Online gaming just keeps on getting bigger.
In fact, gaming is now even larger than Hollywood and the music industry combined, bringing in a whopping $180BN in revenue globally in 2021.
Not only that, but it’s become increasingly popular across all demographic groups, ages and geographies, with hundreds of millions of players spending more time engaged in play and re-defining it not just as a hobby but also as a social and commercial activity.
High-flying titles are now topping big blockbusters, fueling another rising subset of this growing industry- esports.
Meanwhile, the global esports market is projected to reach $9.6 billion by 2030, up from a current addressable market of $1.38 billion (as per Barclay’s).
In the midst of this boom, esports leaders are taking note of the metaverse and the great potential arising from transitioning into virtual worlds.
What Is Esports?
Esports, also known as electronic sports, refer to professional competitive gaming based on video games. The esports industry estimated a worldwide audience of 215 million, with the number of enthusiasts expected to surpass 300 million by 2025.
In 2021, nearly 74 million people watched Riot Games’ League of Legends world championships, breaking all kinds of viewership records. So, how did we get here?
eSports originated in the early 1970s with the "Intergalactic Spacewar Olympics," the first-ever gaming tournament held at Stanford University's Artificial Intelligence Laboratory. The winner was awarded a year's subscription to Rolling Stone magazine.
In 1980, video game developer Atari organized the Space Invaders Championship, the first large-scale electronic sports competition, with approximately 10,000 participants from all over the United States.
And in 1990, the Nintendo World Championships kicked off, touring dozens of U.S. cities. The most recent edition of the series took place in 2017.
The number of competitions saw a boom particularly between 2000 and 2010, during which some of the leading tournaments were established, including Intel Extreme Masters, World Cyber Games, and Major League Gaming. It was during this time that the first international esports organization, G7, was founded. It gathers teams from the United Kingdom, United States, Germany and Brazil.
Nowadays, playing and watching esports streams is widely accessible. Some of the most popular live streaming platforms include YouTube, Fortnite and Twitch, where fans can engage with titles such as League of Legends, Dota 2 and Counter-Strike.
Just as with any sport, esports gathers skilled gamers (sometimes also called athletes) whose talent is on display as they try to beat their opponents during oftentimes intense and lengthy competitions.
Professional and amateur esports tournaments have become equally sought-after, helping transform the industry into a multi-billion force to be reckoned with.
Currently, Asia and North American remain the largest markets, with China leading the pack.
Esports and the metaverse
Gaming is seen by many as the gateway into the metaverse, providing a (seemingly) actionable and sustainable path into the newest iteration of the digital world - and helping improve the range of experiences we can have in it. In other words, the metaverse can be much more fun than it is today.
In this, blockchain technology is quickly becoming a significant force in bringing that goal forward as it is the power behind the play-to-earn model.
Simply put, P2P allows gamers to fully own in-platform assets and to monetize them in whatever manner they wish. It might seem simple, but in an industry long under the ironclad dominion of game publishers and developers, blockchain games represent the unshackling from opaque and unfair practices.
The integration of blockchain into the world of esports centers specifically on the use of non-fungible tokens (NFTs).
Based on the principles of ownership of unique items, scarcity, indivisibility and programmability, NFTs are a vehicle through which players can seize new opportunities in metaverse-based environments.
Let’s take a closer look at how this works.
It will come as no surprise to you that, just like with any other run-of-the-mill gaming title, players enter the metaverse in the form of an avatar, a virtual character that represents their identity and personality in a digital platform. Metaverse games, as earlier mentioned, are predominantly based on a play-to-earn model, meaning that gamers are able to buy, win, or collect assets such as skins, weapons, and a vast array of add-ons, and sell them in return for real-world money.
Since the metaverse is being built on top of cutting-edge technology, that is virtual and augmented reality, artificial intelligence and blockchain, the platform is able to enable organic and immersive gaming experiences that feel very much lifelike. And as the foundations of this new world keep maturing, we can expect interoperability to allow players to move gaming assets between different games and different spaces without any major problem.
In conclusion, blockchain is helping players permanently store their prized gaming assets in the metaverse and these can’t, in theory, ever be stolen or forged. Depending on the platform, items can be kept in a cryptocurrency wallet and sold if the owner so decides. Before we move on, let us touch upon one key infrastructure that is helping facilitate all these metaverse gaming transactions: NFT marketplaces.
Again not gasps of surprise to be had. Within a virtual marketplace, players can trade their gaming assets and hopefully reach a reasonably profitable outcome. And, yes, assets are categorized according to their distinctive characteristics, be that rarity level, collectability potential or the unique powers they unlock. Unique NFTs can also, for example, be made exclusively for esports tournaments and then sold through a marketplace.
At this point, you might be wondering that since this all sounds fairly familiar, how exactly can esports benefit from entering the metaverse. For one, competitive playing can become even more intense considering that tournaments take place in a 360 degree environment, with sensorial queues that the real world can’t replicate.
What I meant to say is that, devoid of any physical constrictions like, say, gravity or material limitations, a virtual environment can take any shape or form desired. Moreover, players won’t be merely engaging with a screen but rather living with the game. From fantasy esports to skill-based wagering, there’s truly no limit to the kinds of hyper sensorial experiences that gamers can engage with in the metaverse.
Reward systems can also be a very compelling argument for esports leagues to join the metaverse, with players receiving crypto prizes, whose value can grow overtime, that they also exchange for real money.
For now, we are yet to see major esports tournaments playing out in the metaverse, but that’s not to say that might not change very soon.
Earlier this year, metaverse entertainment and production company Infinite Reality (iR) reached an agreement to acquire esports conglomerate ReKTGlobal for $470 million, as part of a strategy to invest in NFTs and web3 initiatives including the metaverse.
And as deals, sponsors and partnerships slowly enter this newly-minted industry, we are likely to see more players deciding to dabble in it.
Benefits for esports in the metaverse
The new gold rush doesn’t seem to be for precious natural resources, but rather virtual worlds where a different kind of valuable resources are being unlocked.
Fortnite and Roblox are two major platforms greatly leveraging the gaming world in the metaverse-like environments, with millions of players flocking to free-to-play titles and building a strong community surrounding virtual experiences.
There are several upsides to shifting physical esports events to virtual ones in the metaverse:
By adding non-fungible tokens to metaverse esports gaming, developers can roll out titles with better economic incentives to players. On the other hand, crypto is offering a different way to fund prize pools, not only because the blockchain enables the transfer of money almost instantly and for small fees across the world, speeding the payout process. Currently. winners have to wait days if not weeks for the cash to clear the tournament organizer’s bank account, among other delays. Improved economic incentives, including NFTs that let owners earn continuous royalties, are quickly becoming a central feature for metaverse gaming projects and competitions.
One of the main features of the metaverse and the use of blockchain in it is that it allows greater access to players from all over the world. Take esports fans that live in, say, a sanctioned country or a place where a certain currency is not accepted. Thanks to crypto and NFTs, they can easily purchase gaming add-ons and enter esports matches. The same goes to esports betting, as bettors can easily place their wagers without paying high fees. Another key factor to consider is that the metaverse aims to be a platform open to everyone, and we are likely to see more amateur esports players taking advantage of the opportunity to enter more competitions and try their hand at becoming professionals.
Decentralized gameplay is becoming a favored trend among players, and it's helping connect different stakeholders under one place, including gamers, managers, fans and sponsors. Moreover, decentralization allows all parties involved to have a say in things such as how esports events take place, how the distribution of prize money is done, the format of media rights or player transfers, etc.
Convenience and engagement ease
A central technology helping underpin the metaverse is cloud computing, which means that games can be more easily loaded and streamed, no matter where you are in the world. Of course, there are still major advancements to be made across not only cloud computing but also 5G networks as well as virtual reality hardware for that fully materialize, but some cloud games such as Amazon’s Luna and Google Stadia have lifted the veil on the possibilities at hand.
Thanks to blockchain technology, it’s virtually impossible that players or esports teams could cheat in a metaverse tournament, including match-fixing. All steps taken and transactions made are transparent as they’re available for everyone on a network to track. On the other hand, smart contracts ensure that all payments are made according to the rules and they mitigate concerns that, for example, money prize distribution is unfair.
Potential to widen the range of competitive esports and reach new audiences
Esports cover a wide range of video games, but any sport can become a competitive game in a virtual space as the digitalization of the real world can bring new things into the metaverse. In theory, this means that there isn't a sport in the real world that can’t be “transported” into a virtual environment and turned into esports. This will also help reach new audiences, including younger consumers, while deepening the connection with esports enthusiasts.
For now, it’s fair to say that the relationship between the gaming industry, esports and the metaverse is still in an experimental phase.
Skepticism or lack of understanding of blockchain, crypto payments and VR technology are some of the barriers standing in the way of a bigger investment by esports leagues and projects in the metaverse.
However, as all this innovative technology matures and proves its merits, we will see the next generation of esports unfolding in the metaverse, providing greater value to the industry and welcoming new people into it, including fans, brands, advertising companies and platforms willing to give virtual worlds a shot.