Most everyone, even the most casual sports fan, knows about Stephen Curry, the sharp shooting Golden State Warriors guard and reigning two-time NBA most valuable player whose team continues its title defense this week against the equally ubiquitous LeBron James of the Cleveland Cavaliers. But do you know who Peter Dager is? If you don’t, you soon might.
Dager plays video games for a living – very successfully at that, having made over $2 million in his career and piling up more than 100,000 Twitter followers (His team, Evil Geniuses, has nearly 270,000 followers, which is almost double the amount of the Portland Timbers, the reigning Major League Soccer champions).
Before you ask "How is that possible?" or, "Why would anyone watch people play a video game?," consider that so-called esports is slated to generate more than $400 million in worldwide revenues in 2016, according to data analytics firm Newzoo. That’s up 43 percent from just last year. By 2019, that figure is expected to exceed $1 billion, Newzoo says.
It’s, therefore, easy to see why some are calling esports potentially the next big thing in tech, possibly surpassing the next version of the iPhone, driverless cars and virtual reality. Video games, of course, have been big business in this country ever since Atari rolled out its gaming console during the early 80s, when offerings like ‘Pac Man,’ ‘Space Invaders’ and ‘Asteroids’ became an ingrained part of the popular culture. Now, games are becoming more realistic, intricate and immersive with each passing day.
Still, doubters persist. No one will watch that, they say, in part because it doesn’t require the skill of traditional sports like football, baseball or basketball. But these skeptics are missing the point – that’s the beauty of esports, because unlike the National Basketball Association or the National Football League, for example, there are very few physical barriers to entry.
Carolina Panthers quarterback Cam Newton is 6’5” and over 250 pounds. Very few of us can relate to that type of size, much less the talent he combines with it. The same goes for virtually every other professional athlete alive. Video games, however, are more inclusive.
Moreover, there were similar doubts about the Ultimate Fighting Championship’s (UFC) ability to become mainstream. It’s too barbaric, the naysayers claimed. Sen. John McCain famously called it ‘human cockfighting.’ Safe to say that the UFC has proved those doubters wrong, with news reports surfacing in recent weeks indicating that the organization is on the block and could sell for as much as $4 billion.
Fueling UFC’s rise in the beginning was that boxing had lost favor with most of the general public, thanks to a lack of star power and its alphabet soup of multiple competing governing bodies. Equally important, though, was its masterful business model, which relied on cheap content (most fighters made very little initially) and an aggressive marketing push to promote its individual stars, including early favorites such as Chuck Liddell, Tito Ortiz and Randy Couture.
Once people got to know the personalities, it was clear they weren’t animals and the sport started to grow exponentially. The same thing could happen with esports: The costs are manageable and thanks to social media it’s easier than ever for the individual players and teams to market themselves and communicate directly with potential fans.
Gaming companies Electronic Arts and Activision Blizzard certainly see this as a fertile opportunity, having recently devoted significant resources to this growing area of their businesses. Both have started their own esports divisions within the last 12 months, while Activision Blizzard also bought Major League Gaming, an events organizer with content delivery capabilities, with the hopes of turning it into the ‘ESPN of esports,’ in the words of president and CEO Bobby Kotick.
Facebook is natural for esports as well, possessing the platform to live stream events, and Amazon is already doing this through its ownership of Twitch. ESPN, for its part, has already aired competitions, while TBS last month debuted ELeague, a 24-team live gaming tournament showcase that will span ten episodes this summer. Even colleges are getting in on the action, with the Pac-12 Network recently announcing that it too will carry events featuring competitors from its member schools.
If the notion of watching someone else play a video game seems weird, then paying for that opportunity is probably unthinkable. But what the doubters of esports don’t understand is that younger people think it’s weird to watch people play golf or even baseball on television.
Esports is ready to explode. It’s not fad. So get used to hearing the name Peter Dager and people talk about games like ‘Dota 2,’ ‘League of Legends’ and ‘Heroes of the Storm.’ They are about go to mainstream.
By Ross Gerber
Ross Gerber is CEO and president of Gerber Kawasaki, a Santa Monica, Calif-based investment advisory with approximately $440 million in assets under advisement. Clients and employees of Gerber Kawasaki own positions in UA, ATVI, EA and AMZN.