A couple of decades ago, becoming a professional video game player was the stuff of childhood daydreams. Now, however, it’s a legit profession: The average pro gamer earns approximately $72,000 per year, according to Glassdoor. And it’s possible to make millions by playing for top teams.
Livestream viewership grew from 593 million to 728 million between 2019 and 2021 alone. But a combination of squandered investments, a decrease in ad revenue, the crypto crash (FTX was a huge sponsor), and other factors have led to what some are calling an “esports winter.”
For perspective on these growing pains, b. spoke with industry vet Frank Fields, a former esports manager at Blizzard and Riot Games, who currently serves as associate director of talent at RTS Management.
b.: Why are esports teams struggling, and how is the industry addressing those challenges?
Fields: There was a massive injection of venture capital into esports teams from 2016 to 2018, but largely that money was spent on content houses and player salaries rather than infrastructure for long-term viability.
Traditional tech focuses on creating products — whether B2B or B2C — that can be monetized, but in terms of monetizing competitive teams in esports, there hasn’t been much. In traditional sports, much of the revenue comes from media rights, which just doesn’t really exist in esports. All of this has led to some of the downturns …
The trouble the industry ran into was that it tried to run before it could walk. Many ideas tried to present a solution without a problem, and that wasted hundreds of millions of dollars across the industry.
b.: Despite these financial challenges, what does esports have going for it?
Fields: Gaming is becoming an increasingly popular hobby among people of all age groups, especially younger gamers, and it’s only changing in a positive direction. Publishers hold the key to this answer more than any stakeholder — they understand people’s gaming and spending habits better than anyone and can most inform products best made for gamers’ consumption from the secondary market.
Competitive gaming may not … be the driving revenue force that we once thought it might, but gaming in general is still a pivotal part of the entertainment industry, and in many ways is more profitable than the streaming and film industries.
b.: Where do you see the best opportunities for growth, new businesses, and new services?
Fields: It’s difficult to answer because the industry changes faster than anyone can predict … what I will say is that innovators need to focus on the socialization aspect of gaming. Discord caught lightning in a bottle. … It understood gamers’ habits — in-game and outside of it — and sought to make those connections better …
Rather than try to sell the community on an ambitious vision, understand the problems that exist and solve those in innovative ways. Esports is valuable, but we need to have an honest conversation about where that value is derived from, and how it can be grown in a natural way. You can’t fake it.
