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eSports: Where are we now and outlook for 2017

| By Aaron Noy
Mark Robson, head of e-gaming, Isle of Man Department of Economic Development, breaks down the development of eSports across five key areas and identifies the main drivers for growth as we move into 2017.

Mark Robson, head of e-gaming, Isle of Man Department of Economic Development, breaks down the development of eSports across five key areas and identifies the main drivers for growth as we move into 2017.

There is no doubt that eSports has transformed the way competitive games are played and viewed. In fact, SuperData Research analysts believe the market will grow to over $1.9 billion by 2018, driven mainly by the United States and Europe, which are expected to rapidly invest in the sector. Yahoo ESports’ two-year agreement with ESL, the world’s largest eSports company, is just one recent example of this, and aims to bring eSports to mainstream audiences via distribution across Yahoo’s platforms.

Skin betting

There are ongoing industry discussions on the issues related to skin betting, which facilitates online gambling using in-game awards as currency, and how to eliminate these. However, these challenges have recently been highlighted by the revival of a site which was a given a cease-and-desist letter by Valve in July. At this point, drawing a solid conclusion as to how the crackdown on skin betting will affect the eSports community is difficult, but the potential fallout is significant. It is clear that operators of such sites who continue this activity in a regulated environment will look for a jurisdiction with a very strong reputation in player protection.

Prize pools

Tournament prize pools have increased exponentially and this is a further indicator of the continued rise of eSports. The International 6 (TI6), one of the most important fixtures in the eSports calendar, offers prize money of $20 million. This is mostly crowdsourced, with recreational Dota2 players funding the majority of pay-outs.

24-hour eSports channels

Media companies are synergising gaming and television to target the “Millennials”, a valuable demographic. For example, in June this year, the UK’s first 24-hours eSports channel Ginx eSports TV launched on Sky and Virgin Media. We expect further announcements like this in future, as broadcasters will want to tap into the global audience of eSports viewers. Mainstream TV exposure will bolster the already established eSports ecosystem.

Immersive technologies

The next frontier in eSports broadcasting is expected to be augmented and virtual reality as it is transforming spectating experiences. It is no secret that the intersection of this technology with eSports offers a unique opportunity for both industries, and big companies have already recognised this. For example, Valve launched the operating system Steam VR for the headset HTC Vive, and Virtuix Omni launched the first virtual reality eSports tournament this year.

Although there are currently barriers such as high cost and limited software, the long-term effectiveness and innovation of augmented and virtual reality will win out. The games industry has also been the frontrunner for new technologies, as gamers are usually early adopters.

Venture capital

Although venture capitalists have historically been very cautious about investing in games, they are now changing their approach, and are excited about eSports. This has been driven by the sector’s global popularity. The venture capitalists are spotting investment opportunities in businesses that create eSports platforms, as well as in team ownership and advertising.

Innovative eSports start-ups have emerged as attractive acquisition targets. Recently, Internet giant Alibaba announced it will be investing about $150m in eSports, by entering into a partnership with the International eSports Federation (IeSF). Also, UK-based start-up Dingit, a high-definition eSports streaming platform, launched at the end of February 2015, and has already raised about $1.8 million.

Outlook for 2017

In summary, we expect the drivers for growth in 2017 to be the new competitive platforms launched by game publishers, and livestreaming of major events by media giants. These factors will be complemented by event sponsorships, ticket sales, and advertising.

There will also be a significant growth in the variety of games on offer. Whilst the core is still seen with titles such as League of Legends, Dota 2 and CS:GO, the convenience of mobile devices has led to titles like Hearthstone, Vainglory and even traditional ‘social games’ like Clash of Clans starting competitive tournaments and leagues as well as streaming audiences.

The Isle of Man considers eSports one of the key growth areas, and has been licensing high quality eSports sites for over two years, including industry leader Unikrn. We think eSports is in a very strong position and well placed to grow even further. It will continue to be one of the most exciting sectors in 2017.

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