SBJ/January 15 - 21, 2007/SBJ In Depth

Competitive gaming makes a play

The tournament was called the World Series of Video Games, but there was little obvious evidence of worldliness, or really, anything on-site that screamed out “major sports property.”

Competitors play “Counter-Strike
1.6” in the 2006 World Cyber
Games in Montreal.

Jammed into two smallish TV studios in the Manhattan headquarters of CSTV, the competition last month was a made-for-TV affair that included about 60 spectators — none of whom were allowed to talk during gameplay — and sterile rows of computers that would not be out of place at a Kinko’s.

But the event, whose parent company Games Media Properties recently garnered nearly $5 million in venture capital funding, drew a 0.6 rating on CBS during the afternoon of Dec. 30. The result was below the 1.0 rating producers hoped for, but translated to 433,000 households and a more-than-respectable showing for a nascent event on major network TV.

That CBS placement also followed a series of high-profile showings on MTV and CSTV, as well as online distribution of tournament video through CSTV.com. And much more critically, those efforts represent just a small fraction in the exploding media and consumer interest in competitive video gaming, leaving the sport aiming to take on poker, rodeo, action sports or any of its other competitors for “next big thing” in sports programming.

The World Series of Video Games is rivaled by at least five other major competitive gaming entities, including the ESPN/Electronic Arts venture that includes the popular “Madden Nation series,” and DirecTV’s Championship Gaming Series, which last week announced at the International Consumer Electronics Show that it will expand into an organized international video-gaming league.

No longer a sub-niche activity for antisocial teens, competitive gaming is now a big-money affair structured in many ways like traditional stick-and-ball sports leagues. Venture capital investments are flowing in by the millions (and in some cases tens of millions). Elite players now earn in excess of $1 million annually and garner endorsement contracts. Six-figure tournament prizes are commonplace. Fortune 500 companies such as Best Buy and Verizon are steadily buying up event and league sponsorships. And estimates of the entire industry hover around the $100 million mark.

“Gaming leagues have sort of grown up country by country. It’s arrived in other places such as Europe, and now it’s really happening here in the U.S.,” said Matthew Ringel, president of Games Media Properties. “There’s a real sense of energy now, and the business model is moving to where it’s essentially a media platform as opposed to a stand-alone property.”

Said DirecTV executive vice president Eric Shanks, “This is a completely underserved market building up right before our eyes.”

Industry explosion

Competitive video-game leagues are by no means a new entity — the Cyberathlete Professional League is entering its 11th year — just as video games themselves date to the early 1970s. But in the last two years, the video-game industry has enjoyed its latest and most historic wave of mushrooming growth, surpassing $32 billion in global revenue.

And within the United States, the business continues to extend its dominance over box office receipts for the domestic film industry. Releases of top games such as EA’s annual “Madden NFL” title arrive with multimillion-dollar promotional campaigns previously reserved for top music releases and major studio films.

Amid that macro-level growth in video gaming, fueled in large part by the advent of powerful, immersive gaming consoles such as Microsoft’s Xbox 360 and Nintendo’s Wii, consumer interest has heightened sharply in watching top players compete in a variety of game titles.

The appeal is only furthered by the fact that the general public is playing the very same games as the professional competitors, mirroring an element often cited as a key reason for the global popularity of soccer and basketball.

Gaming competition now comes in a dizzying array of organizational forms and formats, with no one operation dominating the landscape. EA operates a traveling series of challenge tournaments for its “Madden,” “NCAA Football,” “NBA Live,” and “FIFA” titles, with ESPN producing televised forms of the competition in a reality series format that profiles individual players. Other properties, such as Major League Gaming, similarly use a NASCAR-type structure of individual player competitions.

DirecTV’s new league, the Championship Gaming Series, carries the polished look and feel of heavily produced televised game shows such as “Who Wants to Be a Millionaire?” The competition this year will grow into a league-play format with franchised teams, salaried general managers and a combine to recruit new talent.

Competition will begin airing on DirecTV this summer, with the championships set for December. Play will air on a tape-delayed basis but could grow into a live production in 2008.

“This is our attempt to create a sports league,” said DirecTV vice president Steven Roberts. “We’re going to put on a presentation for competitive gaming that has never been seen before. We’re bringing video gaming to the masses.”

The World Series of Video Games is a more hard-core gaming competition, with players eschewing console platforms such as Xbox 360, Wii and PlayStation 3 for the higher processing power of top-end desktop computers.

The wild growth has even spawned themed and novelty gaming leagues. The Hip-Hop Gaming League, a division of the Global Gaming League, features rapper Snoop Dogg as its commissioner. The Global Gaming League, which considers itself more of a media and content-generation company than a pure-play league, last month similarly announced the creation of the Professional Baseball Video Game League. The startup will be composed solely of pro baseball players and led by New York Yankees outfielder Johnny Damon.

“It’s very interesting how everybody’s done this a little bit differently,” said Brian Movalson, EA senior manager of consumer marketing. “But I’m not sure if anybody’s really done it right just yet. Putting video games on TV is not an easy play. It’s sort of like poker used to be. It sort of languished around until people figured out how to present it on TV. That’s what’s starting to happen now for video games.”

Industry executives and observers say it’s inevitable the wide variety of leagues will eventually shake out and leave behind two or three more established, dominant operations. Nearly all of the TV presentations of competitive gaming are time buys, with the obvious exceptions of the more organic efforts of DirecTV and ESPN, which each have their own distribution platforms. But gaming executives do not rule out ultimately garnering rights fees after a period of further growth.

“It’s going to be consolidated,” said Ted Owen, Global Gaming League founder. “It has to be. All these guys aren’t making much money. They don’t have real sponsors outside of the endemic guys. They’re going to have to pool up and gradually grow along with the culture.”

Who’s the audience?

Complicating the anticipated industry shakeout is a growing debate as to who exactly is the desired audience for competitive video gaming. Males ages 13-34 are the obvious, foremost target, and will represent much of the base for the foreseeable future. Each of the current leagues generally pulls more than 75 percent of its TV and online audiences from this population.

What’s uncertain is how much video gaming will grow beyond that demographic, or even how much it needs to in order to survive. And does it need to be accepted as a true sport to gain entry into other segments?

“There are so many young men who are gamers or who are generally interested. The low-hanging fruit on this is so extensive that I don’t think the gaming industry needs to be too concerned about the public at large,” said television consultant Neal Pilson, who is an adviser to Major League Gaming. The league is distributing its competition content through USA Network and AOL.

TV producers edit down competitions into
highlights that are easier for viewers to follow.

“I’m not a gamer. I’ve never played. But I quickly grasped the competitive element of this, the hand-eye coordination, skill and stamina you need to excel. A lot of these questions being asked about gamers as athletes are the same they used to ask about NASCAR,” Pilson said.

Other gaming executives, however, argue that the natural, rapid growth of video gaming is by definition including older demographics and will continue to do so in increasing numbers.

“I think there’s a bit more audience for this than is generally assumed,” said Bob Horowitz, president of Juma Entertainment, which produced the World Series of Video Games event on CBS. “There are video gaming moms and dads out there.”

One element in far more agreement is the limited appeal of competitive video gaming as a live spectator sport. Each league, when quick to describe its spin on presenting the sport on TV, is far less sanguine on the prospects of selling tickets to gaming events, even at nominal price points below $10 per ticket.

The reasons are not difficult to understand. Watching somebody else play a full-length video game can often be a rather dull affair. Game flow can shift erratically and suddenly to an outside viewer, necessitating the need for commentary and editing to construct a more digestible account of the action.

And while live online streams of gaming competition are readily accessible, each of the major properties edits down its content into something much shorter for easier consumption.

“[Ticket sales are] not the model. It’s the people at home watching from Web browsers,” said Mark Dolven, manager of Team Pandemic, an Arkansas-based gaming team specializing in “Counter-Strike” competitions. “You need the producer to edit it so you can understand what’s going on.”

To that end, the sponsor activation, particularly among the non-endemics, so far has been generally passive, consisting mainly of on-site banners visible during gameplay and commercial airtime. Corporations are unsurprisingly looking to get involved in something obviously on the rise, yet are still taking a wait-and-see attitude and monitoring what competitive gaming becomes.

“I think a lot of people are working to understand the world around all of this better, ourselves included, but the initial interest has definitely been encouraging,” said Tim Pernetti, CSTV executive vice president of content.

That all said, there have still been a few more aggressive plays, including Mountain Dew’s title sponsorship of the championship trophy for the Championship Gaming Series, and Boost Mobile’s title sponsorship for Major League Gaming’s Pro Circuit competition.

“Gaming is a dead fit for Mountain Dew,” said Lauren Hobart, director of marketing for the soft drink company. “It’s about reverence and passion.”

What game to play?

The disparate world of competitive gaming also brings a wide variety of choices for games to play, with sports titles representing only a small fraction of what’s played.

EA Sports, which produces most of the industry’s most popular sports titles, holds a 15-year working relationship with ESPN that gives the network some deference for use of its games in organized play. But the deal within that context is not exclusive, and EA is actively talking to other gaming outfits about use of its games.

But at least for the moment, the majority of competitive gaming instead centers on action and first-person shooter titles such as “Counter-Strike,” and the latest versions of “Quake” and “Halo.”

“A lot of organizations do integrate sports games,” said Angel Munoz, chief executive of the Cyberathlete Professional League. “The CPL felt it didn’t want to be an imitation of another sport. We didn’t want people saying, ‘Baseball’s the real thing and those guys are just playing a fake version.’”

But that emphasis on nonsports titles brings about its own potential pitfalls as the violent nature of those games limits how and when the competition can be presented. In fact, one fan of competitive gaming, Sean Weigle, said the appeal of “Counter-Strike” lies in “the sense of joy of seeing someone blasted by your hand.”

To some executives, however, the game itself is becoming less relevant altogether.

“I guarantee fans don’t care whether Johnny Damon plays ‘Project Gotham Racing 3’ or Sony’s ‘The Show’,” Owen said. “The fans don’t care. From my perspective, let them choose the game. If they want to play sports, let them play. If they want to play shoot-’em-up, they can do that, too. It’s not about the game anymore. It’s about the culture and everything around the game. Star power and celebrity and media are what will drive this thing.”


Key video gaming organizations

CEVO (CyberEvolution)
Founded: December 2003
Headquarters: Baltimore
Key executive: Charlie Pitt
Sponsors: Layered Technologies, Nation Voice Communications, Hype Energy
Events:Hosts five to seven events per year primarily for amateurs; reaches 50,000 gamers a month
Marquee event: “Counter-Strike 1.6” tournament with 2,500 participants (held three times a year)
Media: GotFrag, Amped eSports, Team Sports Network (TSN)

Championship Gaming Series
Founded: May 2006
Key executives: Eric Shanks, DirecTV executive vice president; Steven Roberts, DirecTV vice president
Headquarters: Los Angeles
Events: Three preliminary showcase events were held in 2006 and shown to DirecTV subscribers. More organized league play will begin airing in June after being taped in Los Angeles.
Marquee events: Finals will be held in December 2007.
Key sponsors: Mountain Dew, Best Buy, Microsoft
Media: DirecTV, ign.com

Cyberathlete Professional League
Founded: 1997
Headquarters: Dallas
Key executive: Angel Munoz
Sponsors: AMD, ATI, Pizza Hut, Verizon, Benq, Plantronics, Razer, Insomnia365
Events: 60 international competitions with 300,000 gamers
Marquee event: Winter Championships
Media: MTV and CIGA TV (Europe); GotFrag TV (online)

Electronic Arts/ESPN
Founded: EA-sponsored “Madden” tournaments of various forms date to the early 1990s. ESPN and EA signed a 15-year partnership in January 2005.
Headquarters: Redwood City, Calif.
Key executives: George Bodenheimer, ESPN president; Larry Probst, EA chairman and chief executive
Events: EA Challenge Series in 2006 featured 32 regional tournaments for “Madden NFL” and eight tournaments for “NBA Live,” with events also held for “NCAA Football” and “FIFA Live” titles. Regional tournaments culminate in final competitions, often held in conjunction with real-world sporting events such as the NFL Pro Bowl and NBA All-Star Game.
Marquee event: Madden Challenge finals, held each February during Pro Bowl week
Media: ESPN

Electronic Sports World Cup
Founded: 1999
Headquarters: Paris
Key executive: Matthieu Dallon
Sponsors: PlayStation, Intel, LogiTech, Orange, fnac.com
Events: One event with more than 1,000 gamers
Marquee event: Electronic Sports World Cup Grand Final, July 5-8, 2007, Paris
Media: ESWC-Live.com, GotFrag.com

Major League Gaming
Founded: 2002
Headquarters: New York
Key executive: Michael Sepso
Sponsors: Boost Mobile, GameStop, Toyota Scion
Events: Seven-stop tour that visited Las Vegas, Orlando, Chicago, Anaheim, Dallas and New York (twice) in 2006
Marquee event: Las Vegas National Championship (2006)
Media: USA Network (time buy), Comcast VoD, AOL

World Cyber Games
Founded: 2000 (run by International Cyber Marketing)
Headquarters: Seoul, South Korea
Key executive: Hyoung-Seok Kim
Sponsors: Samsung, Xbox 360, AMD, ATI, SyncMaster
Events: 140 worldwide in 70 countries; more than 1 million participants
Marquee event: World Cyber Games Grand Final 2007, Seattle
Media: Sky, GGL.com, WCG TV (online)

World Series of Video Games
Founded: 2006 by Games Media Properties
Headquarters: Los Angeles
Key executive: Matt Ringel
Sponsors: Intel, Fatal1ty, Xbox 360, ATI
Events: Eight events with each held over 3-5 days
Marquee event: World Series of Video Games Finals (December 2006 in New York)
Media: GamePLay HD (Dish Network), Team Sports Network (TSN), Amped eSports (online), MTV.com, AOL

Source: The leagues

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