times are a defining aspect of pro players.

This level of differentiated physicality, combined with a knowledge of the game or game environment to an extent that moves, feints, and actions take place in a spectrum that nonprofessionals cannot see represents the key differentiator between someone “just playing a game” and an “esports professional” or “athlete.” Here again—is having differentially good knowledge, strategic thinking, and technological control enough to warrant the label of “athletes” within a “sport?” While all of the above are performed through skilled manipulation of a technological layer, what are sports such as cycling or F1 if not technologically moderated competitions?¹⁰ The appearance of these pros may not carry the same aesthetic beauty as a runner or gymnast (I'll be blunt—esports pros often conform quite well with the mental image one might conjure when asked to think about a “gaming nerd”), but one doesn't have to look far in more established “traditional” sports such as bowling or baseball to see similarly shaped and sized bodies.

We will not put an end to this debate here; even within the esports community there are proponents of considering it a sport—or not. On a more official basis, the International Olympics Committee has opened a series of forums since at least 2018 as to whether esports should be a medaled event¹¹ (leaving aside how one picks which game or games would be representative, which will almost certainly become a sticky problem). For our purposes, we'll return to the point this section opened with: it should not matter much to business decision makers. At most, the status of “sport or not” raises tactical concerns as to where esports should fit into traditional budgets. Whether esports are legitimized as a sport or not, fans are watching in droves.

A (slightly) less cynical take on the argument would be that officiating of a “sport” is important insofar as it lends legitimacy. The legitimacy of esports, particularly in reference to the sports world by means of common business practices within, represents one of the most fundamental challenges with the industry at large.

Ready? Fight: Challenges and Considerations

As a rapidly developing industry, esports are not without a number of challenges, some of which are those that one might expect with any developing media format; others are unique to the peculiarities of the industry. We'll concentrate on three of the most salient ones to outside partners: business practices, viewership, and representation.

The business of esports is still relatively nascent—as relative interest within the industry increased and the operations within became more sophisticated, the early grassroots fans found themselves rubbing elbows with professionals from traditional sports. The trend was simple enough—as noted, much of the more formalized aspects within esports has looked to the traditional sports model. The reasoning then became that these traditional sports professionals would be able to uplift the business practices of esports to propel the industry towards similar levels of financial success that more traditional sports offerings enjoy. Moreover, the core draw of esports is that it is increasingly the domain of a very difficult to reach demographic: 20‐something males who don't consume large amounts of linear television. Much in the same way that the NFL overtook the MLB in the transition from radio to television, the coming digital age portends a world where (in the eyes of entrepreneurial and forward‐thinking sports execs) esports would overtake more traditional sports while yielding audiences that the businesses are very much seeking.

Unfortunately, this book hasn't existed until now, and many of the traditional sports execs didn't really have an avenue to gain an understanding of the broader esports industry. Given the high regard for authenticity among esports fans and grassroots founders, who at times were all but doing “community service” to keep the industry alive,¹² there have been some natural frictions in terms of how to take esports to the next level.¹³

One of the most hotly contested debates in this tug‐of‐war is one of the challenges proposed above: viewership. Many of the strategies for traditional sports relies upon the massive fan bases those sports command—and while esports fandom is growing at an impressive rate, it's not quite at the level of traditional sports. As a result, the same sales pitches that might have been successful for (say) the NFL don't really resonate when you swap out cleats for magic staves. Similarly, increasingly viewership remains a challenge insofar that the barriers to fandom are quite a bit higher than they are for traditional sports—even if you don't understand the rules, just about everyone who has been exposed to baseball can likely understand the fundamental idea. This is absolutely not the case for a games like Overwatch or League of Legends, which require tremendous viewing (and, likely, playing) experience to understand even the most basic dynamics within the game.

Make no mistake, based in part on the factors discussed above (e.g., generational effects, increased educational uptake of esports) it's extremely likely that various esports titles will scale to the size of more traditional sports. However, that time is not now, and as a result the core business entities have needed to look at a wide array of strategies and revenue opportunities to keep the industry in the black (we'll discuss these over the next few chapters). Until these broader mechanisms for funneling new fans into the industry are fully developed, the fandom (and to an extent, the professionals within the industry) remain in a fairly narrow demographic band. This is one of the value propositions that esports has to offer partners, but it also carries the unfortunate side effect where broader representation is an issue.

Specifically, because esports fandom relies heavily upon experience playing the games in question, and these games are overwhelmingly PC titles, the fandom is overwhelmingly populated with more “hardcore” gaming enthusiasts. As a practical illustration, one of the most popular esports in the world happens to be played within a game that is the poster child for toxicity in gaming: League of Legends. These same enthusiasts tend to be the same that propagate toxicity and gatekeeping behaviors within gaming more generally, in addition to being largely upper‐middle‐class, white, male, and young. The result is an industry and fandom that is exclusionary, and fans or professionals who are women and/or minorities are relatively rare. The same early‐days grassroots fans and organizers of esports who have directed exclusionary efforts towards the incoming wave of sports execs occasionally do the same towards underrepresented groups such as women looking to make a foothold within the industry. When esports tournament organizer ESL proposed a women's league for popular FPS Counter Strike: Global Offensive,¹⁴ many longtime and prominent voices in the broader esports industry questioned the necessity and precedent that this move set.

An interesting and partial exception to the narrowness of representation in esports is the fighting game community (FGC). As a genre, fighting games usually involve two players attacking one another with a series of punches or kicks (often in the form of traditional martial arts, sometimes not) until the health of an opponent is depleted enough to “knock them out.” Popularized by games such as Street Fighter II, fighting games and FGC have deep roots in arcades. By some accounts, Street Fighter II is the third‐highest‐grossing arcade machine (just behind Pac‐Man and Space Invaders), pulling in ~$2.3 billion in revenue across ~200,000 arcade cabinets.¹⁵ Arcade machines present a significantly lower barrier of entry than a game‐ready PC (as little as a quarter is all that is needed to play), and as a result the FGC is significantly more diverse and tends to lean more urban than PC‐based esports do. However, in part because the Japanese companies that produce fighting games (notably, Capcom and Nintendo) have been relatively reluctant to invest in competitive tournaments around their products,¹⁶ the FGC has remained significantly more grassroots and mistrusting of corporate influence relative to their PC‐based colleagues.¹⁷ Ironically, this contributes to the lack of representation in esports as the most diverse of the competitive gaming communities simply do not identify with the label of “esports.”

Shaping the Meta: Conclusions and Implications

Good competitive entertainment requires drama and stakes. Esports certainly have their fair share, and not simply in the form of competition; it extends to the core businesses encompassing the wider industry. Competitive gaming, and the broader phenomena of fans watching gaming, presents a unique window into the future of media consumption and how the audience and content producer interact, in addition to expectations among fans to be more deeply involved with the content they watch. The passionate fan base and highly affective nature of the content present a unique way to interact with audiences, but one in which a high degree of care should be taken not to run afoul of the challenges within the industry or conflicts with the fan base.

We'll follow this brief introduction to esports with a series of chapters to give the proper background and context to interested marketers and executives, starting with a brief history of esports that outlines core tensions relating to growing a grassroots movement into the domain of big business, including finding the proper medium for esports to thrive—online streaming. We'll turn to the generalized world of game streaming since the overlap between these two industries bears consideration, particularly as partnering with streamers or streaming platforms becomes an increasingly attractive and accessible way for partners to integrate into gaming. Having covered the necessary background we'll dive into a primer on opportunities for integration within the world of esports and streaming. As has been the case in opportunities within gaming, the idea is not to provide an exhaustive list and how‐to of tactics, but rather to provide a map to navigate these spaces and understand the relative strengths and weaknesses of any given entry point.

It's fairly well accepted that, intuitively, gaming is fun. Who knew that watching someone play games could be just as much fun (hint: apparently millions of people; let's learn a bit more about them)?