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The Geeky Hobby Blooming Into A Lucrative Industry

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If eSports seems as misplaced in business as CS:GO (Counter-Strike: Global Offensive) and DOTA (Defense of the Ancients) do on 24-hour sport channel SuperSport, then you’ve been missing the big picture – this is one of the fastest growing sports in Africa that experts say could be worth a whopping $874 million by 2021.

Just ask Barry Louzada, a computer nerd who turned his childhood hobby into profit. Now this 37 year old is riding the wave of success as the man, and idea, behind Mettlestate, an eSports events hosting company shaking up the industry from Johannesburg, South Africa.

“When I started out, it was a case of people driving around going to each other’s houses [barbequing] and LANing (network gaming). The internet wasn’t workable in this country for us to actually do any sort of online competing or playing. Now you have got thousands of people coming to conventions,” says Louzada.

eSports has now become a lucrative $1.48 million market in South Africa alone. By 2021, PwC’s Global Entertainment and Media Outlook: 2017–2021 reports it will be worth $4.15 million.

“eSports is a pretty exciting field at the moment. There is a significant scope for growth. I remember in high school when people started LANing over the weekend. There would be cables and computers everywhere. Everyone would have their boxes stuffed into their mother’s car. I was one of those people,” says Chantal Marx, Head of Research at FNB Securities.

Chantal Marx (Photo by Jay Caboz)

The concept that you can play games professionally has caught the attention of more than just gamers. Marx says manufacturers of motherboards, consoles and even cell phones all stand to benefit from the rigorous demand of games.

“The games require significant memory and the reaction speed of your computer needs to be very quick. It’s also the internet providers. Data and broadband companies are interested because the amount of data that these games are using these days are massive,” says Marx.

Newzoo’s Global Games Market report says games have now become the number one favorite pastime; in just five years the industry has grown 56%, illustrating how gaming companies have not only pioneered new ways of engaging and entertaining consumers, but have also led the way in innovating business models to suit the digital age.

Mettlestate is just one of the many new companies that have shown green shoots. In 2017, Louzada says he gave R1.5 million ($111,000) in cash and prizes. Before 2016, a R1-million ($74,000) prize pool was unheard of in South Africa.

Louzada is often called the South African godfather of eSports, having slogged it out for 10 years as a competitive gamer around the world. As a player he was exposed to the international eSports industry firsthand and wanted to bring it to African shores.

“Before I even started playing competitively I felt this unquenchable thirst to make this thing that I love so much bigger and more readily available to people. Where we used to have competitions once a year or every six months, we now have competitions almost every month,” says Louzada.

READ MORE: The Nerd Herd

“The real spark happened when I went overseas for the first time in 2006. I went to Taipei and competed in the Asia Pacific finals for Battlefield 2142. It was like being in a dream where we were picked up in these private limousines and had our own hotel floor. We were being treated like rock stars. The question came to me, ‘why wasn’t this happening to our own eSports stars, maybe not on this same level but microscopically, why wasn’t this happening?’”

Rush eSports

Fans demo games on PS4 consoles at Rush in the Sandton Convention Centre (Photo by Jay Caboz)

For Louzada, the ‘E’ in eSports means entertainment – which is key to what he puts on the table. He wants the players to feel like the rock stars on the international scene. Raising the profiles of local players is one of the biggest challenges facing the local industry which is often seen to be a few years behind the international arena.

“It’s the guys on stage, the guys training for nine months of the year, working tirelessly. We need to make it professional, to have a place where [players] can sit and wait to play their games, so they don’t have to loiter and sit on the floor with the spectators.”

Barry Louzada Mettlestate

Barry Louzada (Photo supplied)

Not only does Louzada want to make rock stars out of the top players, he is also looking to grow the industry by helping to bring prizes to those who compete in the lower leagues, where the majority of fans come from. His plan includes hosting shoutcasting competitions and tournaments specifically for amateurs to come and play on the center court to get a feel for what it can be like as a pro.

“We need to grow the smaller guys who are at the bottom. They are just as important as the guys at the top. We need to give them exposure to step out onto a bigger arena,” says Louzada.

Louzada is also an advocate for gender equality. He hosted the Valkyrie Challenge, partnered with Evetech, an all-girl gamer Counter Strike event, where the winners took home $3,700.

There’s a reason for this. In a space where few women-based teams compete, the past five years have seen a significant increase in the number of female casual gamers; 41% of gamers are now women, according to the Entertainment Software Association’s 2016 Essential Facts About the Computer and Video Game Industry.

Globally, PwC reports eSports could reach $874 million by 2021. As interest rises worldwide, tournaments and leagues have become more sophisticated.

“If you want to run a successful tournament you are looking at a ball park figure or R3 million ($222,000) to R5 million ($371,000) before you’ve even put your prize money down… as a tournament organizer in South Africa I’m buying my own chairs, we don’t get those huge sponsors.”

READ MORE: Female Gamers: The New Sport Stars

South Africa has shown signs of its ability to become a hub for eSports. One need only look at the success of the Really Awesome Games Expo (rAge), in Johannesburg. Now in its 15th year, it attracts thousands of fans to watch Africa’s rising eSports stars live.

The success of local live events is representative of something much larger. The real revenue comes from online viewership. While international viewership reached a staggering 292 million in 2016, South African tournaments are lucky to reach 400 viewers.

eSports Rush

Jean Louis Potgieter of Pulse Gaming celebrates after a round of Counter Strike at Rush (Photo by Jay Caboz)

This is one of the reasons why Gareth Woods, a comedian and eSports commentator, and Ryan McFadyen, a marketer, started their own business, Good Game Well Played. They believe large prize pools in South Africa’s eSports industry have become a poisoned chalice.

“eSports is all about viewership. You don’t want brands throwing their money into a tournament and you only have 400 viewers – that’s charity not business,” says Woods.

Gareth Woods (Photo by Jay Caboz)

“Gamers get gaming but don’t get marketing. Marketing doesn’t get the gaming market. Which is why we essentially got together,” says McFadyen.

Together they want to bridge the gap between corporate and eSports.

“A lot of brands want to get into eSports, but they don’t know why they want to get into eSports. They think it’s the next buzzword… While all this money is being thrown into these massive cash prizes, where is the money in terms of content, in terms of raising player profile, in terms of digital amplification of any tournament or money in terms of the event infrastructure?” says Woods.

The pair believe this means companies should look at growing the ecosystem around it. In South Africa, the popular sport rugby took years to foster its following.

“In eSports what is happening is we are saying let’s host a Super [Rugby tournament], without any of the infrastructure and ecosystems in place,” says Woods.

Woods and McFadyen have found that companies that engage with the community from an authentic level are wholeheartedly accepted. eSports fans want long-term commitment to grow the sport, not flashy once-off prize pools.

READ MORE: You Can’t Get The Kids Off The Computer

One industry that has tapped into this is sports franchises, like football teams Manchester City and West Ham United, and basketball teams the Philadelphia 76ers and Miami Heat. Rather than sponsoring tournaments, they bought their own eSports teams. South African football clubs Kaiser Chiefs and Orlando Pirates have sought to mimic this worldwide trend but it’s too early to tell whether the investment pays off.

Ryan McFadyen (Photo by Jay Caboz)

Whether you spend money on buying your own team or sponsoring players, the ticket to influencing this market is upping the view counts.

“We are talking about bespoke activation. The way brands should view eSports is by piggybacking off someone else’s event. You should provide an experience of an event through the brand. Once you have done that you’ve got your toes into the eSports market without having to spend R20 million ($1.5 million) to do the same thing everybody else has done,” says McFadyen.

Even the success of the most lucrative eSports tournament in the world is down to the fans. The International 2017: DOTA 2 Championships ran with a prize pool of $24.7 million this year. Since 2013, crowdfunding has allowed it to reach year-on-year jaw dropping record breaking figures and turn players into millionaires overnight.

“We’ve tried to inherit too much of the European market, which is mainly PC driven. If I was to start an eSports team I would go after mobile and console, because that’s what people play in this country,” says Woods.

Good Game Well Played are also concerned that African eSports is too obsessed with trying to legitimize itself as a sport. Being broadcast for the first time on SuperSport has helped expose it to mainstream South Africa, but it’s a short-term talking point. The ultimate goal is fostering entertainment.

“If rugby was to lose its legitimacy as a sport, do you think it would lose any viewership? It will still hold the entertainment viewership. Let’s be honest, we’re not here to watch these players because they are the embodiment of human athleticism, we’re watching because it’s entertaining. It’s the politics and drama off the field, the injuries and the player rivalry off the field that we want to watch,” says McFadyen.

Alongside poor local viewership, where brands fall short is assuming traditional forms of marketing will work in eSports. It caters toward the emerging millennial market and brands need to create content differently.

“There is a huge entertainment value [in eSports], especially amongst the millennial market which is not consuming TV, radio or print, but are engaging in social media and other forms of content,” says McFadyen.

“Millennials consume more than 10 hours of content per day. I often think to myself ‘how is this even possible?’ But, it’s because they are consuming it on two of three different screens at once. Watching it on their iPads and phones,” says Woods.

eSports Rush

Events, like Rush, host a number of games on various platforms (Photo by Jay Caboz)

For some, the transition to online is easy. Marx, who is a millennial, grew up with a computer in her home from the age of seven; had access to the internet from nine years old and had built her own website before she was 12.

“It’s intuitive for us [millennials] to be able to play these sorts of games, and even more so for the people even younger than I am. Gaming becomes an extension of yourself, that you are doing in your free time. So instead of meditating when lying on the beach, you are playing on your phone addicted to Candy Crush,” she says.

The bottom line is brands need to step-up their game or miss the eSports train.

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