Video Games Are the New Football

Looking to sign the next Cristiano Ronaldo? I’ll give you a hint: the millionaire athletes of tomorrow probably aren’t going to be 6′ 3″ and they probably won’t bench press 200 lbs. They probably can’t even run that fast.

Thousands of fans scream in a jam packed arena, standing on their toes out of hopes of glimpsing their favorite star athletes.  Around the world, over 20 million people are tuning in to watch the match live.  The athletes emerge from their locker rooms and stride onto the playing field with focused, nervous energy.  Over $20 million is on the line.

Is this the Masters?  The NBA finals?  The Stanley Cup?  Nope.  It’s the Defense of the Ancients (DOTA) 2 International Championship.[1]

DOTA 2 is one of the top games in an emerging industry called eSports.  Just as it sounds, eSports encompasses professional competition in video games and all of the fandom that goes with it.

For sports agencies like Catalyst Sports, times are changing in big ways.  Their job used to be to identify the best football, basketball, baseball and hockey players at a young age, sign them to management contracts and then negotiate salaries and endorsement deals on their behalf.[2]

Traditional sports, long the backbone of broadcast television, are showing cracks in their armor.  Through the first six weeks of the 2016 NFL season viewership has dropped by 11%.[3]  ESPN, the Disney-owned broadcaster of non-stop highlights, sports news and live games has lost over 4 million subscribers over the past 12 months.[4]

For sports agents looking to diversify their business away from overly competitive and shrinking industries, eSports offers a goldmine of opportunity – albeit with a required change in business model.

The challenge facing these agents is that because the eSports industry is so new and unorganized, there aren’t clearly established channels of monetization in place.  Stalwart advertisers such as Coke and P&G are unsure of where to invest their marketing dollars.  Do they buy a team?  Sponsor a tournament?  Run ads during Twitch streams?  Additionally, there aren’t clearly defined leagues or roster rules across the industry.  Players change teams as they see fit and tournaments serve as the only reliable battle ground for determining ranks.

As a result, eSports is currently only monetizing at about $2.83 per fan, compared to approximately $15 per fan for basketball.[5]

An additional challenge facing sports agents in this new digital world is the existence of game publishers in the ecosystem.  In the professional football industry, no one is the owner of the sport of football.  There is the NFL who operates the league, the team owners and the players.  There is no risk that the NFL is suddenly going to lose the right to play the sport of football.

In eSports, however, the athletes are competing with each other in video games that are owned by separate, for-profit companies.  Game companies such as Valve or Activision Blizzard could conceivably shut down, tax or impose restrictions on all broadcasting and monetization of competition on their games.  This is an incredible risk to the business model of sports agents trying to play in this world.  The old gate keepers of the sports world were CBS, the NFL and Anheuser Busch.  Now the gatekeepers are Valve, Electronic Arts and Activision.

Additionally, the way that fans consume eSports is very different than how they consume traditional sports.  This isn’t sitting on a couch every Sunday to watch your home team play.  This is live streaming on Twitch, posting videos on YouTube, traveling around the world for competitions and SnapChatting about your life as a pro gamer.  The most profitable athletes will need to be dominant at video games and also charismatic enough to draw a digital following.

Catalyst Sports has evolved in line with these challenges.  The traditional agent model of taking a cut of a player’s salary in exchange for representation does not work in eSports.  Players don’t get salaries, but rather compete for prize money and collect advertising checks from YouTube and Twitch.  What Catalyst has decided to do instead is to serve as a Sherpa for brands and advertisers looking to participate in this lucrative but disorganized industry.

The new job of these agents is to bring order to a disorderly, growing industry and to provide channels for reliable marketing investment.  The excitement is there and the viewers are there.  Now it is time to turn eSports into the profitable, reliable marketing engine that the NFL has traditionally been.

Total Viewership of Major Sporting Events
Total Viewership of Major Sporting Events

723 Words


[2] Catalyst Sports. Josh Swartz. Harvard Business School, Cambridge. 17 Nov. 2016. Performance.





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Student comments on Video Games Are the New Football

  1. Thanks Jordan. I agree with you, eSports will be even more prominent in the future and their athletes will be future stars, sitting alongside the best physical sport athletes. However, with fame, comes fortune, and the inevitable risk of foul play. How can eSports monitor the potential use of eSteroids – or game-hacking to cheat? We’ve seen this occur already in ‘Rainbow Six Siege’. Traditional sports have established drug testing bodies – how will eSports respond?

  2. Jordan,

    This is quite interesting. Do you find that it eSports will ever be able to emulate the broader experience around sports fandom? I find that there are a few aspects of traditional sports that will be tough to replace with eSports – the element of athletes pushing the boundaries of human capability and the broader ecosystem around the game. One of the most captivating aspects of traditional sports is tuning in to watch human body exceed its expected potential. Athletes stretching what is expected to do incredible things. Is this same aspect repeatable with a video game? Do we lose the concept of underdogs pulling of a Cinderella upset? Does the whole physical component of the game dissapear, where differentiation between participants is sheer speed of hand and strategy? Secondly, an NFL game goes so deeply beyond the game or players itself. The ecosystem stretches to traditions, rivalries, tailgating, jersey sales, etc. In my family, the Green Bay Packers are a way of life, not a hobby. Every Sunday is filled with feasts, beer, jerseys and cheeseheads. Will eSports ever be able to cross into this emotional realm? I guess we will see!

  3. Interesting read Jordan. Your comments around the actual “ownership” dilemma in eSports were particularly intriguing and it is, in my opinion, the biggest risk to the concept. I’d be hard pressed to argue that Activision doesn’t want to monetize these tournaments more directly going forward. Sure, there are exposure benefits to these tournaments, but if I were a public shareholder of this company, I’d push to see licensing fees from these events (or something to that effect). Seems like low-hanging, high-margin fruit.
    Going forward, I’m interested in seeing how eSports translate into high school sports. I can imagine that one day there might be kids walking around with varsity jackets that have eSports patches on them. Which makes sense, I think. Considering that eSports require skills, which can be improved and trained over time, and some people are inherently gifted at these games, much like physical sports.

  4. I agree the eSports are an exciting growth opportunity for agents, brands, and media alike. There is a very targeted audience that seems to offer a great potential for brands to connect and monetize with these millennials around the world. The problem is how do you build a league? How do teams create the illusive brand love we have been learning about in marketing? I think before eSports can truly be monetized it needs to be centralized. Can we get Valve, Blizzard, EA to work together in a licensing deal to create one league? Or does each studio create and manage its own league to further monetize their games? I think before agency like Catalyst can be the Sherpa for brans, there needs to be a clear mountain to climb to get the economies of scale.

  5. Hi Jordan, thanks for this post. eSports is a rapidly growing industry and one that I know very little about so I was excited to read your post and to learn more. I would be interested to learn your thoughts on if you think a permanent player salary might ever be implemented within the industry – at the moment players are paid via sponsorship and tournament wins only but as the viewership grows and demand for eSports increases it would make sense that the players might demand a salary. If so, who would decide what salary bands to set and the contracts around it? I wonder if there is an opportunity for an overarching governing body to be created, similar to the NFL, etc. to control the sport. What if the players unionise? Could they then require payment from all sources, the game creators, tournament hosters, advertisers, etc.? This is a really interesting field that you have written about, one where there is likely to be a great deal of change over the next few years and I am glad that you turned my attention towards it as it will be fun to watch the industry change and grow.

  6. Wow, I had no idea that viewership of eSports events was this high, and growing that quickly. This increasing size makes your worry about ownership, which Hugo also addressed, even more pressing. I hope for everyone’s sake that long-term deals are able to be reached. I believe there are a couple reasons to think that this is likely to happen. The first is that there is likely a Zone of Possible Agreement between the game developers and players. Both would benefit from a deal being reached, and so without a negotiating failure, you would hope this would happen. Additionally, as the NFL has demonstrated, when incentives are aligned between parties, a league can work to grow the pie for everyone, and this is likely more lucrative than when each party acts in their own best interest.

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