Gambling operators have by and large failed to unlock esports betting, but it hasn’t been for want of trying. So what is the secret sauce behind those that are succeeding versus those that aren’t? Hai Ng investigates
We all know the scene; the movie shouldn’t date anyone who loves sports because it should be on everybody’s watch list. Cruise and Gooding Jr. on the phone… “Show! Me! The! Money!”
The sport might be different—on screen, only on screen—but esports is showing people the money. With Epic’s Fortnite cashing in upwards of $700m a month last year and EA dethroning that with Apex Legends in a matter of months, esports isn’t just disrupting the business world, it is disrupting business reality.
If you’re wondering whether this is all just funny money, consider this: Epic is putting up $100m for the Fortnite World Cup; EA allegedly paid top streamer Ninja a cool million to play its game, Apex Legends, on 5 February (you read it right, just for that day, and word is he didn’t have to play for long either); last year, a $10m esports stadium in Arlington, Texas, and this year, a $50m greenfield esports stadium in Philadelphia, Pennsylvania.
What does it mean for igaming? Depends on who you ask.
Having shared the stage over the last several years with speakers from Pinnacle, if you
ask them, they will tell you esports is moving the needle, and continues to surprise them with growth every year. Fifth largest market for them in 2018, and just last month, at my roundtable session at the ASEAN Gaming Summit in Manila, it is now the fourth largest.
Interestingly, at the same roundtable, I had companies and operators scratching their heads and wondering if it’s all fiction, because they just aren’t seeing the same results, and not for the lack of trying.
The usual bogeyman points straight at the millennials—that unpredictable and elusive demographic responsible for esports and many of gaming’s woes. Fascinatingly, more and more of the gaming conference audience is now composed of those same millennials, so there has to be more to the disconnect beyond the choice of a new generation.
So what is the secret sauce behind those that are succeeding versus those that aren’t?
The first clue might come from a customer behavior many of the successful operators reveal: with the exception of major events, esports bettors do not cross over
to betting on traditional sports. This should be great news since it means that esports will actually open up a new customer pool.
In a league of its own
Reinforcing this, the distinction with most successful operators is that their esports product is a totally separate portal, not just an esports tab or an esports category as part of a broad sportsbook.
More than that, they often have a distinct design vernacular, distinct from their other sportsbook products.
A quick look at Pinnacle’s site makes this pretty clear: other than the logo, nothing is in common with its traditional sports pages. The color, layout and graphics are all what computer video gamers are used to, quite different from the no-nonsense straight-to-business layout for everything else.
What may also be telling is that you can cross over to other products pretty easily from esports, but esports is slightly buried on the traditional sports pages—another clue?
Esports and computer video gamers gamble. If you have doubts, just look at the revenue numbers being tossed around when the skin-betting phenomenon came to a head with lawmakers in late 2016-17. Since consumers who have skins with which to wager are game players, the numbers
are a unique insight into a very narrow and exclusive demographic.
Conversely, if you ask most people who have never played games, they wouldn’t even understand how many of the games are scored, much less put a wager beyond a blind bet. With that, it does make sense that Pinnacle’s site design is the way it is. After all, successful product design is driven by understanding the customer, often understanding the customer beyond even what the customer is able to articulate.
It is a well-known fact that many at Pinnacle are Magic: The Gathering players, a popular trading card game that shares many traits with current competitive esports titles, and many are also avid fans and players of esports games and other competitive video games.
If you are a customer, you are more likely to have a head-start on building something other similar customers may enjoy too, especially in a disruptive environment like esports. The perfect storm here is many of those same people have years of experience in building and operating an online sportsbook product before esports became a viable product—they simply put one and one together.
So, what’s the secret?
Clearly, Pinnacle is doing something right, but is the secret sauce really that much of a secret? I, for one, don’t think so—it starts with understanding the customer, understanding esports, and respecting both.
One definition of “disruptive” is: “radically reconfiguring a particular field of business, as by implementing new technologies or a more competitive business model.”
Almost all disruption today can be traced to modern computing technology: Uber, Airbnb, Amazon, Netflix, the list goes on, and while the products and services may sometimes seem mundane enough, what enables the disruption in the business model is made possible by, or driven by, modern computing technology.
What we are seeing at the intersection of igaming and esports isn’t unique. Parallels
can be drawn from when Borders met Amazon, Tower Records met iTunes or Blockbuster met Netflix—the established industry leaders don’t always have the right≈answers.
Whether you attribute disruption to technology enabling new methods of interaction, or simply because said technology hasn’t been around long enough for it to be fully encapsulated, something disruptive, by nature, would possess no clear trends leading to its emergence, or where it goes once emerged—esports exists exclusively in technology.
The oldest esports game played today is probably Starcraft, and that can trace its first version to 1995. Counter-Strike? 1999. The game I mentioned in the opening of this article, Apex Legends, launched 4 February and boasted 50 million players and almost $100m in revenue at the end of its first month. It’s all very new, and the landscape is changing rapidly.
Knowledge, experience, and understanding of esports, and the esports community, might be the nutcracker the igaming industry needs, more than anything else, to find the road to success.
But it always seems that everybody knows a guy who’s a gamer, so why is this nut so hard to crack when it seems so easy to find the nutcracker?
The answer could be as simple as the fact that there are gamers, and then there are gamers. What’s more, it may take a gamer to identify another true gamer. Oh, and gamers aren’t always the easiest people to work with—after all, we play games incessantly.
And one more thing, unless you can find a gamer that is familiar with igaming, you will need to be able to understand, then translate what the gamer is telling you to igaming, which isn’t always as easy as it sounds, especially when the game business often upends established business logic and regulations in igaming aren’t always accommodating.
Finally, remember how esports is pretty new and changing quickly? That’s also going to require
certain skills to be able to work with and react to.
FOMO (millennial for fear of missing out) may not be a factor in a business. One approach can always be to wait for the industry to settle down, then buy, copy, or improve upon something that has made someone else a billionaire.
At the end of the day, the solution that igaming needs to ride the esports wave could be less about the how, or the what, but in successfully finding the who—finding your Jerry.
Disclaimer: While the article makes several statements about Pinnacle, the writer does not work for Pinnacle and has not obtained any direct information from the company, only using statements gathered from conferences, articles, interactions with its representatives, and exploring its websites.
Hai Ng is iGaming Business North America’s fantasy and esports editor. He is co-founder of Neomancer, a unique technology strategy and management firm, and has over three decades of experience in the technology sector, with a decade in igaming. He tweets on matters of igaming as @HaiOnGaming