For people over a certain age, the idea of watching other people play video games sounds as appealing as watching someone knit a sweater. Playing games is fun for many age groups, and some members of the Pac-Man generation may even be up-to-speed on some of the latest titles, but watching video game action as if it were televised sports has mostly been an activity for millennials.
Now, however, e-sports viewing is moving from online platforms like Twitch -- which Amazon (NASDAQ:AMZN) paid $1.1 billion for in 2014 -- to actual television. TBS, a Time Warner (NYSE:TWX) cable channel, has begun airing ELeague, an e-sports competition series, in a three-hour block on Friday nights starting at 10 p.m. Walt Disney's ESPN (NYSE:DIS) has also increased its focus on e-sports, adding digital coverage on a dedicated news vertical, airing Dota 2's The International on ESPN 3 (an online channel) and even dabbling in showing some live tournaments on its ESPN 2 cable network.
"E-sports is well-positioned for near term growth with investors and rights partners now on-boarded who are raising consumer awareness and can deliver mainstream audiences and scale quickly," said PwC sports advisory services director Adam Jones in an email to The Motley Fool. "The successful branding of competitive gaming as e-sports has established parallels to the business of traditional sports, enhancing the acceptance of its similar product positioning and business models by consumers, rights holders, and corporate partners. "
Clearly e-sports has become something more than a novelty. But can it become a traditional television product -- and does it even need to?
Why would TV want e-sports?
E-sports are already big business online, drawing a highly desirable audience for advertisers. About 214 million viewers will watch e-sports competitions globally this year, up from 188 million last year, SuperData Research estimates. Most of them (85%) are men, and about half are 18 to 25 years old. That core audience hits the sweet spot for television advertising.
On top of that, video game tournaments offer traditional TV something that has made regular sports increasingly valuable: live events. That means viewers can't fast-forward through commercials, and television programmers are desperate for more programming that can offer that.
Kyle Emich, a University of Delaware management professor, says there is a real market for e-sports:
League of Legends, made by Riot, earned $1.6 Billion in revenue last year, and paid out $2.1 Million to the teams competing in its live World Championship. Similar e-sports events such as the Defense of the Ancients 2 (DOTA 2) International ($18.4M), Halo World Championship, and Call of Duty (CoD) Championship have drawn huge crowds with similarly large prize pools.
Will e-sports work on television?
The question for Turner, and perhaps ESPN, is whether e-sports' popularity will translate to television.
"In terms of popularity on television it will most likely come down to the product that is offered," says University of Kansas professor and sports management program director Jordan Bass. "If the Turner professional league can strike the balance between staying true to those who are already fans and attracting new consumers it is feasible they will garner enough ratings to thrive (or at least survive)."
Brian Selander, executive vice president for Whistle Sports Network, has an even stronger view: "E-sports tournaments now pack arenas in person and keep tens of millions of people glued to their phones, tablets or laptops for up to hours a day. Why wouldn't it work on the largest screen in the home as well?"
Do e-sports need television?
While television networks need to attract Millennials in order to keep them from cutting the cord (or never having a cord in the first place), e-sports won't live or die based on Turner or ESPN ratings. Says Logitech gaming general manager Ujesh Desai:
The modern TV is the Internet and channels like Twitch and YouTube are already engaging e-sports audiences on a massive scale that exceeds some of the traditional sports shown on TV. For example, the 2015 League of Legends World Championship had 36 million viewers watch the final match. This is larger than the number of folks that tuned into the last game of the 2015 NBA Finals (23 million), and I think this is the main reason you're seeing TV broadcasters like TBS and ESPN looking to enter this market.
It still might work for Turner
It's clear that e-sports have a huge audience, but getting young viewers to move over to traditional television may be a challenge. It will take time, but it's possible that the current audience for e-sports will continue to follow on digital platforms while viewers who are new to the concept will become fans on TBS. TV clearly needs e-sports more than e-sports need TV, but both could be good for the other.
Daniel Kline has no position in any stocks mentioned. He has never watched a video game tournament but did once read a book about how to beat Pac-Man. The Motley Fool owns shares of and recommends Amazon.com, Time Warner, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.