Last year, the League of Legends World Championship finals were the second-most-viewed sports event in the world -- second only to the Super Bowl. There were reportedly 36 million unique viewers for the finals.

This is more than just a bunch of people sitting around watching other people play video games. It's a growing phenomenon attracting not only a vast viewership, but also industry talent, and the potential to grow into a spectacle all its own.

In this clip from from The Motley Fool's Industry Focus: Tech podcast, Dylan Lewis and David Kretzmann explain what exactly e-sports is, some unique challenges and opportunities the new genre presents, and how companies such as Activision Blizzard (NASDAQ:ATVI) and are getting in on it.

This podcast was recorded on June 10, 2016. 

Dylan Lewis: I think one of the key things to hone in on there is watching, hearing you say that. Something that some of our listeners might not be as familiar with is the rise of what we're calling e-sports now. There is the conventional gaming market, where you have people buying titles either physically, or digitally, playing them. They're in-game purchases in some cases.

There's also this transition to a space in the industry where there's money to be made by selling video-game experiences as sporting events.

David Kretzmann: This is a concept that's popular internationally. It's becoming more common domestically as well, but especially in China and Asia, and Europe. E-sports has been a rising phenomenon. You're even seeing dedicated stadiums built for people to watch the elite gamers play a video game. It's really the idea like you have the NBA, the National Basketball Association, where you see the elite gamers, the elite basketball players play.

In a similar way, e-sports is this league, or this platform, where you can watch the top-tier gamers play. Some pretty amazing statistics here. In 2015, the second most-viewed sporting event in the world, only behind the Super Bowl, was the League of Legends world championship, which had 36 million viewers. That's ahead of Game 6 of the NBA finals, which had Steph Curry and LeBron James, the best basketball players in the world; they had 29 million viewers.

The World Series' final game last year had 17 million viewers. Thirty-six million people watched a world championship with League of Legends, a video game. That gives you an idea of just a staggering global audience for people who are actually sitting down and watching elite gamers play. It's still something I'm personally still trying to wrap my head around.

We have some gamers at the Fool who do spend time watching these tournaments and watching the elite players play. This is certainly a driving force with the industry. You have both Activision Blizzard and Electronic Arts (NASDAQ:EA), then other players even like Amazon with Twitch, with the acquisition they made a couple years ago. YouTube is spending more time streaming these gaming tournaments.

You're seeing a lot of big players make a concentrated concerted effort to dive into e-sports and really drive that movement. It's certainly something to watch.

Lewis: I think one of the things that's particularly compelling with e-sports is, whereas with live sports, you are in a lot of ways selling tickets. There are instances where you're at a stadium and there are probably tens of thousands of people watching something.

This is a very scalable and online production for the people that are putting it on. It's a digital pass-type approach. That's something that scales incredibly well when you're talking about porting it out online, or trying to sell some sort of a subscription service to it.

Kretzmann: Absolutely, and you even are seeing some traditional networks like ESPN and TBS broadcasting some of these gaming tournaments. By and large, it is something that's happening online, so it's still a question of how do you gain advertisers and sponsors for something like this. There hasn't been anything quite like this that we've seen.

I think a great example of the resources that companies are putting behind this -- let's go with Activision Blizzard. In October 2015, less than a year ago, they announced that they're creating an independent e-sports division. The person they brought on to head up that division is Steve Bornstein, who was formerly the head of ESPN and the NFL Network. He's someone who knows a thing or two about sports broadcasting. They're bringing in a big gun from ESPN and the NFL network to head up e-sports.

Bobby Kotick, the CEO of Activision Blizzard, he says he wants Activision to be the ESPN of e-sports. We're still in the early phases of this happening. That e-sports division, again, was only created less than a year ago, but then two months after that, Electronic Arts announced that it's launching a competitive gaming division, a similar division to what Activision is doing.

Like I said, you have Amazon with Twitch, where a lot of these games and tournaments are live-streamed and similar with YouTube. You're seeing a lot of big companies put a good amount of resources behind this space and bringing in talent from the traditional sports broadcasting role into this e-sports world. You're seeing a blurring of the lines there.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.