Several years ago, someone was claiming that esports were a bubble about to burst. Today, esports are generating a billion dollars in revenue. This is the History of Esports.
I remember a conversation on Reddit a while ago. The matter at hand was a quote: “Why are esports so popular? More than 1 billion dollars in revenue in 2019, 500 million players, prize pools of almost 40 million dollars: why are esports so powerful?” and the conversation went pretty viral, arguing about the history of Esports and how they became a worldwide phenomenon.
Among the 179 comments, one draw my attention: “1 billion in revenue is not that much across an entire industry—I’ve said it before, but that is the size of the domestic US onion market.”
Well, my first thought was “the onion market didn’t just pop up forty years ago.”
Video game competitions are newbies in the entertainment market, and people seem to forget about that. They are not like traditional sports that have been around for hundreds of years, nor like onions, which were one of the staples of the Egyptian slaves’ diet during the construction of the pyramids.
Electronic sports are a new but powerful phenomenon, able to reach millions of spectators and generate billions in revenue in less than fifty years.
It’s important to emphasize that before arriving to these figures, there have been great tournaments that have marked important milestones, but also failures, recessions, and a sense of inferiority that still haunts esports fans today, as they seek acceptance for their passion from a society that struggles to understand it.
The origins of video game competitions
The truth is that nobody levels up in a day, and esports wouldn’t have even existed without the rise in popularity of video games. In 2020, Twitch counted an average of 93 billion minutes watched per month, and that is thanks to Alexander Shafto Douglas and his video game OXO.
However, when we talked about OXO in a previous article, we said that even though OXO represents the starting point of video games, and therefore, indirectly, of esports, it was just a simple digital transposition of a paper game we all know, Tic-Tac-Toe, and it had no multiplayer or any other video game mechanics in it.
Six years after OXO, in 1958, William Higinbotham released Tennis for Two: a 2D tennis video game, and the first multiplayer one. It used an oscilloscope as a screen and an aluminium controller to serve and return the ball, allowing two people to play against each other.
This was just another brick in the construction of the esports industry.
Even though Tennis for Two was simply created to entertain the visitors of the Brookhaven National Laboratory, it led to a line of hundreds of people clamoring to play the new video game.
Tennis for Two wasn’t the first real game to be commercialized. Nim was developed almost twenty years before, in 1940, but it didn’t find the support of investors since it wasn’t well understood in the market. Anyway, despite the “great” success, it was still too early to talk about gaming: Tennis for Two still wasn’t utilizing or creating a specific game architecture, instead being an alternative use of preexisting tools.
The rise of video games in those years was also slowed down by another factor: an IBM computer could cost almost five million dollars. That didn’t begin to decrease until 1971, when the first microprocessors were marketed.
The ancestor of the arcade: Spacewar!
Despite the chigh cost of computers, in 1962, we saw the first videogame designed specifically for computers: Spacewar!
Spacewar! was created by some MIT students, headed by Steven Russell. The mechanics were pretty simple: “The game features two spaceships, controlled by humans, called “the needle” and “the wedge,” which engage in a dogfight while maneuvering in the gravity well of a star. Each ship has limited weaponry and fuel for maneuvering, and the ships remain in motion even when the player is not accelerating.” (Spacewar!).
Despite its simplicity, “players found the mechanics of the game as irresistible as the supermassive star situated at the center of the screen“.
If Tennis for Two represented the forerunner of video games back in ’58, Spacewar! is considered the ancestor of the arcade.
From the Intergalctic Spacewar Olympics to the Space Invaders Tournament
From 1972 onwards, companies such as Magnavox, Atari, and Vectorbeam all released their first video games, and in October ’72, the first unofficial esports tournament took place at the Stanford Artificial Intelligence Lab in Los Altos, California: the Intergalactic Spacewar Olympics.
It was organized by Stewart Brand, a 33-year-old writer and editor, and the prize pool was a one-year subscription to “Rolling Stone” magazine, awarded to the winner Bruce Baumgart.
In the following years the video game market began to grow, with an exponential increase in consoles and arcades.
Although esports still struggled to catch on, the first official esports event was held in 1980 with the Space Invaders Tournament. It was organized by Atari to celebrate the game of the same name. The event was a success, and 4 finalists among 10,000 participants from across the United States had the opportunity to play against each other in front of four thousand people. The fact that so many people showed an interest in competitive gaming pushed the US company Atari to replicate its first event, and the following year they set up a world championship. The pize pool hit fifty thousand dollars, but the outcome wasn’t what they hoped for.
While expecting three-to ten-thousand participants, the championship registered just 174 players. It was a flop that left Atari speechless. The reason behind this failure can likely be found in its organization: the participants had to pay out of pocket for the trip, and it wasn’t worth it at the time, not yet at least. Furthermore, it came out that the winners (Eric Ginner and Ok-Soo Han) never received their prizes.
The Nintendo World Championship: a boost in the history of esports
Nevertheless, this didn’t stop the rise of esports. Over the years many innovations became part of the foundation for the success of competitive gaming, such as the creation of databases capable of storing players’ high scores, thus becoming the official scoreboard for all the video game competitions.
It was in the 90s that Nintendo gave an important boost to the spread of video games and tournaments with the debut of the Game Boy, (which was flanked by the arrival of the Playstation) and with the organization of the Nintendo World Championships (1990), which toured across the United States. This was followed four years later by the Nintendo Powerfest ’94.
One of the biggest esports events of the 90s took place in 1997: Red Annihilation, dedicated to Quake, a first person shooter. The tournament, which took place in the United States, had about 2000 participants, who clashed in 1v1 matches. The sixteen finalists were summoned to the World Congress Center in Atalanta, Georgia, during the E3 Gaming Expo, and the competiton saw Dennis “Thresh” Fong triumph over Tom “Entropy” Kimzey, winning a Ferrari 328 GTS, offered by the video game co-founder John Carmack. But why was the Red Annihilation so successful? Back in those days, multiplayer had never been a priority for gaming companies; Quake was the first title to have maps designed for this purpose, with a specific architecture for both client and server. There were certainly limits dictated by the technologies of the time, but that didn’t dampen the enthusiasm of the fans.
In any case, numerous video game events took place during these years, such as Battle by the Bay in the USA (now known as the Evolution Championship Series), QuakeCon in 1996, the Cyberathlete Professional League (CPL) and the AMD Professional Gamers League (PGL) in 1997.
Europe and America as the “wild west”
In 1999, at the same time as Counter-Strike was released, (which was the first video game to seriously develop as an esport), Blizzard released StarCraft, a real time strategy (RTS) game that grew into the most played video game at the time. StarCraft helped the Korean esports scene grow, supporting the spread of the competitive world, and becoming a major factor in the birth of many internet cafes. It was a success that other countries only saw several years later. The popularity of esports in South Korea is the reason that Samsung decided to hold the first World Cyber Games in Seoul in 2000. In that tournament, the prize pool of $ 300,000 was contested by more than 430 players from 37 different countries.
But while in South Korea there was a real boom for esports, with well-organized events, the rest of the world was essentially the “wild west,” with only a few organizations that proved to be professional and well-structured.
The Cyber X Games, organized in 2004 in Las Vegas, showed how far esports still had to go. What was supposed to be one of the biggest esports events ever organized turned out to be a total fiasco: many tournaments, including Counter-Strike, were cancelled immediately, and others were interrupted in the middle of the games. The sponsors of the event decided to back out.
Despite the overall disorganization of esports in the early 2000s, the Major League Gaming (MLG) was founded in 2002. It’s still one of the largest esports associations, whose mission is to “globally promote esports through first-rate competition and by providing content premium gaming to viewers at anytime and anywhere through the global streaming platform.” They introduced the “Pro Points Ranking System,” one of the fundamental methods for awarding competitive points to determine the best player in the professional world.
In those years, esports continued to spread, elbowing their way into the market and continuing to amaze people with the numbers they drew. However, like many industries, they suffered a setback with the 2000s economic crisis. It was a bit like receiving a slap in the face.
Until 2009, the numbers seen by esports had been consistently increasing, despite the fact that the economic crisis had begun around 2006. But the world of esports eventually faltered for the first time: unable to create a sustainable business model without any external support, many events failed. Prize money decreased, and the associations and companies that were totally dependent on sponsors vanished.
Only those who managed to become self-sufficient survived. For the first time, organisations started to understand how important it was to build and maintain an audience.
In the past, many companies had already tried to broadcast esports on television, but they didn’t succeed. The only viable alternative was online streaming: an environment that was still extremely difficult and so not highly utilized, at least until 2011, when Twitch was founded.
When League of Legends, Starcraft and Twitch revolutionized the history of Esports
In fact, in the three-year period between 2009 and 2011, three important events marked the beginning of a new era in esports: the birth of League of Legends in 2009, the announcement of StarCraft II in 2010, and the foundation of Twitch in 2011. These three events mark the end of a stable or declining period, giving companies the opportunity to build sustainable business models with less fluctuating revenues and steady growth.
With the end of the great recession and the following exponential growth of the competitive sector, in recent years, more and more companies have shown an interest in this market, leading to the business model we know today.
Towards the official recognition of video game competitions
Esports are not a niche phenomenon. we are not talking about a hundred or a thousand people, but about millions of spectators and billions of revenues. Yet over the years, parallel to these events, two different currents of thought have emerged: there are those who say that esports do not exist, because a person who plays in front of a computer cannot be called an athlete; and there are those who argue that esports exist and are real and they are actually sports.
In defence of this last thesis, in 2017 the International Olympic Committee stated that “Competitive” esports “could be considered as a sporting activity” and the French government identified the esports player as a professional athlete, with the rights and obligations thereof, addressing the problem of retirement, unemployment and medical insurance (Decree No. 2017-872 of May 9, 2017 of the French legislation). This decision was followed by the government of the Philippines in 2007.
The road ahead is still long, however; players still don’t always have retirement income or affordable access to health care, and their professional status remains in an undefined limbo, where earning a living becomes difficult and ensuring a stable future seems like a mirage.