An Overview Of Console Esports - Nintendo

Industry Guest Post: Jonathan Pan is an Esports Instructor at the University of California, Irvine. He has over 13 years of experience in management, strategy, or business development roles across companies small and large. After serving as a Product Manager at Riot Games, he co-founded and served as CEO of Ember, an esports team. He has also delivered one of the most viewed TEDx talks on esports. 


It seems like records are being broken every other day in esports and streaming. The International 2017 had a record $24.8 million dollars in prize pool. The ELEAGUE Major broke the peak concurrent users record on Twitch two years in a row, with a peak of 1.13 million users watching the final match. Most recently, the Ninja — Drake stream has brought all of these topics into the attention of mainstream media.

All of this record-breaking is happening with PC games and console makers — Nintendo, Sony, and Microsoft — are looking to get a piece of the action too, each pursing a distinct strategy. Before we dive into each company’s strategy, we should take a look at what mobile esports has tried to do and is trying to do. It is arguable that mobile esports is the first non-PC platform to explore what esports means for their platform.

When I say mobile esports, I’m focusing on the big three — VaingloryClash Royale, and most recently Arena of Valor (the Western adaptation of Honor of Kings). Collectively, they’ve tried everything: pay esports teams to get involved, created leagues, hosted tournaments, created esports broadcasts, and more. Yet none of these efforts have gained as much traction as PC esports has.

And that’s okay, because the industry has yet to define what a successful “mobile esports” looks like. While I don’t have a definition, I offer the opinion that mobile esports is more suited as a participatory esport rather than a spectator esport. And as a participatory esport, mobile esports may be doing quite well. But it’ll probably never eclipse PC esports as a spectator esport.

Therefore, the biggest lesson learned that console esports can learn from mobile esports is to define it’s own success criteria.

 

STRATEGIC FRAMEWORK

Looking from the outside in, Nintendo, Sony, and Microsoft’s esports strategies seem to focus on one to three of these areas: first-party/exclusive games, input devices, and platform services.

  1. Creating an esport requires esports potential, financial investment, developer buy-in, and most importantly, community buy-in. In total, it’s a big commitment and only makes sense for first-party and exclusive third-party games where the publisher has influence or control over these inputs.
  2. Another lesson learned from mobile esports is that input devices matter. High-level and professional players of mobile games use keyboard and mouse when available because it offers more precision and complexity than the touch screen. We’ve seen this in the past with Vainglory and more recently with mobile PUBG. That’s also why arcade sticks are used by most professional fighting game players.
  3. Platform services make participating and watching tournaments easier. Tournament participation has demonstrated increased retention and monetization for some companies. For example, players in World of Tanks who participate in esports tournaments have 3x longer lifespan and 3.5x higher spending. Meanwhile, gamers watching esports on consoles can help console makers prove the case that watching esports can lead to increased engagement.

 

NINTENDO

Nintendo has taken an about face on esports. After years of actively suppressing the Super Smash Bros competitive community, most notably at Evo 2013, Nintendo recently announced hosting the first official Super Smash Bros tournament and the first Splatoon 2 World Championship tournament at E3 2018.

Nintendo’s esports strategy appears to be focused on growing their two first-party games, Smash and Splatoon 2, on the Switch. Smash already had a vibrant competitive community before Nintendo’s official involvement. If Smash represents Nintendo’s past, Splatoon 2 represents Nintendo’s future. The team-based, family-friendly, third-person shooter has a burgeoning competitive community with professional and amateur teams. The Switch trailer in October 2016 ends with two teams playing Splatoon 2 in front of a huge live audience.

The Switch is interesting as it seems to straddle the unique space between console and portable. If you recall the participatory esports distinction I made earlier, the Switch definitely enables participation as you can bring it to tournaments — enabling larger brackets. There’s much more friction in bringing a PS4 or Xbox One and their accessories around. Outside of being a unique input device, the Switch has been a major commercial success. Nintendo has sold 14.86 million units of the Switch in 2017 with 52.57 million units of software sold alongside the system. It broke the U.S. record for the fastest selling console ever, with 4.8 million units sold in just 10 months.

 

Tomorrow will continue with Sony's esports strategy.

Measuring The Quality Of Esports Viewership

Industry Guest Post: Kevin is the Chief Product Officer at Waypoint Media and in charge of all things data. Prior to Waypoint he was a Special Projects Engineer at General Atomics Aeronautical Systems and most recently worked on the AppNexus data science team building revenue optimization algorithms. He can be reached at kevin@waypointmedia.com.


Esports audiences are simple: they’re young, growing, and most importantly — engaged. Given the nature of esports this has generally been taken at face value, however as the industry matures, sophisticated marketers will be looking to validate these assumptions.

Third party publications report viewership with two specific metrics: average concurrent viewers and viewer hours. Eagle eyed observers however will recognize that these strictly measure quantity — the volume of content consumed.

To measure engagement the real question is: how long are viewers actually staying?

Case Study — Overwatch League vs LCS

The launch of Overwatch League (OWL) has surpassed all expectations. The inaugural season of the OWL has been keeping pace and at times even outperforming Riot’s League Championship Series (LCS).

 

JUST THE BASICS

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From March 8th, 2018 to March 22nd, 2018 the classic metrics show that 20% more content was consumed on the OWL channel compared to the LCS, by broadcasting an extra 10 hours, and having 10% higher average concurrent viewers.

OWL looks marginally better here but there’s almost no information about actual audience behavior with the basic viewership metrics.

 

ENGAGEMENT DISTRIBUTION

To answer the question of audience behavior and to look deeper into viewing habits, Waypoint tracks near minute to minute channel viewership on over 82 million unique registered Twitch viewers.

With this we analyze what each viewer is watching and for how long. Aggregated across all broadcast we generate the engagement distribution.

Viewers are watching 48% longer on OWL compared to the LCS
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Applying this analysis to the OWL and LCS we see exactly how the audience is behaving during each league’s broadcasts — the results are staggering. OWL blows LCS out of the water and it’s not even close.

At the 50th percentile, viewers are watching 48% longer on the OWL compared to the LCS. Possibly even more impressive, 25% of OWL viewers are watching for at least 2.3 hours per broadcast.

 

CONCLUSION

The basic viewership metrics average concurrent viewers and viewer hoursare woefully insufficient in describing a live esports broadcast. A broadcast’sengagement distribution describes how that channel is able to retain its viewership over time.

Comparing OWL and LCS’s basic viewership data, it’s hard to tell how each broadcast is performing. The engagement distribution clearly shows that Overwatch League is outperforming the LCS in viewer retention.

OWL is shiny and new, so it’s hard to say whether or not they’ll be able to keep it up, but what they’ve done up to this point is incredibly impressive.

Amazon's GameOn Service Could Be Game Changing

TNL Take: Developers want to concentrate on one thing: making good games. However a slew of services need to be incorporated to make really great games. This could be anything from multiplayer functionality, leaderboards and tournaments to rewarding the top players - anything that drives game engagement and retention.

Amazon announced on Monday, Amazon GameOn, a cross-platform, competitive gaming service for developers. With GameOn, developers can easily integrate competitions natively into their games on mobile, PC, and console through a set of flexible APIs which is built on AWS cloud infrastructure. 

Here's what stands out about GameOn:

01/SERVICES

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GameOn currently supports leaderboards, leagues, and multi-round competitions - but most importantly gives developers - or anyone really -  the flexibility to create custom events. These tournaments can also be geo-targeted to allow for specific groups of players to take part. This could anywhere from countries and states to just your local McDonald's, which opens up a multitude of brand opportunities.

Developers can also enable players and streamers to create their own user-generated competitions and invite participants. Just imagine Twitch phenom Ninja running a Fortnite tournament for his massive viewing audience while doling out prizes to the winners - more on that shortly.

Further, all of these components are integral to creating a great esports experience outside the core component of the game itself.

Currently, Amazon GameOn is being used by 13 developers including nWay, Game Insight, Millennial Esports’ Eden Games and others.

 

02/PRIZING

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his is where it gets really interesting. In game rewards as well as watch-to-earn rewards have been around for a while and implemented in almost every mobile game. However implementing real-world rewards is a challenge. During my time at Kiip, one of the companies that pioneered rewards for games, we needed to collect email addresses in order to achieve fulfillment.

With Amazon GameOn, you simply sign into your Amazon account - and at this point who doesn't have one in the US - and the item is automatically shipped to you with no additional work for the developer or the customer. 

Another scenario: you're playing a geo-located tournament in Madden Mobile and the Top 10 winners all receive the team's jersey for placing. The cost of the jerseys could either be looked as a marketing expense or even better - have them brought to you by a brand.

 

03/COST

What's this all cost? Developers can use GameOn APIs for free until May 1, 2018. After that date, the first 35,000 plays per month are free for a limited time, then developers will pay $0.003 per play. 

Running simple math, if your game is doing 1M plays per day, that's almost $100,000 per month which may become cost prohibitive unless the ROI is there for developers that don't have any of the services integrated.

Esports and Casinos: MGM's Bet

TNL Take: As casino’s continue to see a dwindling return on gambling revenues and how to get the millennials back in the door, they’re looking at esports to help grow their business.

Today we’ll take a deeper dive into MGM and where the chips are being placed.

 

01/ DEDICATED GAMING AREA

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Opened in late 2016, MGM spent $2M+ converting the former Rainforest Cafe into LEVEL UP, a dedicated gaming and esports entertainment lounge.

The 12,000-square-foot gaming area opened with standard fare like pool and foosball but also includes a laser golf course using AR technology and a VR experience. 

In 2017, MGM made several moves to incorporate gaming and esports further into LEVEL UP which we'll get to below.

 

/02 ESPORTS EVENTS

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MGM properties have hosted a slew of esports events including the 2016 League of Legends Spring Finals and MLG Las Vegas, both at the Mandalay Bay Resort and Casino. In early 2017, Dreamhack Masters Las Vegas featuring 16 teams and a $450,000 prize pool was held at the MGM Grand.

Recently, the MGM National Harbor in Maryland held the Rocket League Season 4 Championships.

To date, no one casino has held as many big esports events at their locations as MGM properties have.

 

/03 SKILLED BASED GAMING

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While slots contribute to a casino’s bottom line, they’re not being played by the younger audience. So what do you do? Combine video games and gambling — sorry skill based gaming.

In February of 2017, MGM installed Konami's first skill-based gaming machine, Frogger: Get Hoppin’, within LEVEL UP with a $2 minimum wager. MGM has also held free entry tournaments around Frogger as well.

In may, MGM Resorts International announced a partnership with Gamblit Gaming to bring two more skill based gaming titles to LEVEL UP — Gamblit Poker and Cannonbeard’s Treasure.

While the jury remains out on the monetization potential for skill based gaming, there’s clearly a need for the casino’s to bring back millennials to the table. 

 

/04 ESPORTS VENUE

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Things start to get bigger now. 

Allied Esports and Esports Arena announced to build an esports venue at the Luxor Hotel and Casino; which it makes it the first permanent dedicated structure on The Strip when it opens this year.

The former nightclub is being turned into a 30,000 square foot arena, which will include daily gaming stations and more uniquely, food made by renowned chef Jose Andres.

This partnership shows that MGM is committed to esports in Vegas and that the a permanent space can service both daily clientele as well as larger events at broadcast quality.

 

/05 INVESTMENT

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Late last year, MGM made a seed investment into Foundry IV, led by Tobias Sherman formerly of WME | IMG. Foundry IV is a new game studio that's looking to create the next big esports hit along with new revenue models.

"As a leader in the entertainment industry, we are focused on the continued evolution of esports and its importance as a strategic initiative for our company," said Rick Arpin, SVP of Entertainment for MGM.

MGM's involvement in Foundry IV could be used for anything from esports gambling, viewing parties to regional events. 

 

MGM has made plenty of bets across the esports ecosystem and will be exciting to see what else 2018 has in store.