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Video-Game Athletes Win Millions. Have E-Sports Arrived?

By Andrew Marder - Sep 7, 2013 at 1:00PM

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The e-sports scene has gotten more attention recently than ever before, but does that mean it's on the verge of mainstream popularity?

If you ever want a deep glimpse into the human psyche and the lengths to which we will go to fulfill even our oddest dreams, you should watch The King of Kong: A Fistful of Quarters. It details the battle for a high score on Donkey Kong that rages between two men. Along with the psychology that seeps out as time creeps by, you might also notice an interesting phenomenon -- the only real thing on the line is pride.

While that pride continues to drive competitive video gamers, the evolution of e-sports has given competitors another reason to practice. Cash. Lots of cash. In the second season of competitive League of Legends play, the total prize pool is up to $5 million. League of Legends is a multiplayer online battle arena that pits players against each other in a fantasy environment.

League of Legends: Photo: Riot Games.

Currently, only a handful of games account for most of the professional competition, but the range is expanding, and game developers are working to get in on the growing e-sports world. Just as Nike benefits with the rise in popularity of soccer, so, too, do game developers win as e-sports gain more traction.

This is why we fight
That we now live in a society where a person can make millions of dollars for defeating another person at a video may seem like an odd concept. The U.S. is late to the party. In South Korea and many European countries, e-sports have already made their way into the edges of the mainstream. Internationally, competitions are broadcast on TV and players can achieve celebrity status.

In the U.S., popular video games such as Activision Blizzard's (NASDAQ: ATVI) World of Warcraft and Rovio's Angry Birds have helped push a range of video games into the public consciousness. With millions of subscribers, World of Warcraft has become the kind of game that almost all of us are familiar with because someone we know plays it. While it's not the same thing as e-sports, it's not a far cry. 

Activision Blizzard's main entrant in the eS-sports ring is a game called Starcraft 2.

E-Sports Stadium in Seoul, South Korea, Photo: WikiCommons.

The game pits humans and two alien races against each other in a battle to build armies and conquer territory. But a look at the leader boards is all it takes to confirm that the e-sports craze has yet to take a firm hold in America. The top 10 Starcraft 2 players are all Korean, and only five of the top 25 break up that run.

The value of new sports
Activision Blizzard and rivals are pushing for an e-sports golden age in America. That desire isn't wholly revenue-driven, and Activision Blizzard has said that its main interest is in helping e-sports grow as a community. That's good to hear, as currently it can be difficult to squeeze a decent profit out of e-sports.

Riot Games, the makers of League of Legends, is busy sinking any spare cash into marketing and infrastructure costs. The company wants e-sports to make it big, and that means treating e-sports like real sports. Riot has proposed building arenas for fans to watch competitions in, developing a regular system of matches, and even getting e-sports recognized by the U.S. government. That last one came true recently, and now e-sports players are recognized as professional athletes by the U.S., allowing companies to grant visas to international players.

That ruling should help e-sports promoters by allowing them to bring in more ringers from other countries where the competition is already fierce. Just like Major League Soccer made a push for recognition by bringing in David Beckham, e-sports may now have a chance to bring in big names from South Korea or Europe to support American teams and boost domestic team spirit.

Without that jump in viewer interest, it's going to be hard for big companies to see much of an impact on their bottom lines. Right now, online video services offer the most e-sports content, but some companies are taking matters into their own hands. Valve -- publisher of League of Legends rival DotA 2 -- has implemented a viewing mode in the game itself. The hope is that players will be the most interested fans, and giving them an easy way to watch a pay-per-view event from within the game interface should help fans part with their cash.

Playing the long game
While a Starcraft 2 match runs around 10 minutes and professional fighting game rounds can be finished in seconds, anyone interested in the growth of e-sports is going to have to wait a bit longer. Activision Blizzard is onboard to help build a community, but it's not getting much help from Electronic Arts (EA -1.13%). EA seems to be happy with the huge fan base that it's generated in its classic sports franchises.

The company is focusing on boosting digital revenue and building an online community of video-game footballers around the world. Titles such as FIFA and Battlefield -- a first-person shooter -- have done very well recently, with FIFA hitting the No. 2 best-selling PC game spot in South Korea.

Getting console manufacturers onboard is going to be difficult as well. Sony  and Microsoft both have their own online communities, and there's almost no chance that they would forgo those communities to allow players to compete cross-platform. In short, there's just no profit in it for them.

The sheer number of barriers in the way means that we're probably a way off from a real e-sports golden age. We might be closer than ever, but that doesn't mean getting your favorite gamer's face on your shirt is a reasonable Christmas request this year. As the community builds, gamers and investors should both hope for some success at the Activision Blizzard level. If a company of that size can use e-sports to raise its bottom line, other large companies should be tempted into the space, which will only help the popularity of the sport.

Fool contributor Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Nike and owns shares of Activision Blizzard, Microsoft, and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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