Recently a reader reached out to me privately and asked, “What exactly is the eSports industry?” Since Wikipedia defines industry as: “the production of a goods or services within an economy.” And examples of industry are everywhere, e.g. the production of items like cars, mobile phones, and clothing. The question becomes, “What does eSports produce which qualifies it as an industry?” The surprising answer to that is media and entertainment. In its current incarnation, eSports produces incredibly sticky media experiences via matches/games/tournaments, live streaming, etc. That is not a typo either. eSports is, in fact, a media industry. And until items like tickets, apparel and media rights are productized (and sold) there really is no parallel to traditional sports business. With that being the case, let’s take a look at 5 forces that are shaping the eSports as an industry today.

Viewer Traction

The rapid growth of eSports is well-documented. In terms of viewership, its simple math that growth is a factor of high replacement demand, e.g. renewed periods of adding new viewers. However, it is not clear how long more viewers will continue to tune in. Still, given that the culture of gaming is growing daily, most are putting their money on the viewership of competitive gaming to do nothing but grow. The course of eSports, as a media and entertainment outlet, is tied to how consistently these fresh, new groups of viewers continue to increase. For example, it is yet unclear if eSports viewing will find any significant traction in groups 45+ years of age

Reduction in Uncertainty

Almost ALL new industries are characterized by a large amount of uncertainty about things such as the potential size of the market, product quality, and the ability to reach customers. This degree of uncertainty actually drives innovation as firms experiment with different approaches shaped by bets on the future. eSports features this in spades as a host of business/organization/team models are featured across today’s landscape. Over time this level of uncertainty will decline as clear winners emerge and establish standards by which the rest of the field is judged. eSports today is immersed in this process, even as the market size and potential becomes more and more apparent to mainstream observers.

Accumulation in Experience

This is, arguably, the most impactful force influencing eSports today. Working with a diverse group of organizations, coaches and teams at eSports Group has afforded me firsthand exposure to how talented the current generation of eSports leaders is. Age proves to be little more than a number, in the vast majority of cases. However, the outside viewpoint that eSports is run by nothing more than children still holds sway. Oftentimes in business, intelligence, ambition and passion take a back seat to hard-earned experience. Industry maturity will in lock step with the maturity of its participants.

Marketing Innovation

In a world consistently drowned by talk of marketing messaging, brands, promotion, etc. eSports must continue to stimulate demand. I did a video post on why eSports needs mobile, not only as a distribution medium but as a connective tissue. Up to this point, eSports has been driven by incredibly strong organic growth. The result has been a degree of authenticity, connection, and engagement that puts traditional sports to shame. The three pillars of authenticity, connection and engagement serve as guardians to eSports success.  Nonetheless they do not eliminate the need for outreach. The current approach has been to treat eSports like Fight Club, one that has left it as a best kept secret. Good marketing (not spamming or parroting), in the form of conversations, helps broaden the reach of something worth talking about. Marketing innovation can also help shift power from outside “market makers” to the eSports community itself.

Expansion

There is a tendency for growth of scale to attract larger, new entrants (see: Amazon’s purchase of Twitch.tv). This is often related to the flow of venture capital $$$ which brings smaller start-ups into the fold. Both have occurred, in small doses, with eSports thus far. The pace of future developments is important because it will help vet business models within the space. Assigning dollar amounts to ventures either through outside investment or acquisition gives a clearer picture of objective market value. In turn, these values help develop the overall market and prove that a significant market existed all along (see: I told you so).

At the end of the day the above forces are not immutable. Positive action will continue to influence the state and direction of the eSports industry, above all. Meaning, the natural course of industry evolution should be treated as an opportunity, not fate.

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Alex Fletcher is founder & president at eSports Group, where he helps customers meet their eSports advisory & consulting needs. When Alex isn’t glued to a screen, he spends time with his wife, their two dogs, and pretends to learn Polish. Feel free to stalk him on Twitter – @FletchUnleashed