The skyrocketing profile of eSports, as a whole, has outpaced understanding of its industry. Figures from firms like Newzoo and SuperDataResearch provide a quantitative view of the eSports marketplace, but glosses over the fast-growing industry surrounding it. Given its current state of development, the eSports industry is emergent. There are some common structural elements shared by industries in this stage of development. Understanding the realities of an emerging industry is a critical component to recognizing opportunity and capitalizing on growth.

Technological Uncertainty

In the case of eSports, technological uncertainty is represented by several different realities:

1. Mobile – According to the “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2014–2019,” The number of mobile-connected devices exceeded the world’s population in 2014. Additionally, by 2019, mobile-connected tablets will generate nearly double the traffic generated by the entire global mobile network in 2014. These projections will collide with a growing eSports industry where, outside of Hearthstone, no current eSport title has successfully bridged the gap between PC and mobile.
2. Scalability – eSports is larger than just matches played by professionals; it encompasses a vast sea of amateur and semi-pro play. The world’s top eSport title, League of Legends, reportedly features, 67 million playing every month and 27 million playing every day. The technological infrastructure behind popular eSports games must be able to scale to the demands (availability, uptime, etc.) of larger player bases.
3. Security – Vulnerabilities to issues stemming from server downtime, distributed denial-of-service (DDoS) are a real threat to the integrity of eSports. Coupled with the increased presence of gambling and wagering channels, it is critical to ensure technological infrastructure is fully secured.

Strategic Uncertainty

There is a rash of strategic approaches being put into play across the eSports industry, by its industry participants today. The nature of an emergent industry necessitates different approaches to product positioning, marketing and the like. This includes variations on similar products and offerings. For example, several companies have released platforms that allow players to wager on their own competitive games. The feature differentiation is low across that group simply because the characteristics of users and industry conditions are in the emerging phase.

Early Stage Commercialization

The early stage of an industry is typically accompanied by a high proportion of startups, spin-offs and other embryonic companies than will ever be experienced throughout its lifecycle. The fluidity of technology and strategy in the emerging phase entices equity and stimulates an environment conducive to novel ideas. The eSports industry, in particular, is particularly appealing to newly formed companies, as it contains very low barriers of entry and is global in nature. Furthermore, without established imperatives or scale economies as deterrents, smaller companies will continue to populate and grow within the eSports industry

First-Time Buyers

Industries are formed around markets of “buyers” who are willing to purchase a product or service. In the case of eSports, this paradigm is slightly different. There is a thriving community of fans, supporters, and participants across the competitive gaming landscape; most of which are not buyers, in the traditional sense of the word. They do, however, consume (and even produce) a significant amount of eSports related content. This consumption consists of watching professional matches, streamers or even playing games competitively. Right now, the process of converting that engagement into purchases is embryonic, at best. There is a significant gap in understanding the factors that prompt members of the eSports community to actually purchase a product or service.

Short Time Horizon

Most emerging industries are marked by a breakneck pace of innovation and change. eSports has seen the pressure of rapid growth produce expedient changes in industry conventions such as, the introduction of drug-testing for its professional players. An increased rate of change results in a smaller time frame in which to develop strategic approaches to the market. Firms in the eSports industry are encouraged to develop products and meet the changing nature of demand. This reality creates a void in forms of “conventional wisdom” that all industries rely upon as they mature.

Alex Fletcher is founder & president at eSports Group, where he helps customers meet their eSports talent and intelligence 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