Cracking the code on eSports

During his presentation at the D.I.C.E. Summit in Las Vegas earlier this month, Major League Gaming president Mike Sepso asked the audience of industry insiders who had ever been to an MLG event. Even though the eSports organization focuses on games the D.I.C.E. audience cares about deeply--League of Legends, Call of Duty, Starcraft II and the like--the hands that went up were few and far between. Speaking with GamesIndustry International after his talk, Sepso acknowledged a sort of disconnect between the mainstream gaming industry and the eSports scene.

"It's interesting," Sepso said. "I think there's a very tiny subset of games and publishers and developers who have cracked the code on eSports and realize it's an important part of game development. Not for every genre of game, right? You're not going to turn Final Fantasy into an eSports title. But for a certain subset of the genres, it's a really important part of the player base. And it's a really fast-growing portion of the player base."

"There's a very tiny subset of games and publishers and developers who have cracked the code on eSports and realize it's an important part of game development."

Sepso said one of the reasons only a few companies seem to "get" eSports is that it's a difficult audience to design a game for. While there's no shortage of games with online multiplayer on the market, only a few of them attract the sort of competitive gaming scene required to sustain interest beyond the game's launch window.

"It's tough," Sepso said of creating an eSports-worthy game. "I don't think it happens anymore if we and other eSports organizations are not involved well before the game releases. Unless the multiplayer team is experienced in building games specific for eSports."

One of the problems developers and publishers run into is that creating an eSports hit requires going against the focus on instant gratification that permeates mainstream game development.

"When you build a game and your studio is investing tens of millions in budget and tens of millions in marketing, you want everyone in the freaking world to buy that game and you want them to have an immediately good experience with it," Sepso said. "The counterintuitive part about eSports is it has to have a skill gap. It has to be something that's difficult to learn to play well."

That inability to jump right in and feel competitive against experienced players might be a barrier to entry for newcomers to eSports, but it's not the only factor that could be a hurdle to the field's continued growth. For example, Sepso said there's a crucial educational component necessary when trying to develop a new sport. The audience needs to be brought up to speed on the culture, from the use of tags and handles instead of real names to the array of lingo specific to each game. There's also a cultural resistance to growth in some genres, Sepso said.

"One of the reasons our advertising is so effective is because they don't eschew the ads. They like it, it's validating."

"I would say fighting games are the one I would point to where they would prefer nobody watches," Sepso said. "We're way too big for the fighting game community. They don't want to touch us at all. We're like big, commercial, and ugly, and they don't want us screwing up their good thing."

MLG has tried to incorporate fighting games into its business a few times, and while some specific game communities were more supportive than others, Sepso said there seemed to be "kind of the hipster mentality" where the more mainstream and popular something becomes, the less they like it.

"With the bigger genres, the ones we specialize in especially, the audience appreciates that and they support it," Sepso said. "One of the reasons our advertising is so effective is because they don't eschew the ads. They like it, it's validating. It's like, 'Wow, there's a Pepsi ad. Holy ****, we're huge!'"

However, getting those Pepsi ads hasn't been easy.

"I've been trying to sell advertisers on eSports for 11 years, and it's difficult still," Sepso said. "A lot of them don't want to touch gaming at all, forget about eSports. When you're trying to explain to a 25-year-old media buyer who's not a gamer at all, you're trying to explain the audience is 18-34 year-olds, mostly guys, affluent, tech savvy, you can't reach them on TV, they've never read a magazine. Where are you going to reach this audience with your client's message? And you inevitably have to explain what DOTA 2 is, which has no relevance at all."

"I've been trying to sell advertisers on eSports for 11 years, and it's difficult still," Sepso said. "A lot of them don't want to touch gaming at all, forget about eSports."

This has limited much of the company's direct sales for advertising to more expected sponsors like game publishers and movie studios, but it has brought in more non-endemic advertisers by taking the explanation of what DOTA 2 is out of the equation. In November, MLG launched its MLG TV portal, sort of a multichannel pro gaming version of ESPN, with scheduled broadcasts featuring a variety of eSports stars and leagues that go out worldwide in 1080p resolution.

"We can do all that cool stuff on the front end, but we also launched on day one with a private ad exchange built into it, so it's directly connected to 40 of the largest media buying trading desks in the world who are continuously bidding in real-time on all the available inventory," Sepso said. "So we provide the audience data, and they've got an algorithm that says, 'I'm going to send this Ford F-150 ad to as many 25-36-year-olds as possible in the next hour and a half.' And here's where they are."

As a result, the advertisers don't need to know what the content is. They just bid on whether or not the audience is the group they're trying to target. The response has been strong so far, with Sepso saying sell-through hasn't dipped below 90 percent since launch. On top of that, the programmatic advertising is also providing a new tool for MLG's direct sales team. One of the common refrains the direct sales people hear when being turned down is that this company or that company doesn't buy ads in the gaming space.

"Now the sales team can run a report on all the brands that bought ads and they can show that and say, 'Actually, you do. You're buying it from us all the time. So maybe you should think about better placement, maybe brand integration, and maybe do a sponsorship deal kind of weaving you into the content,'" Sepso said.