How free e-sports has become a billion dollar industry

Friday, 17 April 2020

Competitive video gaming is now a booming global industry and starting to gain wider acceptance.

If becoming an All Black didn't quite pan out, becoming an e-sports athlete could not only earn you millions but also make you an Olympian.

The global e-sports industry made US$1 billion (NZ$1.7b) in revenue last year, according to online video game retailer Green Man Gaming.

Lets Play Live director Duane Mutu says e-sports is competitive gaming and possibly more difficult to become the world's best in than traditional sport because of the millions of players internationally vying for the top spot.

'The elite players are the 1 per cent just like in any sport. Now imagine competing against millions of players around the world,' Mutu says.

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'Just as you could play rugby all your life and never be as good as the All Blacks, you could play e-sports and never become the next Messi or Ronaldo.'.

E-sports has no boundaries with traditional sports stepping into the world of e-sports, Mutu says.

'Traditional sport is restrictive space-wise. E-sports has broken down the barriers of having to physically be somewhere to participate.'

Chris Hunt and Sam Pearson competed at last year's Fortnite World Cup.

The New Zealand Warriors rugby league club quickly took notice of international sports clubs like the Lakers, Miami Heat and Adelaide Crows and partnered with Blank e-sports to launch its own gaming squad last year.

In the next four years, e-sports will be recognised as an Olympic sport, Mutu says.

'We won't be seeing the gaming boom reduce any time soon because mobile gaming is getting more popular, 5G is here, more people are participating in gaming.'

Like any other sport, the professional e-sports world also has managers and coaches.

Reagan ‘GhostChips78’ Kelly juggles school work with competitive video gaming.

A 16-year-old teenager in the United States earned US$3 million when he won the Fortnite World Cup last year.

Players from countries that embraced e-sport early, such as China, South Korea and the US have an advantage, Mutu says.

But New Zealand players punch above their weight too.

Two Kiwi Fortnite players qualified to compete at the world cup. Chris Hunt and Sam Pearson came last in the competition but walked away with $76,000 each.

Hunt and Pearson are also part of the Warriors e-sports team.

The world's most popular e-sports games are free and companies build brand loyalty through virtual merchandise, Mutu says.

Virtual merchandise includes clothing and accessories players can buy to customise their characters, using in-game digital currency.

'If you ask a teenager if they want a new pair of Nikes or clothes for your avatar, they will want the virtual shoes.'

Duane Mutu says e-esport developers build brand loyalty through virtual merchandise.

'These are cosmetic goods, they don't amplify the avatar's performance. As crazy as that sounds, people want that.'

For instance Fortnite, which is a free game, made a US$1.8 billion profit last year, most of which was earned from micro-transactions.

Even educational institutions have started taking note of e-sports as a legitimate career path.

Waikato University Omen E-sports Arena manager Tom Featonby says children and teenagers are moving away from traditional media and games, so toy companies have adapted by creating toys and collectables pieces timed to coincide with e-sport game launches.

'When we were young, movies would come out and then toys would come out, now Lego Fortnite is a natural progression of that,' Featon says.

'Kids are no longer coming home from school and watching TV, they are gaming, socialising with their friends through these e-sports platforms. What your avatar is wearing is all part of this online person people want.'

Waikato University Omen Esports Arena manager Tom Featonby says traditional toy makers were using e-sports' popularity to sell their products.

In 2018, Waikato University became the first university in New Zealand to offer an e-sports scholarship as part of its wider plans to be an e-sports industry leader.

Waikato University is also the first New Zealand to provide a dedicated room for gamers..

The group which was created for students has been opened up to the public during the Covid-19 lockdown to compete in tournaments online through its Facebook page.

Overseas, e-sports scholarships are increasingly popular in the US, reflecting its status as the world's fastest growing industries.

Economic Development Minister Phil Twyford says New Zealand's interactive games development industry is on track to be worth $1b a year by 2025, .

Waikato University senior deputy vice-chancellor Professor Alister Jones (front) at the university's e-sports arena with e-sports coordinator Tom Featonby.

The industry made $203.4m last year, double what it made in 2017, according to the New Zealand Game Developers Industry Survey.

Reagan Kelly also known as Ghostchips78 has been New Zealand's defending Street Fighter champion for three consecutive years.

The 18-year-old has spent a large chunk of his teenage years being flown around the world to compete in Street Fighter tournaments.

'Winning has given me an incentive to stick with the game because I'm doing well in it,' Kelly says.

But unlike other gamers, Kelly plays the video game once every two weeks when his friends gather to compete against each other at a local arcade.

Kelly didn't have much trouble getting his parents to support his hobby.

Street Fighter's first iteration was released in 1987 and Kelly's father played under the same alias Ghostchips78.

While Street Fighter does not have a following as big as Fortnite, Kelly won cash prizes of up to $3000 at the national championships.

Kelly says once sponsors get behind games, players can make millions.

Energy drink company Red Bull is one of the biggest supporters of e-sports. The company has e-sports studios in Britain and Japan where players can compete against each other.

Gamers film themselves playing on video streaming websites Twitch and Youtube.

One of the world's highest paid Youtube personalities is Swedish gamer PewDiePie.

SkyCity bought a 40 per cent stake in New Zealand e-sports company and broadcaster Lets Play Live in 2018, and by July 2019 took full ownership of the company.

SkyCity describes e-sports as 'one of the fastest growing forms of entertainment globally (and particularly popular with millennials)' in its last annual report and hopes it can increase SkyCity's brand awareness and visitor numbers.

SkyCity chief marketing Liza McNally says the company expects to see growth in the e-sport industry.

'We're an early entrant into the market in New Zealand. If we look globally and we can see the potential for e-sports,' McNally says.