Twitch was sold to Amazon for close to $1 billion in cash, leaving cable executives scratching their heads. How did this happen and why did cable miss the boat in terms capitalizing on millennials’ massive craving for video-game related content?
Video gaming, after all, is a huge business. The Gartner Group estimated that the industry itself took in some $93 billion in global revenue this past year. More than 60 million people have used Twitch to post highlight videos of their game play from such titles as League of Legends, Dota 2, World of Warcraft, Minecraft, Diablo and Call of Duty.
Some 32 million online viewers logged on for last year’s annual League of Legends World Championships. There were plenty of signals that fellow gamers enjoyed watching and listening to other gamers as they played and bantered about video games, yet programming executives were unable to successfully tap into this zeitgeist.
Not that attempts weren’t made. In 2002, Comcast and Charles Hirschhorn, a former president of Walt Disney Television and Television Animation, set out to launch G4. The ambition was to follow in the footsteps of MTV and create a platform for video-game related content that would eventually be produced by game creators. Unfortunately, ratings didn’t follow and in 2005, Comcast replaced Hirschhorn with Fox Sports and ESPN marketing alumnus Neal Tiles, who promptly announced that the network would evolve into a lifestyle channel because “guys like to play games, but not necessarily watch a bunch of shows with games on the screen.”
MISREADING THE MARKET
It was a classic case of misdiagnosis. The problem wasn’t that gamers weren’t interested in games-related programming. The problem was that gamers were no longer watching cable TV. The Internet — with its pulldriven, rather than push-driven, content design — was a far more entertaining and satisfying media outlet. And the rise of interactive game communities built around MMO (massive multiplayer online) titles such as Ultima Online, Everquest and World of Warcraft helped shepherd in the world of social-media engagement as we know it today.
But in this digital streaming universe controlled by behemoths like Amazon, Apple, Facebook and Google, there lies a potential opportunity for cable operators to get back into the video-game business. And the sounding alarm for action couldn’t be louder, especially given the graying trend among television audiences across all cable networks and demographics.
It may be hard for older viewers to wrap their heads around the question: Who would want to watch others playing poker on television? Is it really that interesting to look at playing cards on the TV and guess which ones will appear next on the draw?
Apparently some pretty smart executives at ESPN thought that programming built around the World Series of Poker, the annual Texas Hold ’Em tournament in Las Vegas, would work. They were right, and other networks from Spike TV to Travel Channel to NBC followed suit with poker shows of their own.
ESPN’s circa-2003 decision to build its WSOP coverage around the personalities of participants such as Phil Hellmuth made the players into known quantities whom audiences tuned in to see. Their celebrity helped the sport grow from a cult following to a mass audience: ESPN’s live finals telecast in 2009, for instance, drew some 2.1 million viewers.
But in the world of video games, the stars are homegrown, with large, organic digital followings. Many are an order of magnitude more popular than ESPN-featured poker players and a few even eclipse some of the biggest names in pop music, at least in terms of online presence. While Justin Bieber has 8 million subscribers on YouTube and Rihanna has 12.5 million subscribers, 24-year-old Swede Felix Kjellberg, who goes by PewDiePie on YouTube, has more than 30 million subscribers and is estimated to earn between $140,000 and $1.4 million per month from YouTube advertising alone, according to The Atlantic and Social Blade.
Ben “Yahtzee” Croshaw of Zero Punctuation fame regularly garners more than 6 million downloads a month for his video-game reviews on The Escapist (www.escapistmagazine.com), a website dedicated to computer games and digital entertainment.
The gaming world’s voyeuristic obsession has given rise to a phenomenon call eSports. Individuals and teams align with various associations including the Korean e-Sports Association, the United Kingdom eSports Association and the International eSport Federation and participate in professional major gaming tournaments held across the world including the World Cyber Games, the Electronic Sports World Cup, and the World e-Sports Games. These competitions, along with professional leagues such as New York-based Major League Gaming, offer up the sort of prize money normally associated with major televised sporting events. The International 2014: Dota 2 Championships, held in Seattle this past July, paid out almost $11 million in prize money. Yet these events do not receive any real TV coverage.
There seems to be a prejudice against eSports that may indeed be misplaced. ESPN president John Skipper seemed to echo this thinking when asked to comment on Amazon’s acquisition of Twitch as it relates to eSports. “It’s not a sport — it’s a competition,” Skipper said. “Chess is a competition. Checkers is a competition. Mostly, I’m interested in doing real sports.”
The popularity of eSports hasn’t translated to big ratings on TV. This, however, could be less about content itself and more about the delivery.
While it is true digital natives prefer to pull content when they want from where they want, it should be noted that analytics demonstrate gamers will log on to watch video content that they look forward to seeing when they know that it’s available.
In other words, scheduling can still be a relevant factor when it comes to must-see entertainment. The Escapist was the first digital only website to incorporate regularly scheduled video programming, as it saw the benefit that this afforded brand marketers. It is an example of where a digital production team saw value in the way television does things. Likewise, cable should look to digital properties for ideas that work.
In this vein, social engagement offers a major advantage to digital properties over traditional cable outlets. Think about the banter that takes place on the sites such as YouTube, The Escapist, Gamespot and Twitch.
This is the true obstacle and opportunity for cable television executives. They need to better understand the importance of communication amongst digital communities. Their ability to tap into conversations with viewers via second-screen offerings is something that will go a long way towards giving them a chance to re-engage with young viewers.
Think about live appointment-television offerings such as major gaming tournaments or even celebrity “Let’s Play” sessions hosted by YouTube and Twitch celebrity “Let’s Players.” (Let’s Players are gamers who post videos of themselves navigating games while providing humorous, critical or other type of commentary about the games they are playing.) This is not to say that all programming needs to be live, but it should have a communal quality to it.
PLAY WHERE THE PUCK WILL BE
The key is that programming needs to be fresh and deal with content that is interesting in the now, even if it’s a nod to the past. And the conversation between the viewers has to be authentic and unfiltered.
In short, cable executives need to look back and understand what has worked for the likes of Twitch, Machinima and YouTube but they also need to pay attention to where consumers of gaming related content are heading. As Wayne Gretsky famously pointed out, “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”
Great programmers will figure out what people want before they know it. They will deliver it to viewers in a way that meshes with their experiential expectations and then supersedes them. Push content, even live, needs to offer something more.
Take advantage of smart screen technology, get involved in the communication and create the party that everyone wants to be invited to. Offer gamers more than what they are looking for. Aim for real time, but allow for consumption after the fact.
In other words, have a Netflix/Amazon Prime strategy that works on second screen devices. Drop your anchor squarely at the intersection where social meets live and must-see television. Make sure the content stands on its own and provide a platform that will allow the gamers to keep the conversation going. They’ll stick around if they’re having fun.
Thomas S. Kurz is founder and CEO of Fan Space Inc., a mobile messaging and second screen entertainment platform startup based in San Francisco.