Ten years ago, the idea that millions of people across the world would tune in to watch others play Call of Duty or Street Fighter for cash prizes may have seemed laughable. But, with the incredibly rapid rise of esports, it seems the sceptics have been proved wrong.
At this moment in time, esports is one of the fastest-growing spectator sports in the world and analysts have claimed it is the second truly global sport after football. If it wasn’t clear already, esports is here to stay.
With the massive success of the esports industry in Asia, it is only natural other countries would try to replicate the model. Right now, it looks like Las Vegas is gearing up to try and establish itself as an esports hub.
Even the Governor of the State of Nevada has said he is committed to helping make the city the esports capital of the world.
In 2016, a collection of some of the largest esports, mind sports and entertainment companies in the world came together to form Allied Esports, a network of dedicated esports venues and content production facilities across the planet. Allied Esports currently has eight esports venues, with two in China, two in Europe operated by ELC Gaming, and four in North America, which fall under the umbrella of Esports Arena.
The latest Allied Esports venue to open in North America was another Esports Arena, which is located at the Luxor Hotel and Casino in Las Vegas.
Jud Hannigan, CEO of Allied Esports International, told Gambling Insider: "Very early on we knew we wanted to have our global flagship located on the Vegas Strip and at the centre of the Vegas esports movement.
"It’s stranglehold on the title of ‘entertainment capital of the world’ has never been stronger. With an infrastructure that’s able to accommodate dozens of events and thousands of people every weekend year-round, esports is simply the next phase of what makes Las Vegas special.
"Some of the top esports events have already been taking place in Las Vegas for years. There is also a very passionate video game community already established in the city that will act as a foundation as this effort continues to expand.”
Some of Hannigan’s thoughts were echoed by Mark R. Johnson, an academic researcher who specialises in esports, currently working at the University of Alberta.
Johnson told Gambling Insider: "On the one hand, Vegas obviously has a lot of infrastructure in place when it comes to hotels, hosting events, looking after those who come to the city, and so forth. It also has obviously tremendous experience with one kind of 'gameplay' (gambling) and has hosted esports or esports-esque tournaments in the past."
However, an issue that keeps cropping up with esports in Las Vegas is that a majority of those who participate in the activity are very young, with some younger than 21.
"Vegas is a city where so much of what it offers is age-limited, and a huge number of esports players are younger than 21 - this is inevitably going to severely limit the appeal of the city for many," Johnson added.
This does have the potential to be a major issue for esports in Las Vegas. But, as players get older and don’t have to worry about age restrictions, this shouldn’t be too much of a long-term problem. Besides, there are places in the city now where people of all ages can partake in esports.
Johnson went on to say: "Vegas is perfect for the top-down elements of esports but has serious issues when it comes to the bottom-up elements of esports.
"At this point, it remains to be seen which of these will prove the most important but I, along with many other esports researchers, am certainly closely watching Vegas at the moment. The city's growing commitment to esports definitely brings with it a lot of opportunities.”
It is still unclear as to whether gambling operators have realised the betting potential esports has.
Johnson says: "Definitely not. A few operators have begun to offer odds on esports games and I think that's an essential step to beginning to explore the potential of esports betting. But, in general, many betting providers, even the big names in the field, tend to be very traditional.
"There is a very large knowledge gap between those who know a lot about gaming and esports and those who don’t.
"Esports players and spectators tend not to be demographics that are traditionally understood as gamblers. This means gambling content will need to be marketed in a very different way but also that entirely new markets could potentially be reached if esports gambling really takes off."
Luke Cotton, COO of esports agency Code Red Esports, explained to Gambling Insider: "With a few notable exceptions, the product is really poor in particular from traditional bookmakers. So much so that even esports fans would find it hard to navigate to bet on a match that they know is going on and want to bet on.
"Very few operators have done any serious marketing around esports and it’s been done in a way that lacks excitement generally. I think there’s been a lack of interest and there still is a huge lack of understanding.
"The gambling industry has not gone about doing esports the right way. Operators have stuck to the markets, expecting people to bet on them and then being perplexed when people don’t. This is a different customer base and the gambling operators need to understand that."
As it stands, only a handful of operators offer esports betting. This includes Pinnacle, Bet365, Betway and Unibet. If other operators can realise the full potential of esports and manage to engage an audience and consumer base, the potential earnings could be massive.
Competing with other markets
With the emergence of esports in the US, there has been the perception they are playing catch up with countries that have already adopted esports, such as South Korea and China..
According to Cotton, the US is already "very developed" and has an enormous following. Thanks to stadium events and the commercial aspect, the US is the "leading market in terms of maturity" with "lots of teams signing leading sponsorship deals and raising significant sums of money through funding.
"Looking back, South Korea used to be the market leader that’s often cited and obviously China. Both have a huge interest by virtue of the size of the country and interest in gaming, but the US is nearly already leading the way."
In western markets, traditional fighting games such as Street Fighter and Mortal Kombat have been considered as esports games. However, in major esports markets, the types of games played are more varied than ever, having grown to include first-person shooters, strategy games and Multiplayer Online Battle Arenas (MOBAs).
The US is "far behind" on what is on offer, according to Johnson: "There is very little grassroots esports culture outside of fighting games to the extent one would expect in much of Northern and Western Europe."
However, with the audience for esports growing more and more every day, it is likely the US will be able to overcome the issue, especially considering how many major esports tournaments are now hosted in the US and just how much time and financial resources are being invested into the activity.
Hannigan added: "Although the US may be behind in total audience size, it has the power to make up ground quickly. The emergence of esports is now being found alongside traditional US-based sports leagues, which have created a revenue model through sponsorships and media rights that pave the way for new entry points into the industry."
The sector seems set to continue its growth but how it can achieve this is not very clear.
Johnson predicts there may be several "big developments" in the next five years.
He explained: "A substantial number of top players presently hail from Global South countries, but the infrastructure and support for esports in these nations is lacking. I think we will see a major investment drive, especially in South America, and potentially in South Asia too, aimed at closing this gap.
"I think we will see shifts in what we think of as an esports game. The precise nature of these shifts is difficult to predict, as so much is dependent on the longevity of games and player interest.
"There is a risk of an esports bubble if corporate investment and sponsorship doesn't seem to pay off. A lot of esports players refer to those who invest in esports as 'suits,' and this term is meant to convey that many investors are business people who don't really understand games, gaming communities, gaming as a practice and so forth.
"There’s definitely a risk all this initial excitement will fail to pay off. Corporate sponsors could withdraw and esports will be changed significantly as a result."
Cotton said: "Obviously there are certain trends we are seeing and expectations we have but nobody can give an exact 'this is where we will be.' What I do think we will continue to see is huge growth. Although, in terms of fan prevalence, nobody really knows how big esports will become."
Bring it back to Vegas
With the future so unclear, there is a lot of potential for Vegas to establish itself as the world capital of esports; it’s just a matter of getting a few things right. First thing’s first, establishments in Vegas need to ensure they cater to fans of all different esports genres, with something for both casual and competitive players. As Vegas is first and foremost all about entertainment, this shouldn’t be an issue. But it can be easy to alienate a consumer base that doesn’t feel like it is understood.
The commercial aspect has to be kept in balance and investors and game developers need to listen to the community and give them what they want. For, if they lose the support of the esports audience and community, it’s possible any success and growth will be short lived.
But, like Cotton says, no one knows what the future holds and "anyone who says they know what’s going to happen with esports over the next five years… they don’t."