Volamel
2023-08-07 02:04:36
- Marty “Lazerchicken” Strenczewilk
As of late, it is coming to light that Activision Blizzard is facing its own esports layoffs as reported by The Verge among further changes and even the closing of the Overwatch League.
As a company with a storied but rather dubious past in the competitive gaming sphere, its ambitious city-based franchised league was met with scepticism from industry veterans.
With a $20 million dollar price tag for its inaugural teams in 2018 and a $10 to $15 million leap for expansion teams added in its second season in the year following, Activision Blizzard courted executives from traditional sports and funding from venture capitalists that were animated to enter an economic sector that was reported to be growing and nearing the billions of dollars.
And to make the deal even sweeter, a now infamous Morgan Stanely report suggested that the Overwatch League could bring in anywhere from $20 to $720 million in revenue.
Jumpcut to the franchise based in Chengdu, China dissolving in 2023, one of the Los Angeles-based teams that, at the time was playing out of China, had its active players sacrifice parts of their salary to assist in acquiring a new player, and teams cost cutting so cynically that ancillary professionals are not getting paid, it is clear esports is facing a reckoning.
Financial resources are constricting, investment is leaving amid uncertainty and inflated growth projections, and the passion-driven folks at the bottom are getting squeezed.
- Anonymous
"Ego runs rampant in esports as it does in traditional sports," Strenczewilk said. "This idea probably isn’t revolutionary to you, but we usually think of it in terms of trash talk."
"I’m here to talk about the bigger problem with ego—how it’s driving esports CEO’s to spend far beyond their means and even risk bankruptcy.
"Championship glow is fleeting. It fades away super fast. In its wake, we find financial devastation that was always preventable."
And if the rampant layoffs and discourse of sales weren't enough to give a good sitrep of the realities of esports, then anecdotes from those actively working in the space will illuminate some of the ecosystem's biggest problems.
An anonymous source was rather transparent with their view of the space as it stands today and how the esports winter has affected their livelihood.
"It does feel like esports is going through some kind of economic correction," they said.
"I don't think there's anyone who thinks things are going well, but how grim the future looks depends on what esport you're coming from."
"Some [games] are doing much better than others. Big money came in and changed the game for a lot of [titles], but even if that goes, esports can always return to grassroots."
"We just may need to be less dependent on that income."
They shared that not only the availability of work but their salary had seen a "drastic decrease".
"With spots and pay being more limited, the competitiveness and stress have increased," they said.
Furthermore, the source cited a sense of "strife" and "situations of undercutting to get any income at all" to be present as well.
"Some companies are getting hit so hard that I need to pursue legal action to get paid from one who doesn't have the funds to finish off their invoices.
Another anonymous source echoed many of those same issues and fears.
"The layoffs at the beginning of the year were scary," they said.
"I think everyone could feel that was a looming possibility but the layoffs happened in volumes that no one could have predicted. During those weeks, to see long-term organizations dissolve, and even more layoffs now, it's hard not to be a little depressed and feel a sense of doom about the long-term viability of esports."
"Foundations were set in esports with unrealistic expectations because passionate [people] believed so much in esports succeeding that they set up non-sustainable paths for growth."
"People are still really passionate about seeing the scene succeed but we need to take steps back in order to move forward."
The source initially was reasonably bearish on the current health of esports, but "firmly believes" in the passionate individuals that aim to "rebuild that foundation with better structure."
Between diversifying their own portfolio, attempting to make ends meet throughout the COVID-19 pandemic and surviving in the increased competitiveness it not only brought but maintained as a new standard in their sector, the source shared the mental toll the esports winter had fostered.
"I feel more expendable than ever and constantly worry if I'll just be out of work," they said.
However, they shifted focus on how to fix the situation. While others looked at the spending, this source focused on more tangible, human aspects.
"The biggest hurdle for the ecosystem to grow again I actually feel is ego and attitude in general. Esports is full of passionate people and passionate people tend to be loud and proud with a solid personal view and goals."
"I'm definitely guilty of this, but we're human and don't necessarily share the same values or prioritize the same objectives. And especially when it comes to esports fans, who the scene depends upon to bring financial stability, they exude entitlement and by and large tend to demand that things be a certain way without understanding the limitations and boundaries which esports has to operate in."
"I think people need to accept that esports is a marketing tool and companies set limits to the spend towards that department and if the return isn't there then sometimes that disappears."
Assistant Director for the University of California, Irvine's (UCI) esports program Ronald "Renanthera" Ly gave a measured, yet more optimistic take hailing from the collegiate sector.
"Yeah, let's roll with the health analogy! From where I'm sitting, esports is going through post-puberty," he explained.
"I think it's had its big growth spurt and has got a chance to experience what it may be like when it's all grown up in the future. But it's starting to slow down and the hormones aren't raging the same way they did when esports was an adolescent."
"Maybe like a child star, I think esports is realizing the truth of the matter."
"Yes, it has a ton of potential, but it's not going to be able to race to where it wants to so quickly or easily."
"Esports will be okay. And so long as competitive fire burns in gamers, and it always will, esports will survive. But to see it flourish, the industry now gets a chance to reexamine sustainability and do things better."
"Putting all the money at the top instead of investing on a solid foundation was always doomed to fail one way or another. Has trickle-down economics taught us nothing?"
When asked whether or not UCI's esports program had seen any change in interest or funding, Ly said they "felt the effects of the slowing industry" but were finding their footing in the market correction.
"UCI Esports has been readjusting and moving very smoothly despite large [venture capital] pulls at major professional organizations because we've always had to learn how to do more with less comparatively."
"I think we'll start to see a large movement in the coming few years to see collegiate as the real home for amateur and aspiring play."
"I think we all can see now that moving to emulate big sports franchise models has been a major misstep at this juncture in the esports tapestry, but if we are to adopt one standardized norm from the outside, it would be serious integration with education as a pipeline to the big leagues—think college basketball for example," he said.
"Candidly speaking, I know so many professional players and coaches who have been uprooted from their life trajectories to chase their dreams."
"It's pretty exploitative that our industry capitalizes on these young talented individuals, these teens, to have to make such major sacrificial decisions with no security blankets."
As for identifying the biggest hurdle and finding solutions past it, Ly pointed to the relationship between developers, their marketing budgets, and the health of the games in question.
"This is the proactive question we should all be asking each other," he said.
"For me, esports has always ultimately been a massive marketing initiative that lives off the back of the passion and earnest love for games people have."
"Not maliciously, but esports will exist so long as the titles that exist are alive, engaged, and healthy. I would hope that the developers understand that the biggest issue for longevity for not just their esports, but their games in general, is constantly attracting and retaining a player base."
"So, the actionables are; high schools and collegiate esports is the future."
"I think cyclically, it just makes a lot of sense right now to support esports from the ground up, and now is the perfect time as a lot of pros and coaches will be returning to school."
"I'm sure we'll see their fingerprints on the industry at this level soon."
- Anupam "Pummy" Terkonda
Furthermore, Tari also cited that both the lack of stability and job security in esports is turning him away.
"Both play a role and it really isn’t consistent in terms of money too. Also requiring to be somewhere else away from family does have a toll on how you play too," he added.
Anupam "Pummy" Terkonda broke out on the greater Overwatch League stage during the 2023 Pro-Am alongside team Trick Room. As an exciting prospect awaiting his rookie debut, Terkonda explained the difficulties of grappling with your dreams.
"For me personally, esports has always been a hobby while pursuing education," he said.
"Like many of my peers, turning it into a career was a dream I know I am close to and would seriously consider any offers to turn it into such."
"Seeing the news surrounding esports, I do see the potential of a career dwindling as the uncertainty of the future makes the light at the end of the tunnel feel further than ever."
"What makes esports so interesting to me is its low barrier of entry. Unlike traditional sports, esports does not require a huge financial investment or a parent to help drive you to practice."
"Most professional players casually started playing the game and naturally rose to the highest rank before seriously pursuing the competitive side."
"You truly get to see the best of pure skill rise to the top."
Terkonda would go on to claim that the low barrier to entry in esports at large was both a blessing and a curse. He felt as though many, but not all, Overwatch teams at the highest level had "hardly any more structure" when compared to amateur teams.
"The only difference between the lifestyle of these [Overwatch League] teams' players and the average [Overwatch Contenders] player is that one is getting paid $4.5k per month," Terkonda explained. "Both are practicing upwards of 4 hours per day while competing from their home setups."
"Esports will continually be challenged with convincing players to put the rest of their life on hold, in exchange for a minimum salary while not knowing if that paycheck will still come next month."
"When considering a career path, it is obvious why players are considering a more secure opportunity with a clear pathway to their destination in a professional field."
"Entering my final year of undergrad, I have no regrets about the last several years of competing in Overwatch. It's led to some of my most memorable moments."
"While I am just as bummed out as the rest at the potential closure of the Overwatch League, I feel that I made the best decision for myself of pursuing an education at the same time allowing for my future to remain open despite the reduced opportunities in the esports world."
- Julien Ducros
Riot Games' VALORANT is one of the fastest-growing esports in current memory. VALORANT commentator and expert Josh "Sideshow" Wilkinson gave a fair profile of the space as well as possible avenues to explore to create stability.
"Esports are having forced reality checks currently," Wilkinson explained.
"Major investments, from venture capital companies on one end and corporate sponsors on the other, are being reassessed; less credence is being given to lofty projections of growth that many in the esports scene were speculating would occur and instead, those investments are being measured against the current revenues and engagement figures."
"This seems to have been triggered by a number of events—for sure one of them is the wider financial downturn, but it also seems to be a result of esports organizations, team and league based, failing to deliver on key deliverables."
"For those who still believe it inevitable that competitive gaming will become a huge phenomenon, due to younger demographics being more interested, streamer culture surrounding these titles becoming mainstream, etc., it also may involve a shift in timelines."
"An example investor may have expected to approach profitability in ten years, but if the data now indicates that it will take twenty years, their investment needs to be halved for the same return."
Wilkinson cited that he hadn't personally been affected too heavily due to VALORANT's incredible growth. He explained that this attention has helped keep rates at a "solid place" and pushed new features for its live events. Between live streaming and commentary, Wilkinson explained that "diversification helps avoid the natural, and strong, ebbs and flows of the esports market."
Going further, Wilkinson identified one major hurdle that has limited esports since it was first catalyzed.
"For esports to have another boom, it either needs to demonstrate incredible growth potential or a serious ability to monetise," he explained.
"The first could come through better utilization of social media platforms, short-form content, and hooking into streamer culture. It could also happen for an individual esport if it hit the mainstream celebrity culture, potentially carrying a few others along."
"The second is what most people are focusing on—monetisation of currently existing audiences."
"Personally, I think the most interesting area to explore is that of developers creating their own viewing clients with superior technology to watch their esports."
"One minor benefit is that it could incentivise Youtube and Twitch to entertain broadcast rights deals again. However, this could also facilitate digital sales direct to the audience."
"If esports can build a culture of being advertised in-game items through the viewing client, then that could be expanded to advertising real-world goods directly through the client."
"Additionally, and perhaps most importantly, owning the viewing client would allow you to target adverts more effectively than Twitch currently does, leading to higher advertising revenue without a cut being taken."