The billion-dollar business of e-sports

If you’re puzzled by the notion of a packed arena filled with people cheering for athletes who mash buttons, not wide receivers, you might want to pull up a chair. E-sports leagues have sprouted around the world with increasing frequency and sophistication in the past decade; the Overwatch League is just the latest outgrowth of an industry that’s on track to crack $1 billion in revenue within the next year. The top players are in their teens and early 20s, and have names you might not recognize. But the executives betting big on some of the most successful e-sports franchises in the country are plenty familiar, like Philadelphia 76ers co-owners and Wharton School alumni Josh Harris and David Blitzer, and New England Patriots owner Robert Kraft.

cartoon of dueling e-sport players facing each other with crowd cheering in background

Tucker Roberts, the president of Comcast NBCUniversal’s e-sports team, was in Brooklyn for the Grand Finals to cheer for his squad, the Philadelphia Fusion. In keeping with the city’s tradition of sports underdogs, the Fusion managed to claw their way to the championships, where they were set to face the heavily favored London Spitfire. More than 10 million people tuned in on streaming platforms like Twitch and legacy networks like ESPN, with a higher share of 18-to-34-year-olds than the Super Bowl or the NBA Finals. Some viewers were die-hard fans. Others just wanted to catch a glimpse of a growing global phenomenon.

Even from the video game industry’s early days, it was clear that video games had the potential to bring large numbers of people together. Stanford University hosted the first e-sports contest in 1972, with competitors playing SpaceWar for a subscription to Rolling Stone. In 1980, Atari held a national Space Invaders tournament in New York that attracted 10,000 applicants. Ten years later, Nintendo took the tournament concept on the road, hosting the Nintendo World Championships in 29 cities. 

Other seismic developments followed. In 2009, the developer Riot Games released League of Legends, a multiplayer battle-arena computer game now played by 27 million people every day. A League of Legends championship was held at the Staples Center in Los Angeles in 2013, marking the first time that an e-sports event was held in such an attention-grabbing setting—the house the Los Angeles Lakers built.

“You started to hear rumblings about e-sports,” says Michelle Young, director of operations for the Wharton Sports Business Initiative. She recalled learning in 2015 that former Lakers stars Rick Fox and Shaquille O’Neal had both purchased their own e-sports organizations—a signal to the world of professional sports that video gaming might be worth their attention.

“And then in the next nine to 12 months,” Young adds, “it just exploded.”

Read more at Wharton Magazine.