Is the U.S. falling behind in eSports — and does it matter?
By Carly Regehr
A Newzoo report predicted that North America will compose only 13 percent of the eSports global fanbase by 2020.
Life as a professional gamer: it’s considered a childhood fantasy for some. The opportunity to show off one’s bond between man and handheld controller. In the bigger picture, there’s a fleet of teammates to keep in check while everyone’s trying to reach one objective: defeat the opponent. That’s a partial definition of competitive gaming. It’s an industry that’s growing so rapidly and out-of-control that an eSports research firm predicted profits to peak over the $1 billion threshold in three years.
Before we fast forward to 2020, though, there’s talk about a historic upcoming year for a branch of gaming: eSports. In that same report, Newzoo also forecast exponential financial growth for fiscal year 2017. Of the $696 million of foreseeable revenue, North America is primed to make one of the biggest contributions with $257.52 million (37 percent). But not all is well on the home front in terms of 2020.
Though North America injects a lot of money into the industry, it won’t touch what comes in from other regions of the world. Newzoo reports that 37.18 million people will consider themselves eSports enthusiasts by 2020, which is good … for 13 percent of the global total. The big man on campus, the Asia-Pacific region, has more bragging rights and will reportedly account for 145.86 million, or 51 percent of eSports enthusiasts worldwide.
Why is there a huge gap in fanbases among eSports communities in North America, Europe and Asia? What makes other countries so much more interested in eSports? And finally, what can North America do to catch up?
You Started It!: Gaming in the ’70s and ’80s
With the invention of the PC in the previous decade, an untapped concept at the time craved the same attention. And as electronics started to take over the 1970s, many areas of the industry began to flourish, particularly products that carried an entertainment agenda. For example, the arcade would introduce another dimension to an unprepared generation. A gentleman by the name of Nolan Bushnell would later be coined (no pun intended) as the pioneer of arcades in America. If the name rings a bell, it’s because Bushnell is responsible for one of the first gaming consoles, the Atari.
By the time Atari and other home gaming consoles were born, Americans would begin to realize the impact that gaming would have on their culture. However true that may be, it’s only truly the beginning of America’s next cash cow. As time and technology progressed, both the arcade and gaming consoles would find one sworn enemy, online gaming. Doom, a classic first-person shooter game, paved the way for an influx of online gamers. It also influenced a handful of successors, including Call of Duty, one of the most recognizable game series in the world.
Consequently, the gaming industry wouldn’t see the end of its growth spurts. Higher quality games with better graphics followed, along with the birth of open world environments. And regardless of the debate surrounding the FPS genre, there are other beneficial components to gaming, like encouraging problem solving and teamwork.
Take one FPS game, Counter-Strike: Global Offensive, for instance. It’s an online platform that’s very similar to the militaristic themes of Call of Duty and Battlefield. It might scream offensive to those looking from the outside-in, but there’s more to it. Some aspects of game theory need to be mastered in order to win. It’s full of deep strategy as well as building communication with other gamers. Right now, CS:GO is one of the main attractions in eSports, due in no small part to the publicity it receives from streaming service Twitch and the TBS channel.
So over the last three decades, gaming shifting from a side hobby to something more formal. In some places like South Korea, gaming is not about just interaction with others: it’s a culture. The U.S. and Canada, are falling behind in general. Though money is never the only factor, for North America, it boils down to the market. The eSports landscape simply isn’t as mature here as it is in other places.
Ranking the Top 5 Nations in eSports
Breaking into eSports greatness does seem to be somewhat of a birthright. Like most team sports, eSports follows the pattern of demographics. Being a part of the Southestern Conference in college football, for example, is a guaranteed membership into football pedigree. An SEC school is more likely to land some of the best high school recruits, as well as head into the postseason. The same phenomenon happens in eSports: location is key.
On some of eSports’ best teams, a majority of their roster profiles will say they’re from either Europe or Asia. Two of the best eSports squads in the world, Virtus.Pro (CS: GO) and SK Telecom T1 (League of Legends) are from Poland and South Korea, respectively. This kind of talent placement reflects those two regions’ way of inhaling the industry as a culture.
Meanwhile, the U.S. and Canada make up only a fraction of not just rosters, but teams within eSports competition. Cloud9 and Team Liquid are two of the top contenders in the domestic pool, though Team Liquid has teammates from Spain and Germany. Canada, on the other hand, represents a smaller portion, taking over small chunks on OpTic Gaming and Cloud9.
5. France, North America
Both France and North America are emerging eSports markets, whose teams are climbing up the totem pole.
Teams: FaZe Clan (France, U.S.), Team EnVyUs (France, U.S.), Team Liquid (four of seven CS: GO members are from North America), Cloud9 (North America), Frag Dolls (U.S. all-female team)
Specialties: Counter-Strike: Global Offensive, League of Legends, Overwatch
4. Germany
Germany contributes one entire world class German team (maybe two) to eSports, but it earns a spot on this list because Cologne serves as the headquarters of many of the teams’ gaming houses.
Teams: Team Liquid (1 DOTA 2 member is from Germany)
Specialties: CS: GO, DOTA 2, League of Legends
3. England, Poland
Both the U.K. and Poland can claim strong fanbases and high winning records.
Teams: Virtus.Pro (Poland), Fnatic (England), H2K Gaming (1 from Poland)
Specialties: League of Legends, CS: GO, DOTA 2, World of Tanks, Hearthstone
2. South Korea
South Korea keeps rather quiet in terms of numbers. Not many eSports resources are needed when you have the number one team in LoL history, SK Telecom 1.
Teams: SK Telecom T1, H2K Gaming
Specialties: League of Legends
1. Scandinavia
Sweden is a majority stakeholder when it comes to professional gaming, followed by neighbors Denmark, Norway and Finland.
Teams: FaZe Clan (2 from Norway, 1 from Finland), Ninjas in Pyjamas (Sweden – CS:GO, Finland – Overwatch), Astralis (Denmark), Team EnVyUs (two on the Overwatch roster are from Sweden)
Specialties: CS: GO, League of Legends, Overwatch
Scoping Out the U.S. eSports Market in 2016
In previous reports by Newzoo, saturation in the U.S. market was examined. Unsurprisingly, most of the people involved in the industry were college-aged males. Of the 192 million total gamers that were acknowledged in 2016, 72-percent were males (36 percent were between the ages of 21 and 35). Furthermore, 184.9 million (56.8-percent) of 325.1 million U.S. residents considered themselves gamers.
Obviously, the problem isn’t due to the number of gamers. Though it’s just a sample size of one country, the findings would map out that nearly half of the entire U.S. eSports audience identified as enthusiasts, those who follow the sport regularly. It’s certainly odd that the world’s second-highest stream of revenue from eSports ($23.6B) slightly trails China ($24.4B) but has a strong lead over third-place Japan ($12.4B). Yet, the United States fails to bring in a noteworthy cast of loyal followers. The country has always been fond of contradictions, but it has one department that’s its constant ally: media coverage.
The Publicity of the eSports Brand in North America
Branding in America dates back to the advertising age of the early 19th century. Madison Avenue was swarming with admen whose second nature involved the treatment and exposure of a brand. These days, it’s a practice that has become much more personal: it’s all about catering to the intimacy of one person. Lately, the marketing plan behind eSports has been concentrated on millennials, the keystone to the new arrivals in business. It’s also the generation responsible for the social media boom.
Informing the public about a business — domestic or international — in North America relies heavily on media. In eSports, coverage continues to grow from both traditional and new media channels. Not only is Twitch alive and well, but cable networks such as TBS and ESPN are starting to support the lifestyle. The Electronic Sports League, or ESL, is also cashing in on the eSports boom of the 21st century with its own streams.
The idea behind reaching a deal with an industry that’s in its infant stages is a risk. But to the eyes of media outlets paying attention to the statistics, it’s a win-win. Even though there’s still an obvious drought in eSports coverage, there are some networks that could jump on the bandwagon.
While being more preoccupied with UFC fights, Big 12 football and Big East basketball, FOX Sports could be a primal player in broadcasting eSports tourneys. TruTV, the home to some March Madness coverage, also has some room in its portfolio. As of right now, Impractical Jokers, The Carbonara Effect and Hack My Life are the only gems in their line-up. Both FOX Sports and TruTV could muster up some extra attention and revenue by inducting eSports into their list of programs. One of them doesn’t have enough to survive on and the other has a couple of shows with poor ratings.
As for TBS and ESPN, they both see gold in eSports. The same goes for American universities, who are embracing gaming as a scholarship. Robert Morris, a university based in Chicago, welcomed gamers into their institution about three years ago, offering some students $15,000 in scholarship money. Further west, UC-Irvine bobbed its way into the mix, introducing a gamers lounge, complete with 80 iBuyPower Noctis computers. Other universities are starting to incorporate more gamer-friendly majors as well, including computer game science, which merges game design and computer science.
The motivation behind TV networks and universities buying into eSports in this fashion is pretty clear. And with some popular brands fading out, there would end up being a sufficient amount of room for eSports and an increasing fanbase. Luckily, there’s hope in discovering how to market eSports, but it’s an unusual one: international soccer.
Analyzing Soccer Markets as Strategy in Building eSports Clientele
In all honestly, soccer has never been one of America’s best sports outside of the U.S. Women’s National Team. Traditionally, American soccer is avoided until the World Cup, but even then, it often remains in the shadows. It’s also a fanbase problem, as it simply doesn’t occupy the same status among sports in general as it does in Europe and many other places around the globe. It’s the same dilemma surrounding eSports and its North American fanbase.
Soccer is a staple of the European diet, but the MLS is looked at as a second-class citizen by some Americans, who just don’t have the same appetite for it. The remedy has been simple: ship and loan players from Europe. By allocating resources that way, the MLS has been, at least in part, rebranded and reclassified as an interest to American fans who follow European leagues like the Premier League and La Liga. Classic players like Kaka and Frank Lampard transferred over to the MLS in what was intended to be a revolutionary idea for the association.
Over the last few years, the love for soccer is slowly being captured by the U.S. and, yes, Canada. International soccer teams have also been scheduling matches with MLS organizations on American soil and that doesn’t do any harm to the sport. This rise of soccer fandom around North America can lend thanks to the recruitment of international players and the adoption of a European-like atmosphere. To succeed like soccer in North America, eSports should do the same.
Thankfully, though, it’s following a similar path. Gaming tournaments, like the most recent ELEAGUE bracket, featured international teams in U.S. cities. It’s an important move not just for the gamers, but for eSports to thrive as an industry in the U.S. For the record, it’s not just about North Americans opening their eyes up to eSports and gaming. It’s about other countries looking up to North America as a major game player. The roots of many professional gamers lie in other parts of the world. That’s why it’s essential to morph eSports in North America from stigmatic to a reality so that recruiting can take the same form as the MLS ideology.
Final Thoughts: It’s Not (Yet) an Institution in North America
In order for eSports to gather a bounty of followers in North America, a stigma has to be removed. Many people still don’t take the industry seriously nor see it as a competitor. Yet with increasing exposure, from tournaments airing on major networks to sponsorship deals, eSports in North America is the crocodile among alligators. IFor now, Canada and the U.S. are the rookies in a pool full of eSports veterans, like South Korea and Sweden.
Granted, it’s a sad story to think of representing only 13 percent of eSports enthusiasts worldwide, but Canada and the U.S. are doing well in support roles. All sorts of media and corporate sponsors based in those countries are providing necessary funding for teams and tournaments. Looking past the 2020 projections, though, North America will supply the eSports community with some of the most elite players — if, of course, they want to pursue it full-time. Most gamers call either Twitch or YouTube their home, but with higher amounts of prize money and fame being dished out over the few years, the supply of homegrown talent has a chance to grow exponentially.
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It’s just a matter of letting go of what used to be while adjusting to what’s to come for the eSports industry in North America. Though most things aren’t built overnight, the outlook on a solid eSports fanbase might achieve all-time numbers by 2022 as opposed to Newzoo’s 2020 prediction. After all, the industry has spent only a few years in development; while it’s still at a young age, it could hit full maturity within the next five years among American and Canadian viewers. Competition will grow by then and the demand to be a part of it — from a spectator’s point of view — is what can truly help North America take a full seat at the global eSports table.