ESports: The Battle for the Emerging Market
A new type of competitive multiplayer videogame has emerged in recent years: the MOBA. A MOBA is a game where there are two teams of five, competing against each other. Each side has a base, and armies spawn at this base and push outwards in lanes towards the other team’s base. One team wins if they can manage to destroy all the towers in at least one of the three lanes, and push into the other team’s main base, eliminating their final building. It is fiercely competitive, and even one player making a few mistakes can let the other team win as a result of his poor decisions. As a result, the communities built around these games have a reputation as some of the worst in videogames. Nevertheless, MOBAs are incredibly popular the world over, and the developers are trying to develop this popularity into a legitimate eSports market.
There are two main companies attempting to pursue this goal: Valve, making DOTA2, and Riot Games, with League of Legends. These games, while having minor differences, are largely the same, and each company would like the top players in world playing their game. To do this, they are offering large amounts of prize money to the winners of their tournaments. DOTA 2, which hasn’t even been released yet, had a tournament at its first gameplay unveiling with a prize to the tune of $1,000,000. According to http://blog.dota2.com/2011/08/a-champion-has-been-crowned/, Team NA’VI came away with this prize money, and even the second place team came away with $250,000. Riot responded two weeks later by one-upping Valve, announcing that for their second tournament season, there would be $5,000,000 in total prize money throughout the year (http://na.leagueoflegends.com/news/league-legends-season-two-feature-5-million-prize-pool).
This is especially interesting because one of the companies has a history of competition and the other does not. While Valve, a part of the gaming “Old Guard”, has had to deal with direct competition from the best and brightest of companies (id, creators of “Doom”, and Infinity Ward, creators of “Call of Duty”), Riot has not had real competition (There was a previous MOBA, HoN, which had no serious cash tournaments or market share and thus cannot really be considered). Therefore, they are doing the only real thing they know how to do: throw money at the problem until it potentially goes away. Valve is responding as such, and each company is so far in they can’t leave now. This means there is a bit of game theory here.
The game is simple. Both companies need to invest money into their community if they want to get people to play their game. So one system might look like this (each number is the number, on the scale of 1-5, the relative profit the company would make):
If they both enter: 3,3
If only Valve enters: 5,0
If only Riot enters: 0,5
But this system itself isn’t correct in and of itself, due to the fact that many of their players are a cynical bunch, and investing more money could simply look like a cash grab, and they would switch their preference to the other game. So if both enter:
3,3
If only Valve enters: 5,0
If only Riot enters: 0,5
Now, here is the difference
If Valve spends more money than Riot: 4,3
If Valve spends FAR more money than Riot: 2,5
And this is the same for the vice versa. It’s a delicate game, courting PC gamers. They will commit to a product if it proves that it is friendly to the consumer, and the company. Otherwise they’ll prematurely throw a game under the bus, and declare the competition the winner. Only time will tell who will win the war for the consumer’s hearts and minds