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Traditional Media Grabs for the ESports Control

Eleven years ago, Ted Owen had a dream: to persuade the Olympic planning committee in Beijing that video games belonged in the 2008 Games. The skepticism was overwhelming. And despite the best efforts of the founder of the Global Gaming League, the Olympics came and went without a game controller in sight.

Today, that dream doesn’t seem so far-fetched. Several major networks, including ESPN, NBC and TBS, regularly air eSports programming. And the organizers of the Asian Games, a pan-continental multi-sport event held every four years, have confirmed eSports as a demonstration event in 2018. At the 2022 Games in Hangzhou, China, it will have full medal status.

The explosive rise of eSports in the past decade has caught many off-guard, perhaps none more than the traditional — or “offline” — sports world. Game Five of the 2017 NBA Finals — the most-watched Game Five since 1998 — was watched by 24.5 million people. But the 2015 world finals of online game “League of Legends” nabbed 36 million unique viewers, according to Riot Games.

Meanwhile, overall NFL ratings were down 9% in the 2016 regular season and fell 6% during the playoffs, according to MoffettNathanson analyst Michael Nathanson.

That’s leading networks to escalate their involvement in competitive gaming.

“It’s impossible to ignore the impressive growth eSports has had, both in the U.S. and globally,” says Rob Simmelkjaer, senior VP of NBC Sports Ventures. “We always want to be tapping into what people love and how they’re spending their time and what they’re choosing for their entertainment. … For any sports media company, this is becoming an essential component of your strategy.”

Ironically, while both the broadcast and gaming worlds are quick to talk about the growth of eSports, they’re still figuring out how best to capitalize on them.
“ESports is in its infancy … and everybody’s still figuring out how to crack the code, not only producing or distributing it, but creating the best value for ad sales, creating the best viewer experience,” says Craig Barry, executive vice president and chief content officer for Turner Sports. “This is part of the evolutionary process of setting up something brand new.”

There’s certainly big money for players. The International (a tournament for the game “Dota 2”) has given out more than $55 million in prize money since its launch in 2011. “League of Legends” has awarded more than $36 million, says Ben Schachter, an analyst with Macquarie Capital.

But on the game-publishing side, it’s still mostly a marketing play. While publishers Activision and Electronic Arts have launched eSports divisions, neither has made a significant contribution to earnings so far. Take-Two Interactive Software has held two eSports tournaments, with little financial return.

“The tournaments we did were test cases to see if consumers would like this, and they did,” says Strauss Zelnick, CEO at Take-Two. “Millions of matches were played and hundreds of thousands of teams were created … but in terms of the revenue created — if there was revenue created, and we’re not sure there was — it came about through brand-building. So far, all we’ve done in eSports is in service to building the brand and delighting consumers, it has not, so far, been in service of creating revenue.”

Take-Two hopes to change that with its recently announced partnership with the NBA to form an eSports organization. Based around the company’s “NBA2K” franchise, teams in the league will be operated by NBA franchises and will follow a tournament format similar to that of the NBA — a regular season, a bracketed playoff, then a championship match. Seventeen teams have signed up so far, which will formally tip off in 2018.

A media partner has not yet been announced, but is forthcoming, says Zelnick.

Networks are a little better off than publishers when it comes to monetizing eSports. Barry says the company’s eLeague has → ← brought 10 million new viewers to the TBS network — and over 25% of the viewing audience for eLeague events has been in the coveted 18-34 demographic. Across digital platforms, the company’s competitive gaming league — formed in conjunction with WME — has racked up viewership totals of more than 3 billion minutes.

“It’s a native digital platform and we’re not trying to convert people, so to speak,” says Barry. “What we’re doing is we are executing on the digital platform to be authentic to the games and then the TBS or broadcast extension is a portal to create awareness for a casual fan or someone who is interested in eSports but doesn’t know how to deep dive on the digital platform.”

While watching an eSports event might be initially confusing for some viewers, network sports executives are hoping the stories that emerge in these televised tournaments prove as compelling as those that do so in “offline” sports or the Olympics. If people can rally around curling, goes the thinking, they can certainly become engaged in watching players battle it out in “Quake,” even if those viewers aren’t gamers.

At NBC, the company’s sports group has teamed with online competitive gaming platform FaceIt and developer Psyonix to launch a tournament centered around “Rocket League” this summer. It will feature more than 40 hours of coverage across the group’s live-streaming, VOD and linear platforms.

The finals, to be held Aug. 26-27, will be televised live on NBCSN in the U.S. and on Syfy in parts of Europe.

“We’re hoping we’ll uncover some diamonds in the rough,” says Simmelkjaer. “Maybe there will be someone playing in one of the [smaller] regional tournaments that could end up playing at the professional level. That would make a great narrative for the end of the tournament.”

But some console manufacturers are still standing on the virtual sidelines.

Nintendo games such as “Super Smash Bros.” and “Splatoon” have been used in some tournaments, including 2015’s Nintendo World Championship, which was broadcast on Disney XD. But the company’s holding back on professional eSports for now.

“Leagues, big paydays for winners, pro players — that’s where I think things get a bit … complicated,” says Reggie Fils-Aime, president of Nintendo of America. “From a Nintendo perspective, those are elements that are bit less interesting to us.”

The story’s not much different at Sony.

“We are, at this point, working hard to answer [the] question: What is the best way in which a hardware-based platform can contribute to the eSports ecosystem and profit from it?,” says Andrew House, global chief executive of Sony Interactive Entertainment. “I do tend to think it’s a category that will possibly not generate a huge amount of profit in the near term, but over time I do think it has potential and we’re watching it very carefully.”

Despite that occasional reticence from different sectors in the gaming community, video-game tournaments are certainly ready to make a lasting impact in the sporting world.

“I had so many people tell me I was crazy,” Owen says. “I see [this] as a complete and utter vindication that Global Gaming League, myself and a few others at the forefront were absolutely right.”

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