Understanding Esports. Part 2: The Game Streaming Landscape

Beginnings.

It began somewhat with Justin Kan. After failing his startup – an online calendar software – Justin decided to run a wild experiment. It involved broadcasting his life with a camera attached to his head, 24/7, to the rest of the world. Over the next eight months, Justin got so immersed in the endeavor that the camera became a permanent travel companion. Justin then partnered with Emmett Shear, Michael Seibel and Kyle Vogt to create a new form of entertainment – one that streamed people’s daily lives, 24/7.

This was the mid-2000s. TV executives were still crunching viewership data and trying to envision the next innovation of Big Brother-style reality-TV. Unbeknownst to them, Justin and his partners’ endeavor was setting the ground for just that. This endeavor, set up in 2007, was called Justin.tv. It marked the birth of a new form of entertainment: LifeCasting.

Justin.tv’s next mission was to challenge the hegemony of television and democratize access to video. They opened Justin.tv for multiple new genres of live streams. Justin.tv would air whatever was the in thing – From cooking shows to protests in Myanmar, and everything in between. Stream categories included music, animals’, divas, dudes and dudettes to name a few. To Justin’s disappointment, most categories proved unsuccessful.

Most, except one. A strange breed of users was watching one another play video games. To the partners’ surprise, the gaming section was even growing exceptionally fast. In 2011, they renamed the gaming portion of the site to Twitch.tv. The site took off in February 2014 when a stream called ‘Twitch Plays Pokemon’ went viral. Gamers from around the world started pouring in. The channel was viewed more than 6.5 million times, with an average of 65,000 concurrent viewers.

In August 2014, Twitch.tv was purchased by Amazon US $970 million. The rest is history in the making.

“But the De Facto Platform for Videos is YouTube”

Around the same time as the founding of Justin.tv, YouTube took birth in 2005. From a streaming perspective, YouTube’s big moment came in 2010. The platform struck a landmark deal with the Indian Premier League (IPL) to livestream all 60 matches. Lalit Modi, then IPL commissioner, remarked that YouTube had morphed into a virtual cricket stadium of sorts. The next big moment for YouTube was when it livestreamed a tête-à-tête with President Obama.

By 2013, livestreaming had caught the attention of everyone. A big-tech powered gold rush ensued, as each company tried to build or acquire their own livestreaming service or functionality. Twitter acquired Periscope. Facebook introduced Facebook Live. Instagram followed soon after. Even LinkedIn embraced livestreaming in 2019.

More Democratized than a Live Broadcast

Livestreaming, to put it simply, is the broadcasting of live video, in real-time, via the internet. To compare it with the live broadcast of sports and news though, is a bit unfair. Sports, events and news are usually broadcast in well-defined, planned and structured formats. Broadcasters are trained and guided by years of experience and market science.

Livestreaming, on the other hand, is raw. One of the biggest differentiators of livestreaming is the democratization of content creation. This allows anyone to livestream using a platform of their choice. There is no censorship, no editing and, for good or for worse, no holding back. The audience receives the content from the streamer the moment it is created. Democratization also allows content creators to develop or follow their own niches, with the core purpose of bringing people from all over the world together through their streams. That social media has enabled individuals to share raw footage of their day-to-day lives with an audience, and earn income from it, has also proven that video does not have to be professionally produced to succeed online. For livestreaming, the streamer is the actor, and the producer, and the director, and the script writer…

Consider this: if livestreaming is a practice, then the person behind the camera is the product!

If you express surprise when I tell you that livestreaming is the most popular, fastest growing entertainment format today, you’re probably not a millennial and definitely not Gen-Z. Whether it is how we consume content, shop online, learn new skills, forge new connections, seek inspiration or find new pursuits, livestreaming is greatly influencing us both culturally and behaviorally.

Game Livestreaming is as Mainstream as Social Media

Covid19 has only accentuated this phenomenon. Whilst social media, music, sports and ecommerce led livestreaming is only now permeating deep into our lives, videogame livestreaming has existed for at least a decade.

Streaming titans like Ninja, Shroud and Dr DisRespect have spent years consistently playing online, streaming and growing their communities. A typical session involves streaming game play, interacting with fans and followers, commenting, chatting and doing bizarre things more often than not to entertain crowds in real time. In fact, music, entertainment and sport industry veterans are now looking to run their livestreams on game streaming platforms like Twitch to stay relevant with this audience!

Even more interesting, is India’s love for gaming livestreams. At an average of 4 hours and 35 minutes per week, Indians now spend more time viewing game streams than any other nationality. Moreover, Indians are now spending almost an equal amount of time watching esports streams and traditional sports. (Esports is a subset of gaming that involves multi-player competitive matches between players or teams).

The rapid rise of game streaming platforms isn’t a cultural surprise, though. People have always watched others play video games. They sat around the television watching each other play, or they would visit the local arcade to watch the masters. Game livestreaming brings that pastime into the 21st century by allowing gamers to stream live to anyone wanting to watch them. Game streaming has taken the original form of entertainment – the games themselves – and allowed for a “second derivative” mode of consumption. While no one is interested in watching others stare at a movie screen or listen to an album, the digital immersive-ness and interactivity of games has made this second derivative an exciting and popular form of new entertainment.

So, What Platforms Make Up the Game Streaming Landscape?

There is no question that the global quarantine has supersized the livestreaming industry, with the industry having its moment at 99% year-over-year growth. 3 major players – Twitch, YouTube Gaming and Facebook Gaming, make up majority of the global game streaming traffic. There are other, local leaders too – Huya, Doyu and Trovo (all owned by Tencent) and some Indian entrants as well – Loco, RheoTV and Rooter – to name a few. For this piece, we’ll cover the three major players. (The remainder will get suitably profiled in one of our later stories.)

Twitch: Twitch is an undisputed pioneer and leader as the world’s de facto game livestreaming platform – with a staggering 65% market share in terms of total hours watched in Q2, 2020. Twitch has cemented this unique position in the majority of Western markets, and, dominates the content creator landscape with 4 million creators streaming each month. Twitch has always been about community and bringing people together, and hence, upon its acquisition by Amazon, introduced its Prime Members to Prime Gaming. Twitch is also actively building communities outside of gaming, such as music and performing arts. Twitch has also forayed into the virtual movie watching landscape with the introduction of Twitch Watch Parties to further offer a social experience. Twitch is also able to benefit from premium sport content from the likes of the English Premier League and NFL via Prime Video’s sport content deals that allow sharing of carriage with Twitch. A particularly interesting feature of the live streamed sports commentary allows viewers to interact with the commentator which marks a major shift away from traditional game broadcasts. Whilst gaming remains central to Twitch’s offering and a cornerstone of social broadcasting dedicated platforms, the trend away from gaming is set to continue with a variety of media companies and celebrities turning to social broadcasting as a new outlet.

YouTube Gaming: Following their failed acquisition attempt of Twitch, YouTube launched its own platform – YouTube Gaming – in August 2015. At the time of launch, gaming-related content (VOD) accounted for “billions of hours of watch-time a month, with hundreds of millions of users” on YouTube’s core platform. However, the new YouTube Gaming vertical intended to compete directly with Twitch by focusing on livestreaming. YouTube Gaming’s endeavor would be to corner the esports market as evidenced by their partnership with three major esports franchised leagues of Activision Blizzard – Call of Duty League, The Overwatch League, and The Competitive Hearthstone League. The platform has also signed exclusive deals with big streaming content creators like Courage, Valkyrae, Musilk and LazarBeam. Each streamer brings in thousands of live viewers and additionally boasts of millions of views from highlight compilations that are uploaded as VOD on YouTube. Analysts believe YouTube has a distinct core advantage of a popular VOD section whist also building its livestreaming capabilities. YouTube Gaming has grown steadily over the years and has become the second-most popular livestreaming platform in US and the most popular one in India, accounting for approximately 22% of total hours watched in the Q2, 2020.

Facebook Gaming: The social giant introduced Facebook Gaming in 2018. Facebook’s strategy is predicated on signing exclusive streaming deals with noted celebrities and microcelebrities, including former Super Smash Bros. pro Gonzalo “Zero” Barrios. They’ve drawn a little notoriety to the platform, pushing Facebook Gaming into the third-place spot in the livestreaming pecking order behind Twitch and YouTube Gaming. Another boost to Facebook’s service was Microsoft’s decision to shut down its own game streaming service, Mixer, and divert its users to Facebook. With 109 million hours watched in July 2019 compared to 345 million hours watched in July 2020, Facebook Gaming continues to be a fast-rising star with 215% year-over-year growth.


A Virus Changed the Way We Internet

Between the months of March and April of 2020, the videogame streaming genre grew by 45% - Twitch’s viewership up by 10%, YouTube Gaming up by 15%, Facebook Gaming (the more recent entrant) up by 72%.

Tomorrow’s consumers are expected, generally, to have more leisure time and access to faster internet. How will consumers' consumption of entertainment evolve when 5G enables seamless video streaming during commutes, or even as remote employment and online retail become the new normal?

Rather than sitting on their laurels, the gaming, tech and livestreaming-entertainment industries have continued to demonstrate strength in their creative imagination, facilitating the ability to connect with audiences and make a positive global impact. The new challenge is for the others – creatives, content creators, advertisers, event organizers and investors – to join the revolution and turn this industry in to an ecosystem.


[This is Part 2 of a 5 Part Series on Understanding Esports. Part 1 served as an introduction to Esports. Part 3 will discuss opportunity for marketers in esports. Part 4 will discuss the rise of franchise based esports. Part 5 will discuss the Indian esports landscape]