For work, Lucas "Mendo" Hkansson was playing video games, but he wasn't having much fun. He'd made a lot of sacrifices to become a professional gamer, including dropping out of high school to train Overwatch for up to 18 hours each day. In 2017, he was ecstatic to be selected by the Houston Outlaws to play Overwatch professionally. His hard work seemed to have paid off, and he appeared to have landed his ideal job. Then it hit me: this isn't going to happen.
Esports professionals are referred to as athletes for a reason. With the Outlaws, Hkansson had a strict schedule. He awoke, warmed up, and spent the remainder of the day in a cramped, windowless chamber playing Overwatch. He described his time there as "horribly unpleasant." He claims he had to put the emphasis on the league, not himself since his contract restricted when he could broadcast on Twitch. And there was always the lurking worry that if Overwatch's publisher, Activision Blizzard, made too many changes to the game, he'd have to relearn his best characters—or lose his job.
Hkansson left esports after a season in the Overwatch League to focus on content creation full-time. Another esports team, Team Liquid, soon recruited him not just to play, but also to help him build his fame as a gaming influencer. On Twitch, where he has 621,000 followers, he now plays another shooter, Riot Games' Valorant. Hkansson claims that he is now happier and more stable and that despite the Overwatch League's increasing emphasis on player well-being, he believes that more players will follow in his footsteps. (A request for comment from the league was not returned.) “If they haven't already, I believe that most individuals who can will. Several individuals have already done so.”
A lot of prominent gamers are leaving esports to seek jobs as Twitch or YouTube celebrities, which they believe are more sustainable. Over the last two years, Damon Lau, the head of esports at United Talent Agency, has noticed an increase in the number of individuals making the transition. The math is simple: they believe that by playing games for their fans on YouTube or Twitch, they can earn more money in the long run and with less arduous schedules. Athletes are asking themselves, "Why can't I manage my own career and destiny and have the chance to create a company around myself?" according to Lau.
A few dozen burned-out esports professionals aren't the only ones affected. Esports organizations, game publishers, and event sponsors are gradually shifting focus and money away from competitive events and toward video game broadcasters. The shifts reflect, at least in part, genuine worries among esports pros about the industry's health, with many saying they're spending more on gaming content producers or influencers as a means to diversify their company.
According to game analytics company NewZoo, the esports sector will be worth $1 billion by 2020. However, large statistics connected with esports have traditionally been seen with suspicion. According to a 2018 study by Kotaku, most companies' values are overstated. While organized competitions have attracted tens of thousands of spectators to big stadiums and may reach large online audiences through YouTube and Twitter, the money generated from live events is usually insufficient to cover their high costs. (This was true before Covid-19 shut down most big in-person meetings, but the epidemic has expedited these developments, as it does in other sectors.) The expenses of building esports stadiums or renting out venues are astronomical. The wages of players may be enormous, often exceeding six figures. In addition, major league buy-ins for games like League of Legends or Call of Duty may cost millions or even tens of millions of dollars. Most esports organizations, according to two sources, are in the red.
Publishers are also having a difficult time recouping their esports investment. Chris Greeley, Riot Games' head of esports, said that the company's esports efforts are "approaching breakeven." Epic Games underestimated its esports prospects by $154 million in 2019—the year it conducted its $30 million cash-prize Fortnite World Cup—according to an earnings document disclosed during its trial against Apple last week.
Esports, according to Greeley, isn't a bloated bubble about to pop. “I believe you'll see a lot of people pivoting or changing direction or adjusting strategy to continue to go forward,” he adds.
Typically linked with competitions, esports companies are increasingly negotiating more content creation agreements. (Three of the top teams refused to respond through email.) Rather than competing as part of an Apex Legends or Counter-Strike: Global Offensive team, these gaming influencers broadcast on Twitch or YouTube, sometimes simply talking with followers and other times playing high-level games. Teams assist these gamers in managing their companies, facilitating sponsorship deals, and even paying wages as part of their partnership agreements.
Having a roster of YouTube or Twitch superstars on hand may assist teams in attracting additional sponsorship agreements, which still account for a major portion of their revenue. Individual athletes, whole teams, and even entire tournaments have smaller and less engaged audiences than influencers do. A Call of Duty League event may get 70,000 viewers, but on any given day, a top streamer like Timothy “TimTheTatMan” Betar comes close to that. These kinds of measurements make it simple for companies to decide where to invest their funds.