Video gaming has become a truly mainstream phenomenon and eSports played in tournaments are beginning to draw significant viewers around the world. The global video gaming industry currently generates more than $135 billion worldwide which is twice as much as the film and music industries combined. Consider, for example, that the reboot of the PC game Call of Duty Modern Warfare pulled in $600 million only three days after its release.

There are hundreds of millions of fans around the world that are prepared to watch the most elite gamers live; currently, it’s not uncommon to see sold-out arenas, significant prize pools, and big-name sponsorship deals for eSports events that have given rise to a young generation of ‘cyber athletes’.

The eSports ecosystem consists of the following components:

  • Game Developers

Generally independent studios, they develop the games from scratch. A story is written around which a design team builds the elements that tie the narrative into a game structure. The programmers then represent this narrative in computer code which can be implemented as multi-player game and/or available online as well as the traditional stand-alone game available for purchase. The gaming engine on which the mechanics of the game depend are now owned by large game publishers such as EA and Dice.

  • Publishers and Distributors

Publishers are responsible for distributing the games once they are created. Often, they finance the development of the game, oversee the design and gauge customer interest, decide on packaging, and market the retail version of the game. Some publishers own game development studios and distribute their own games through retail stores. The trend in distribution, however, is to do so digitally through web-based platforms such as Steam, Origin, and UPlay among others.

  • Hardware Vendors

These are the companies that create the electronic devices and infrastructure on which games are played depending on the platform. The biggest platform for games currently is mobile devices (smartphones and tablets) made by major electronics companies such as Samsung, Apple and Xiamoi among others. These are followed closely by PC gaming in terms of popularity with hardware companies such as Intel (for processors) and Nvidia (for graphics cards) and a range of other companies that make PC components Finally there are the consoles such as Sony’s Playstation, XBOX from Microsoft and Nintendo’s Wii. Next-generation platforms in the virtual and augmented reality space, such as Facebook’s Oculus, could potentially join the major players but the technology is not yet mature enough to attract significant numbers of players.

  • Streaming Services

There are various services that enable players to live stream themselves playing video games that others subscribe to watch on various platforms including Twitch, which is owned by Amazon, and YouTube Gaming, owned by Google. While these are not eSports environments, they generate a huge amount of content and have given rise to gaming celebrities that can earn significant money through sponsorships and fan payments and also help to popularize the idea of playing video games to earn money.

The eSports phenomenon is a bid to treat video games like any other major sport where fans are prepared to pay money to see their favorite players and teams compete live in an arena environment. Like other professional sports leagues, eSports is the foundation for an ecosystem of other opportunities such as betting on live matches.

Players, like in any sports franchise, are central to the ecosystem; they are the stars with their own personalities and fanbase. An example is Kuro Takhasomi (KuroKy), who has won over $4.2 million in prize money from Dota 2 tournaments to date and is the highest earner of any player of eSports.

Many eSport video games are team-based, so there is a crucial element of putting a winning team together that can be just as popular as individual players. The fact that eSports franchises are currently selling for millions of dollars suggests that this is a fad that is here to stay. These franchises don’t just employ players they take care of their every need to ensure their success including trainers, coaches, and personal chefs.

Some of the most important games in the eSports universe right now are Dota 2, Counter-Strike, League of Legends, Overwatch, Fortnite, and Call of Duty.

Competitions in these games through leagues and one-off tournaments can offer large prize pools for winners. The biggest single prize pool to date was $25.5 million, which was offered for a Dota 2 tournament in 2017 called ‘The International. When you consider that this is the second richest prize pool offered by any sport (only the U.S. Open Tennis Tournament offers more), it’s obvious that that eSports and gaming have serious fan support and an even more lucrative future.

Running eSports events also generate significant revenue with organizers of these events filling arenas with fans and attracting significant sponsorship. Often game publishers organize events around their own games, but there are also independent events. Sponsors such as Coca-Cola, Intel, and Mercedes-Benz clearly see value in eSports and have spent millions of dollars to sponsor events and this reaches the massive audiences associated with eSports and video games.