How the Esports Bubble Burst and Why
Another media biz frenzy has crashed. Will we ever stop falling for miracle fixes for entertainment?
A few years back, a datecdote circulated that more people watched an esports finale than watched the Super Bowl. To be up front, this wasn’t true.
This nugget circulated widely, because, well, why wouldn’t it? People love wild statistics.
Free advice: If someone compares something to the Super Bowl, that’s a tell. It means a bubble has just inflated in media and entertainment — and you don’t want to be too close to it when it pops.
Let’s take a peek at some recent esports headlines to check in on its progress in taking the NFL’s crown:
Jacob Wolf: Overwatch League Shutdown Vote Underway as Activision Blizzard Prepares for Esports' Future
The Verge: Activision Blizzard lays off esports staff as it faces potential dramatic changes for the Overwatch League
Bloomberg: From $1 Billion to Almost Worthless: FaZe Clan Runs Out of Hype
Jacob Wolf: Why the MrBeast-Endorsed Creator League Fell Apart in Less than 72 Hours
DOT Esports: The future of the Call of Duty League has never felt more bleak
GamesIndustryBiz: Twitch Makes Another Round of Layoffs
I guess we should be a little concerned about the sport of the future, huh?
Of course, we all should have seen this coming. The esports bubble bursting was completely predictable. And yes, I wish I had written the damn article calling my shot. (In my defense, I cast doubt on the Overwatch League wayyyyyy back in 2019, and I debunked that terrible Super Bowl number two years ago. I’ll also put my track record in calling bubbles — from podcasts to celebrity production companies to the TV production boom to music catalogs — up against anyone.)
When hype cycles begin, there simply aren’t enough folks willing to step out of the herd and ask if trends are real. (Check out my takedown of the simplistic F1 narrative again just yesterday.) The reporter’s job, as an Economist editor famously put it, is to simplify and then exaggerate. That’s great to explain complicated topics, but if you’re investing — as a sponsor, investor, broadcast partner, producer, whatever — you need to understand the reality. In the case of esports, some of the bubble’s participants include L.A. Rams owner Stan Kroenke, Drew McCourt (son of the former L.A. Dodgers owner), Warner and Disney’s cable networks, sponsors such as Warner Music Group and the celebrities Drake, Will Smith and Steph Curry, to name just three.
I can say, “Beware of bubbles” and “Ignore the hype” and avoid getting sucked into well-meaning news articles boiling complex subjects into breathless headlines. But in the entertainment business’ moment of significant tumult, when so much of what used to work no longer does, when there’s a glaring double standard for one set of players versus everyone else, everyone is looking for that magic cash geyser that's going to replace the ones that are drying up. And that’s the problem as well as why we’re likely to continue down this path of chasing one bubble after the next.
So let’s do an autopsy on the esports bubble. (Note: esports itself isn’t dead, just its frenzied moment.) If we can somehow internalize these lessons, we’ll be better prepared for evaluating the next one.
In this article, we’ll explore:
The first modern sports bubble — and its fade into irrelevance
The three different businesses we confuse when it comes to video games and esports and why we shouldn’t
How data in bubbles often overhypes demand
What a “five forces” analysis of esports reveals
The strategic weakness that was esports’ fatal flaw
The best hope for esports moving forward