How esports grew up: An oral history

With its arena-filling events and six-figure salaries, the esports industry has come a long way since the early days of competitive play.

The first video game tournament took place in 1972: Spacewar! hosted by Stanford’s Artificial Intelligence Laboratory, but game developers have taken much longer to realize the potential value of competitive games as both a product and a marketing channel. For decades, competitive gamers have stood on the sidelines, dodging developer quit letters and playing mostly for passion, not for prizes. The word “esport” didn’t exist until 2000, when Korean Minister of Culture, Sports and Tourism Park Jie-won combined the words “electronics” and “sport” to coin the term.

Fast forward to the present and advertisers are pumping millions of dollars into the esports industry in an effort to reach gaming consumers. Game developers have spent years developing structured competitive leagues like the Overwatch League and League of Legends Championship Series, realizing that esports fandom is a driving force behind casual gaming activity. In general, this rising tide has lifted the majority of esports company boats, but that doesn’t mean the expansion of esports hasn’t had its fair share of growing pains.

Here’s the story of the evolution of esports from grassroots times to today’s business landscape, in the words of esports and OG industry experts.

01

The first days

Before game developers and non-endemic brands embraced esports, the pioneers of competitive gaming existed largely on the fringes, relying on passion and volunteer work to keep tournaments going.

Mike Sepso, CEO of Vindex and co-founder of Major League Gaming: Some of the people I first met in the corporate suite said, “I knew your name because I saw it on a quit and desist letter.” This is how I would define the difference. When esports really started, if it was ESL [Electronic Sports League] or MLG [Major League Gaming], we were kind of people trying to do something they wanted to participate in, institutionalize and market, but none of us had ever worked in the video game industry before. So our expectations of how things were supposed to work were very different from how the studios and publishers thought. Keep in mind that the early ESL and MLG events didn’t even have spectator passes, because no one came to watch – it was just a tournament to play in.

Daniel Lee, tokenomics designer at Heroic Journey, former general manager of League of Legends at Counter Logic Gaming and former Super Smash Bros. Melee player in the top 100: From a cultural point of view, it was all about the love of the game. I think part of the great thing about really being at the beginning of a space, where there aren’t really high stakes, is that you can just do whatever you want. We’d go to the majors and have like 16 people in a hotel room. Sitting really packed behind a CRT [television] to see a player play, while now there are projectors. We were all starting it; we didn’t really have much corporate interest.

Rod Breslau, journalist and pioneering eSports consultant: It was all self-sufficient; that’s how everyone did things. There were paid concerts, but you really did it for the love of the game, which was Quake at the time. So GotFrag was created in North America, which was Counter-Strike’s main hub, then grew to cover other games. That was really the first time in the West that you could get paid for eSports journalism.

Jason Baker, CEO of Do Not Peek Entertainment: The first few days were really built around you and your friends traveling to an event, filling your car with your personal computer equipment and going over a LAN and playing at an event. That would be the port section of your computer on a LAN. It was like, “Hey, everyone, we’re going to have a Return to Castle Wolfenstein tournament.” The inscriptions were on this bulletin board, or whatever, and you were going to play this little thing. And you didn’t go there to play this game, but, “okay, I’ll play this”.

02

Demographic expansion

The first esports scene was blatantly white and masculine, though it still boasted its fair share of women, like Heather Garozzo, who was a high-level Counter-Strike player before becoming an esports executive. But these days, it’s clear that the misconceptions about the esports scene being a monolith are no longer true. Women and gamers of color abound in esports these days, and brands have responded by increasing their marketing spend to reach the gaming audience.

Image courtesy of Jason Baker

Heather Garozzo, vp of the community and events of Dignitas: I always regret the fact that many people say “women are not as good as men” or “women cannot compete in the higher leagues”. I was in the top flight, but no one really remembers it, because social media and streaming weren’t that big. Of course there are simply more women playing, there is no doubt about that. It has become more culturally accepted to be a player. The other day I spoke to my 10 year old niece; all of her friends are playing Valorant. And since there are more women in the spotlight, you feel more confident. Over the years, going to different events as an observer and seeing young women come to me and start crying and hugging me, I didn’t really know how to react.

Sex: There is definitely more gender parity now. In the beginning, in the Counter-Strike and Halo worlds, there weren’t many women. Now, across the board, gaming isn’t a genre-specific activity, so I think the fans are a lot fairer.

Baker: The majority were always white teenagers, usually 16 to 20 years old, and I’d say that’s the majority anyway. But there was a lot of stuff in Texas and a lot of bands from Southern California. There were a lot of Latin Americans, a lot of women at events, volunteering or helping run communities or just playing in teams. So I would say that women have always been part of the scene, and when people act like they don’t belong, it feels so weird to me.

03

Pin away from the competition

As the eSports audience grows, esports organizations have gradually shifted their lists from a scrupulous focus on competition to a mix of competitive players, content creators, and influencers. For those who have been in the industry for more than a few years, the word “esport” specifically describes top-tier professional competition, often in one of the major franchise leagues, but for most non-endemic brand marketers, it’s a catch- all terms for a series of entry points into the gaming community. Nowadays, competing isn’t necessarily the easiest way to become a gaming influencer.

Garozzo: That’s not necessarily a bad thing, because when you look at the organizations that are most successful, like 100 Thieves, they are a lifestyle brand, in a way, and their [competitive] the players are very content because they simply don’t have the time. It is incredibly challenging to be a professional player and to stay on top. So the creators give you a little more flexibility.

Sex: The creator economy, in the gaming space, has clearly grown from esports. All the first generation of people who were great creators – you know, Hector with OpTic, Nadeshot, Ninja. Those guys were all people from the esports scene. Maybe not the best competitors, but they quickly moved on to making YouTube videos about games and started in the esports scene. Now, most of the big esports teams also have the biggest game creators in their portfolios.

Lee: Nowadays, the responsibility you have as a top player to know more is substantially higher and the amount of tech skills you need is substantially higher. The amount of time it takes, the amount of effort to keep up with everyone – substantially higher. Competition is a relative skill, right? You are rated roughly by the skill level of your peers. And since there are so many more people playing, you just have to put in more time to be ahead of everyone else.

Jason Lake, CEO of Complexity: Competition will always be Complexity’s guiding light, but diversification is becoming increasingly important in esports. Rather than sitting with a dusty branding, we constantly explore how we can push the envelope. In preparation for our 20th anniversary, we are continuing to expand Complexity’s legacy with creators such as TimTheTatman and Cloakzy.

04

Dark money on the horizon

As the industry continues to grow, esports companies are starting to build a larger network in search of funding and are under increasing scrutiny from both fans and investors. Some esports fans have been critical of esports companies that have received investment or sponsorship from cryptocurrency companies and entities such as the Saudi Arabian government.

Image courtesy of Jason Baker

Garozzo: Years ago, either you had a friend whose parents had a lot of money and were funding it, or you found individual sponsors, and then that went straight to the players. Obviously, there are a lot of VCs that get invested, so it’s not like money [these days] it is going straight from the sponsors into the pockets of the players. But I know there are a lot of rich people betting on esports, and it’s exciting. It can be scary, but more money is generally a good thing.

Jordan Fragen, Esports Insider reporter: It’s a bit of a false premise to say that dark money or blood money is a new thing for esports. There have always been very shady people involved in esports. I think Moscow 5 is probably the best example of this, where they got arrested by the FBI for stealing people’s credit cards; it was just a money laundering program. But I think what is changing is the quantity and the scale. Right now, of course, the Saudis have some sort of monopoly in esports with their ownership of FACEIT, ESL and DreamHack. When all major tournament organizers, which are independent in quotes and not quotes, are owned by the PIF, it creates a different tone and tenor for the industry.

Baker: ESL and Blast, they all take some very questionable money. But the 2007-2008 Counter-Strike stuff definitely had a lot of questionable money, and even the early Counter-Strike stuff had a lot of really interesting and questionable play money. So I’d say it hasn’t changed that way – it always has. There is the desire to have competitive gaming, but it is not always easy to recover your costs. So you have to have people willing to take that risk. And sometimes they are companies, I would not say shady, but questionable companies, some of them.

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