The Rise of E-sports
From it’s introduction over 30 years ago, video games have enraptured the attention of consumers from all ages. It became a niche, and a veritable community of video gamers and game developers fostered and grew into a staple group in society. Despite the modest beginnings of video gaming, the recent explosion of popularity of video games still boggles the minds of many. How did the niche of video gaming enthusiasts expand to today’s proportions, where a single video game tournament can command over 32 million viewers? The answer may, in fact, lie in the principles behind network effects and how one particular genre of gaming changed everything.
The article here describes the undeniable success of League of Legends, an online multi-player game where players are pitted in a 5 v 5 match in the pursuit of victory. Definitely, games of the same sort have existed previously, why haven’t they been this successful? The answer lies in analyzing this through the lens of network effects. Firstly, between the two instances of stable equilibrium, there exists a single point of unstable equilibrium that determines the popularity of a product. If the product cannot garner enough popularity to surpass this point of unstable equilibrium, or “turning point”, then it is doomed to slowly fizzle out due to the downward pressure that is exerted to the product. This seems to have been the case in the realm of e-sports before the arrival of League of Legends, with the article stating that it “evolved from a small population” to a “full-scale phenomenon”. So what did League of Legends do to surpass this turning point? According to the network effect, one of the factors may have been its extremely low barrier to entry, particularly the price to pay for the game, absolutely free. Along with the game being free-to-play, it is also not very graphically intensive, allowing anyone to pick it up to play. These two factors definitely contributed to lowering the inherent “price” of getting into the game, lowering the point of unstable equilibrium. This gave it’s developers the much easier task of jumping over a lower hurdle, with advertisements and cash prize tournaments attracting attention worldwide. Analyzing the networks effects of this, it is clear that these boosts in popularity were enough to slingshot e-sports into the spotlight, because once the turning point is surpassed, there is a strong upward pressure to push its popularity even further, until the upper stable equilibrium is reached. For now, this is where League of Legends stands, and it is clear that network effects have played a key role in catalyzing its path to success.
Link: http://www.nytimes.com/2014/10/12/technology/riot-games-league-of-legends-main-attraction-esports.html