An Overview Of Console Esports - Microsoft

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. 


In Part 1 we looked at mobile, a framework for analysis and Nintendo's esports strategy and Part 2 focused on Sony's esports efforts. Today will conclude with Microsoft.

 

MICROSOFT

Microsoft’s esports strategy appears to be growing the competitive communities of these first-party games: HaloGears of War, and Forza. Halo esports has been around for a long time and has kick-started the careers of some famous players today. In fact, the most popular streamer today, Ninja, was a former pro Halo player. However, he had some choice words to say about why he started taking a break from competitive Halo last year.

Gears of War appears to be doing better in terms of esports teams/player relations. Last week, they announced sharing 50% of revenues from skin sales to esports teams. Here’s how Complexity team owner Jason Lake responded:

On the input device front, the Xbox Elite controller is a hit. The controller is customizable with various features to help competitive gamers play better such as rear triggers, bumpers with adjustable sensitivity, adjustable sticks and better grips for long play sessions. Also, more button placements allows players to do more actions more comfortably, increasing performance.

On the platform services front, Xbox Arena allows players to create their own tournaments. It remains to be seen if tournament organizers will adopt to use Xbox Arena to create tournaments are continue to use established third-party tournament platforms such as Battlefy and FACEIT. Battlefy powers Nintendo’s Splatoon 2 tournaments as mentioned earlier. FACEIT became “one of the first Tournament Organizer partners for the Xbox Live Tournaments Platform” in 2016.

 

WHICH STRATEGY IS WORKING?

It’s too soon to tell if Sony or Nintendo’s strategies are working, but they are on good footing. The PS4 is the established market leader with 73.6 million units sold as of December 31, 2017. While Microsoft has not announced sales figures for Xbox One, analysts estimate that figure to be around 30 million. Size matters and Sony is well positioned to leverage their large install base once they have a first-party esports game.

In the meantime, positioning itself around the Call of Duty franchise in a time when Activision-Blizzard is making significant investment across all of their esports games, especially on the tournament administration and broadcast front, is a smart move as gamers won’t likely hear the words that plague other console esports efforts — “lack of investment” or “poor production.”

Nintendo is well-positioned to leverage Smash’s vibrant competitive community while continuing to build up the Splatoon 2 competitive community. The main complaint about Nintendo is that they haven’t done enough to support their esports efforts —now we have an opportunity to see what they will do in 2018.

Microsoft is on shakier ground. They clearly recognize what esports can do for its ecosystem and its games, which is why they have made significant investment in full-fledged esports leagues. However, the main hurdle seems to be spotty execution and not going all in when they need to. This is to be expected as many companies underestimate the amount of money it takes to run in-house tournaments with accompany broadcasts or outsourced ones.

An Overview Of Console Esports - Sony

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. 


In Part 1 we looked at mobile, a framework for analysis and Nintendo's esports strategy. Today we continue with Sony.

 

SONY

Sony doesn’t have a first-party game like Super Smash Bros or Splatoon 2 that they can build a competitive ecosystem around just yet. In the meantime, Sony’s esports strategy appears to be positioning itself around the most popular console franchise, Call of Duty, while making improvements in input devices and enabling tournament participation directly from the PlayStation 4 (PS4).

The Call of Duty franchise is widely acknowledged as one of the most recognizable esports to mainstream audiences. Starting in 2015, PS4 owners started getting timed exclusivity for Call of Duty DLCs. The Call of Duty World League, which started in 2016, is played on PS4. Sony announced in March that they will reorganize in an effort to focus more on first-party games. If this effort yields first-party games with esports potential, they may shift their esports strategy.

On the input device front, Sony has partnered with Razer and Nacon to create two pro controllers: the Razer Raiju and the Nacon Revolution. There are two reasons for creating these: 

First, console competitive gamers have needs that are more unique than the average console gamer. For example, Call of of Dutyplayers put their hand in a shape of claw in order to hit circle (crouch), move the right stick to aim and R2 to shoot all at the same time. However, pro controllers have input buttons on the back, so this allows them to map circle (crouch) to the back, so they can hold the controller normally without straining their hand.

Second, there is pressure from Microsoft and unlicensed third-party manufacturers such as Cinch and SCUF, who are modding PlayStation controllers. This helped push PlayStation to license pro controllers to stay competitive and to show an understanding of the competitive community’s needs.

On the platform services front, PS4 players can play in ESL tournaments directly from their PS4.

 

Tomorrow will continue with Microsoft's esports efforts.

YouTube vs. Twitch

YouTube vs. Twitch

The platform wars have begun again (Graphic: The Next Level Media)

The platform wars have begun again (Graphic: The Next Level Media)

By Feature Writer Jordan Fragen

YouTube is in a bit of a crisis.

Despite being the largest platform for gaming video content online, Google’s video platform has seen major changes and controversy over the past six months. Major creators have been deeply affected by advertisers choosing to spend their budgets elsewhere and many have lost 50% or more of their monthly revenue in the wake of what many have dubbed the “Adpocalypse.”

Amidst demonetization and dwindling ad revenues, YouTubers have branched out to diversify their income. Many have moved to Amazon’s Twitch while others have utilized crowd-funding services such as Patreon. YouTube is losing potential revenue despite being the central hub for gaming video content online.

This is a major branding problem for Google.

YouTube’s competitive niche has been narrowing and they are no longer the go-to solution for rising stars to build their name or advertisers to reach the coveted and elusive 18-34 demographic that advertisers seek.

But YouTube is fighting back.

In the last week, Google has announced 3 major changes in order to win creators back to their platform and all of which will deeply impact the eSports ecosystem.

 

/01 YouTube Gaming Announces Sponsorships as a Direct Competitor to Twitch’s Subscriptions

Youtube Sponsorship Details (Graphic: Twitter)

Youtube Sponsorship Details (Graphic: Twitter)

In an August study by Streamlabs, YouTube was outpacing Twitch’s user growth but lagging behind in monetization. This is a major problem for gamers who make a living off of their streams and gameplay. It has been far more efficient to build a presence on Twitch than YouTube primarily because of Twitch’s Subscription service. For $4.99 a month, fans can support their favorite creators and gain access to subscriber only perks such as private discord servers and unique emotes.

Since imitation is the sincerest form of flattery, all of these features appear to have been carbon copied by YouTube.

According to an official blog post, eligible YouTube Gaming creators can now receive sponsorships from their fans. Notably, this feature is specifically being rolled out for gaming channels first but may soon be a part of the main YouTube ecosystem.

The primary reason creators use YouTube is for Video On-Demand while Twitch specializes in Live Streaming. However, both of these platforms require a major time investment of which most professionals can’t spare. Many have resorted to uploading long segments from streams to their YouTube channels for this very reason.

The incentives to repurpose content from Twitch on YouTube goes deeper. While most people use Subscribers and Views as a metric to judge the success and profile of a YouTuber, the primary metric YouTube’s algorithm uses when selecting recommended content is neither of those things.

Behind the scenes, YouTube has looked to maximize watch time since 2012.

Gameplay videos are not only easy to watch in long sessions, but they are relatively easy to produce. Recycling content from Twitch only serves to maximize the utility of the content.  By encouraging streaming on YouTube and giving pros another way to monetize through subscriptions, YouTube is looking to move this content to a single location. This is clearly YouTube attempting migrate creators from the dominant platform back to their own.

 

/02 YouTube Analytics Now Provides creators with Subscriber Sources

Connecting Creators with their Audience (Graphic: Google Developers Blog)

Connecting Creators with their Audience (Graphic: Google Developers Blog)

Until now YouTubers have been unable to see data on where new subscribers originated. This is important to understand because it can help creators maximize the growth of their audience base if they know where to target or create content for aka what exactly advertisers do on the opposite side.

In particular, two of the subscriber origin categories will be particularly helpful for YouTubers:

/01 Subscriptions Feed will help creators understand how their content affects current subscribers, both positively and negatively. More specifically, it will tell content creators what videos are annoying their subs enough to cause them to unsubscribe.

/02 Subscriber Drops from closed or “inactive” accounts will now be available to creators. This is hugely important as many viewers have complained that they have been unsubscribed from channels without their knowledge and YouTube has been notorious for dismissing these problems. Now that this information is explicitly available, this will help creators advocate for themselves.

 

/03 YouTube's New Studio App

Powerful Tools Come to Mobile (Graphic: YouTube Creators Blog)

Powerful Tools Come to Mobile (Graphic: YouTube Creators Blog)

Most YouTubers have been unable to effectively manage their channels on mobile. YouTube is looking to change that with the addition of several features to their new Studio app. The two most significant of these features are the ability to schedule posts and customize thumbnails within the app.

Particularly this gives pros more flexibility to also become content creators. Often the most attractive players to eSports organizations are these pros who also build a personal audience as they often have the highest ROI. Until now, many pros simply couldn’t manage their channels regularly due to travel. While not solving this problem entirely, this does give pros more options to build their personal brand.

[Edit: 500M around the world own a phone and don’t have a toothbrush. What do you want to bet on?]

 

CONCLUSION

YouTube remains a key platform to eSports as it is often the place where people first learn about the competitive and professional ecosystem. However once someone new became a fan, they often migrated to Twitch to watch live. YouTube is now seeking to cater to both the live and VOD audience and only time will tell if they can chip away at Twitch’s massive lead on the streaming side.

Personally, I’m skeptical.

By focusing on VOD, YouTube had a unique niche. Seemingly, they have dropped this focus in favor of emulating other’s success. I worry that this strategy might lead to YouTube to becoming the jack of all trades for video, while being the master of none.

Additionally, bringing livestreams and episodic clips to one platform may not be in a creator’s best interest. By releasing shorter, more regularly occurring content, YouTube has conditioned its users to tune into everyday at a specific pace. Creators risk alienating subscribers who already saw this content by re-uploading the livestream in the same location as the VOD. This will affect the algorithm as more subscribers will skip episodes, YouTube will register this as the subscriber becoming less interested in that content and it will lead to fewer recommendations for that creator.  

eSports continues to be one of the most promising spaces for advertisers to reach the critical 18-34 audience. In addition to acquiring exclusive rights to air some tournaments, YouTube is hoping to catering to the needs of pros.

Since many of the stars that built Youtube’s popularly are leaving and taking their desirable audiences elsewhere, YouTube is no longer as culturally relevant as it once was. It may have a larger audience, but tastemakers and trendsetters are no longer prioritizing YouTube. As eSports grows, so too will the star power of its elite players - in addition to the platforms they choose to use. Many like Facebook and Twitter, along with a slew of startups, have already begun reaching out.

Without making more overtures to eSports pros, YouTube risks losing its place as the preeminent platform for internet celebrities, their content, and their cultural relevance.

eSports Media Evolution's Next Move: Twitch, NBC, ESPN, Yahoo

ESPORTS MEDIA EVOLUTION'S NEXT MOVE: TWITCH, NBC, ESPN, YAHOO

2016 eSports Media Evolution. What's Next? (Photo: The Next Level)

2016 eSports Media Evolution. What's Next? (Photo: The Next Level)

TNL Take: It's #TBT - that's Throwback Thursday's for those stuck to their Bloomberg monitors rather than Instagram Stories - and the kids use it to post something today based on something old.

So here's a #TBT on eSports media evolution and where it's potentially heading next.

Last August in The Next Level 059, I spoke about the future fragmentation of eSports viewing; whereas a few years ago you only went to Twitch, 2016 brought a slew of distribution partners.

TNL Infographic 007: eSports Media Evolution (Infographic: The Next Level)

TNL Infographic 007: eSports Media Evolution (Infographic: The Next Level)

On the last deal between Yahoo eSports and ESL, note why I felt it was important from what seems like a millennium ago and where this plays into our story later today:

Yahoo eSports and ESL (Photo: The Next Level 059)

Yahoo eSports and ESL (Photo: The Next Level 059)

Now let's come back to 2017.  As mentioned earlier this year in The Next Level 128:

TNL Take: Go ahead and file this away till December but mark my words:
In 2017, eSports TV, broadcast rights and exclusivities will see big growth.

 

Here's what happened in just the first 2 months of 2017:

TNL Infographic 031: eSports Media Evolution 2017 (Infographic: The Next Level)

TNL Infographic 031: eSports Media Evolution 2017 (Infographic: The Next Level)

There have been even more deals - like YouTube essentially cornering Counter-Strike content - but let's highlight the last 3 to reflect the new reality:

 

JUNE 20: TWITCH, BLIZZARD SIGN MASSIVE 2-YEAR 3RD PARTY EXCLUSIVE DEAL

Exclusive Overwatch Loot Item for Twitch Prime Members (Photo: Twitch)

Exclusive Overwatch Loot Item for Twitch Prime Members (Photo: Twitch)

Last week, Twitch and Blizzard announced a huge 2 year exclusive 3rd party streaming agreement and partnership.

The deal is made up of two parts: content and in-game integration.

On the content side, Twitch gets access to Blizzard titles including Hearthstone, World of Warcraft, StarCraft II, Overwatch and Heroes of the Storm - pay attention to this one for a moment.

Twitch also gets access to 20+ events including:

  • StarCraft II World Championship Series
  • Hearthstone Championship Tour
  • Hearthstone Global Games
  • World of Warcraft Arena Championship
  • Overwatch APEX League
  • Overwatch Premier Series
  • Heroes of the Storm Global Championship

I've highlighted the last 3 because of the following: Ad Sales, the necessary evil, tug-of-war that exists both internally at publishers and externally at agencies and brands. Let me paint a simple picture:

 

[Media Buyer/Brand]: How can we work with Heroes of the Dorm? Please talk to Facebook, they have the exclusive.

[Media Buyer/Brand]: OK, how about the Heroes of the Storm Championship? Please talk to Twitch, they have the exclusive.

[Media Buyer/Brand]: OK, what about the Overwatch League? Please talk to Major League Gaming and whoever else they will partner with.

[Media Buyer/Brand]: But, wait, what about the Overwatch Apex League? Please go back and talk to Twitch.

Sound complicated? Just try explaining eSports.

 

The second part of the deal, just like Twitch Prime, is genius. Twitch Prime members will receive access to a slew of in game items across Blizzard titles and an exclusive Overwatch Loot box. Over the next year, Twitch Prime members will receive almost a dozen more of these.

"Loot Boxes" are essentially the lottery system inside gaming which primes the monetization pump: Want a really cool shirt for your character, skin for your gun or a Madden/FIFA player that's ultra rare? Buy a box and hope you win. Good luck!

We will continue to see exclusive, multi-platform deals across the same title. Ultimately, this benefits the publisher the most - like always - and more content for viewers to engage with.

But while we are still so early stages in the monetization of eSports, does this make it easier for media buyers and brands, the ones ultimately funding the current "infrastructure"?

This is just move preview #1.

 

JUNE 21: NBC ENTERS ESPORTS WITH ROCKET LEAGUE ACROSS TV, DIGITAL AND OTT

NBC To Broadcast Rocket League Across Multiple Platforms (Photo: Psyonix)

NBC To Broadcast Rocket League Across Multiple Platforms (Photo: Psyonix)

NBC has finally entered the eSports space by partnering with Psyonix's Rocket League. NBC Sports will work with online tournament platform FACEIT for a 2v2 event with a $100,000 prize pool.

The tournament will be shown across both TV, Digital and OTT with the current list including:

  • NBC Sports Regional Networks
  • NBC Sports Network
  • Telemundo Deportes
  • NBCUniversal International Networks

In terms of TV dates, NBC Sports PR told me

"The Regional Finals will be played at NBC Sports Regional Networks studios on the weekends of August 5-6 and August 12-13, and will be live-streamed on the NBC Sports app and Telemundo En Vivo app, as well as other social media platforms. Participating NBC Sports Regional Networks will televise the final hour of coverage from each of the Regional Finals.
The Grand Finals will feature 16 total teams competing on August 26-27 for the inaugural title and the $100,000 prize pool, which will be televised live in the U.S. on NBCSN. The Grand Finals will also be broadcast on Syfy in the UK, Germany, Australia and multiple countries across Latin America, in addition to all previously listed streaming outlets.

Wow that's a lot.

Now for Movie Preview #2.

Twitch has the exclusive on the Rocket League Championship series of which Season 3 performed very will with 150,000 average concurrent viewers and 1.5M+ hours viewed.  Further, Twitch did a phenomenal job on selling brand sponsors which included Mobil1, Old Spice and Brisk/7-11.

Oh, there's also the 7-11/Brisk Rocket League Summer Series going on right now.

When does Rocket League Season 4 start?

August.

 

JUNE 28: X-GAMES TO FEATURE ROCKET LEAGUE ON ESPN3

Even More Rocket League (Photo: Psyonix)

Even More Rocket League (Photo: Psyonix)

The business development team/person must have been on overdrive after Rocket League's Season 3 Championship as they've signed another deal, this time with the game featured at ESPN's X-Games.

Tournament platform FACEIT will again be involved in the $75,000 prize pool event which will be streaming on ESPN3 from July 14-16. eSports isn't new to X-Games as they've previously hosted titles including Call of Duty and Counter-Strike.

Movie Preview #3

 

/01 IS THE SAME CONTENT SUSTAINABLE?

Blizzard titles will probably be the first on the Mars OTT network. Rocket League may make there 4th distribution deal before the end of the year.

Is there enough audience to consume this content clutter?

Let's not even start on the issue of the bloodbath going on across media today, with just eSports related cuts: Yahoo eSports shuts down, GAMURS closing Wiki site due to poor ad revenue and ESL cutting staff yesterday.

 

/02 EASIER FOR AD SALES?

Let's ask a question:

Do the financial teams at Blizzard or Pysonix look at the media rights checks in front of them and say "But won't this make it potentially difficult for ad sales and brands to understand?"

I'll bet a million loot boxes that check was cashed before the question was even answered.

Why do I keep saying movie previews? Because, I've seen this movie before - many times.

In Game Advertising (Photo: Jamie Burke)

In Game Advertising (Photo: Jamie Burke)

My first article ever written was in October 2015 - "In Game Advertising: Failure or Future?"

 

I really hope it's the latter.