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The Rising Tide of AI in eSports

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The Evolution of Sports in Our Digital Era

The definition of "sports" is ever-expanding. In 2021, skateboarding debuted at the Tokyo Olympics. In 2022, a new take on the traditional bobsled: the "monobob" will appear in the Beijing Olympics. Once mere hobbies, these events evolved into legitimate sports when their popularity, intensity, and profitability hit a critical mass—and they're not the only new "sports" gaining mainstream traction. 

Today, we are witness to the rise of electronic sports (i.e, eSports): video games played in a highly competitive, organized environment. Although it may seem far-fetched, the global gaming scene has grown undeniably popular, competitive, and lucrative in recent years. In fact, eSports may even debut in the 2028 Olympics.

The Entertainment Software Association reports that nearly 70 percent or 227 million Americans played video games in 2021. Gaming dwarfs the world's most popular sport: soccer, with only about 24.4 million American players. In fact, boasting more than 2.77 billion players worldwide, it may be the most popular "sport" in history.

Below, we explore the eSports industry: its stakeholders, market drivers, and technology. We examine the role of data science and artificial intelligence (AI) in its growth and discuss how early actors can capitalize on its underexploited market space.

Casual vs. Competitive Gaming and the eSports Industry

According to Oxford Language, a video game is simply “a game…produced by a computer program.” But not all games have sporting potential. Only a select minority of games attempt to cultivate a competitive community, and even fewer succeed.

It’s crucial to understand that gaming, like any sport, can be casual and/or professional. Gaming’s casual and professional leagues are comparable to college soccer’s recreational and NCAA divisions. Same sport, different levels of play.

Casual gaming includes every form of recreational video-game use, from Candy Crush on the iPhone to Cyberpunk 2077 on the Xbox. Some games may encourage players to compete in a multiplayer mode, but there are no real-world rewards for winning.

Professional gaming is restricted to highly competitive, organized gaming. Today, more than 500 gamers worldwide make a living playing eSports, earning up to $17 million per year from sponsorships, prizes, and other revenue streams.

Notably, while only a few hundred competitive gamers earn money from professional gaming, thousands of casual gamers leverage streaming platforms such as YouTube and Twitch to earn revenue. These “streamers” collect viewer donations, paid subscriptions, sponsored advertisements, and more. Top Twitch streamer “Ninja” earned more than $500,000 a month in 2020—not counting the income he generated for Twitch itself by attracting viewers and, by extension, advertisers.

Ultimately, the eSports industry has many stakeholders: casual and competitive players, streamers, viewers, streaming platforms, game developers, advertisers, and more. Its reach and revenue have exploded in recent years. Newzoo estimates that the global games live-streaming audience grew to 728.8 million in 2021. Further, eSports revenues increased to $1.1 billion: a year-on-year growth of over 14 percent.

This significant growth is attributable, in part, to COVID-19. The pandemic has driven people indoors, and professional gaming has enjoyed increased viewership and participation as a result. It doesn’t hurt that the industry’s diverse content—which now spans tens of thousands of unique games—offers something for truly everybody.

Data Science and AI in eSports

It would be short-sighted to speculate about the future of eSports without considering the technologies that make it possible. Video games are a relatively new invention; their widespread popularity, even newer. Without recent and ongoing developments in technology, the professional gaming industry would not exist.

In 1958, William Higinbotham invented Pong: the world’s first video game. This simple, tennis-like game supported only two players at a time, who competed by manipulating digital “paddles” around a screen to hit a ball into their opponent’s net. It was technologically crude by modern standards, using only analog components.

Today, Fortnite is the world’s most popular video game. The massively multiplayer online game (MMO) smashed records in 2020 with 250 million players worldwide and a 12.3 million concurrent player peak. Business Insider reports that Fornite’s success stems from its frequent updates, social experience, and microtransaction revenue framework: all advancements made possible by data science and AI.

Data science: the extraction and application of insights from Big Data is perhaps the most crucial factor behind the eSports industry’s development and growth. Not only is it used to build video games (with key functions in game design, monetization, and more), it plays an integral role in making them viewable.

Ask a traditional sports fan why they love their favorite player, and they may recite figures like “X touchdowns in the last season” or “Y yards run.” These insights come from sports analysts, who measure and track sports performance using data science. 

Similarly, the eSports industry leverages data science to quantify, measure, and track its competitors’ performance. Fans can find their favorite players’ stats and compare them in real-time. On the back end, coaches can use data science to gauge players’ strengths and weaknesses. Streaming platforms and advertisers can personalize marketing, conduct consumer analysis, and enhance the viewing experience.

Artificial intelligence (AI) is an umbrella term for “smart” technology capable of tasks that typically require human intelligence, and it plays an invaluable role in the eSports industry. AI makes video games more immersive by generating realistic graphics and lifelike characters. It also works hand-in-metaphorical-hand with data science to convert Big Data into the valuable insights and processes we discuss above. 

Together, data science and AI make eSports a welcoming environment for billions of people. Evidence suggest that “gaming spaces can be socially accommodating environments for…socially anxious or shy [individuals]. Further, the Pew Research Center reports that 36 percent of teens have made new friends while playing video games. Thus, it’s clear that eSports unites all kinds of people all around the world by overcoming geography and language barriers through shared fun. 

How Companies Can Capitalize

Like social media in the 2000s, the professional gaming industry is today’s “new kid on the block”: it’s young, rapidly growing, and its potential is still largely unrealized.

According to McKinsey & Company, “eSports is now the third-most-popular spectator sport for young men,” and its popularity is significant among other demographics, too. Further, eSports viewership and participation rates are higher for younger generations, with Gen Zers only half as likely as Millennials to watch live sports but more than twice as likely to watch eSports. This data suggests that the eSports industry still has plenty of room to grow, and companies that invest now will enjoy high return-on-investment.

The question is, who should cash in—and how?

The eSports industry offers such a huge variety of investment opportunities. Advertising is perhaps the most accessible, with companies including Intel, Red Bull, Arby’s, Coca-Cola, and Mercedes adding eSports to their sponsorship lineup. However, another option is direct investment in eSports organizations. In 2019,  investors valued three such organizations above $100 million: Cloud9, Team Liquid, and TSM.

Companies can also invest in eSports through data science and AI—technologies that fuel the industry’s growth. Data science helps companies determine which eSports platforms, organizations, and streamers will offer the best return on investment or sponsorship. AI can help companies get the most “bang for their buck” by automation and optimization processes. For example, McKinsey suggests that “brands tend to underestimate the [demographic] fragmentation of eSports fans [and end up wasting their money]”: a problem that AI can circumvent with automated ad-targeting.

 

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Synaptiq focuses on the humankind of AI; building a better world as we lean into an age of collaboration between humans and machines.

We are a full-scale data science and AI consultancy with over 60 clients in 20 sectors worldwide. Our mission centers on growth and partnership—in and between organizations, people, and the technology that makes our work better.

Learn more about us and our partnerships on our website, https://www.synaptiq.ai/

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