Up until the late 90s and early 2000s, the vast majority of games were single-player, standalone games. At best, you had a game like GoldenEye 007, where you could split your screen into two or four different panels, which allowed people in the same room to play together (and yell “don’t watch my screen!” at each other).

The arrival of the Internet changed that. Players started connecting with each other online and game developers created Massive Multiplayer Online Role-Playing Games (MMORPGs), where thousands of gamers could play together in a single world, with the most famous example being World of Warcraft.

Although in decline, WoW still has a significant amount of paying subscribers

The increased prevalence of multiplayer modes in games also saw esports, or competitive gaming, become more popular. While the beginning of esports can be traced back to a Spacewar tournament in 1972, it was really the game Quake that helped popularize it. Quake, along with its predecessor Doom, were the first games that introduced a wider audience to multiplayer modes such as Deathmatch and Team Deathmatch.

The 2000s then saw the birth of the Electronic Sports World Cup and the World Cyber Games, as well as the start of what are now incredibly popular esports teams, such as Team Liquid in 2000 and Fnatic in 2004. Esports gradually became a global phenomenon, and in 2018, Newzoo estimated the global Esports economy to grow up to $905.6 million for 2019 and $1.4 billion by 2020. Esports reached a global audience of 380 million people in 2018.

Source: newzoo.com

As you can probably deduce from the numbers, esports has become big business. A huge number of people watch professional gamers compete against each other. Twitch, the game streaming platform that was bought by Amazon for $1 billion in 2014, saw its users watch people gaming for a total of 355 billion minutes in 2017.

And you only need to watch one of the streams on Blizzard’s Overwatch League to see how professional the production of some of these esports tournaments has become. Often, they’re sponsored not just by the companies you’d expect, such as Intel, Alienware or Dell, but also by companies that seem to have nothing to do with the gaming industry, such as Toyota.

Problems with Esports

Despite esports seemingly moving from strength to strength and growing at a considerable chip each year, the esports industry remains fraught with problems. First and foremost, only a very small percentage of the almost $1 billion in revenue that the industry generates goes back to the actual players. And when it does, it goes to a few elite gamers, while hundreds of millions of amateur gamers never seen any money while gaming.

Gaming is seen as a hobby or, more condescendingly, as a waste of time, because there are no monetary incentives in exchange for the time you invest gaming, nor is there even a reasonable chance you’ll ever earn enough money to live off of gaming. Streaming or betting on the outcome of matches and tournaments are the best ways to earn money in the gaming industry, and they’re not reliable income streams.

The second problem is that the esports industry is incredibly fragmented. Think about this: the vast majority of games aren’t cross-platform, which means you already divide the user base up into console, PC, and mobile. Next, you have games that differ from each other quite drastically. Esports enthusiasts who like Counter-Strike might not care about League of Legends, and vice versa.

Even in the niche of PC Counter-Strike gamers and viewers, there’s no real governing body that controls the leagues and the tournaments, like FIFA does for soccer. Nor is there a website that comprehensively ranks players or gives a nice overview of the different teams. It’s all on seperate platforms, each with their own user base and their own revenue stream. This makes it very difficult for the industry to collectively improve and grow.

The Emergence of Blockchain in Gaming

As the Internet made multiplayer modes popular in games and introduced esports to the world, another phenomenon was happening concurrently: virtual economies. In a game such as World of Warcraft, you could complete quests and kill monsters for coins that you could then use to buy items in the game.

While Blizzard kept tight control on the exchange of those items or their in-game currency for real dollars, a black market developed where players would trade items for fiat. Not all game developers were that strict either. The developers of the online virtual world Second Life didn’t really have any policy when it came to exchanging in-game property or currency for real money.

The city of Amsterdam was modeled after the real-life version in Second Life. It sold for $50,000

As a result, these virtual economies increasingly spilled over into the real world, and digital currencies started to represent real-world value. When blockchain technology was introduced to the world late 2008, it gave us the ability to turn those digital currencies into cryptocurrencies that are much more secure and transparent.

How Blockchain Can Improve Esports

In order to open up professional esports for more casual gamers, tournaments need to happen everywhere and all the time. This is in itself already difficult to do. But it becomes even more difficult when you think about the logistics of each tournament. In such a fragmented industry, how can gamers trust that the tournament will pay them out appropriately? How will gamers know if prizes are rewarded fairly?

This is particularly relevant if gamers have to pay an entry fee to participate in the tournament. Gamers have to put a lot of trust in the organizers of the tournament and are at risk of being defrauded. You’d be mistaken to think this rarely happens. Even pro gamers risk not being paid out.

Blockchain can eliminate that risk and make esports for casual gamers trustless and much more secure. A blockchain is a decentralized and immutable ledger, which means that there’s no centralized entity pulling at the ropes from behind the curtain. Everything is transparently recorded on the blockchain. How prizes will be awarded can be encoded into a smart contract that will automatically pay the winner when the tournament is over.

Blockchain also allows the industry to become less fragmented in certain areas. For example, a decentralized application (DApp) can create a single universal gaming profile for all gamers. All the relevant stats for all games across all platforms can be recorded onto the blockchain and displayed nicely through an easy-to-navigate front-end user interface. This way, viewers can see who ranks #1 in Dota 2, for example, along with their stats, as well as the stats for other games they might rank for. All this, in a single place, transparently recorded on the blockchain.

Blockchain can improve esports betting too. Unikrn is a blockchain esports betting company backed by the likes of Mark Cuban. It allows you to bet on game matches with its cryptocurrency Unikoin Gold (UKG). You can even back yourself by placing a bet on one of the matches you’ll be playing. Its United Masters League is the first professional Counter-Strike: Global Offensive tournament with cryptocurrency payouts.

The Unikrn user interface.

While Unikrn’s primary focus in on esports betting, it’s increasingly moving into helping organize esports tournaments too. It sponsors the ChallengeMe tournament, which has a total of $290,000 in prizes, all paid out in Unikoin Gold. ChallengeMe allows casual gamers to play and improve their ranking. Prizes are awarded for the best players.

Another interesting blockchain company in the esports industry in DreamTeam. DreamTeam is a teambuilding and skill-growing platform, where players can find teams, get better, and find sponsorships. It also provides a platform for team managers to improve their team’s skills, scout for new players, and dig into the analytics of team players. DreamTeam uses blockchain technology and smart contracts as a way of paying people. This includes gamer salaries, tournament prizes, and sponsorship fees.

DreamTeam already supports League of Legends and Counter-Strike. Soon it’ll support Fortnite, Dota 2, PUBG, and Overwatch. The DreamTeam platform is useful for casual gamers, because it’s a single place where they can find teams and get better. Finding people to play with isn’t easy otherwise, let alone finding a team with good players who play together often and who want to get better at your favorite game.

Although only time will tell whether DreamTeam will become the go-to place for casual gamers to find a team and earn money in the above-mentioned games, it’s nonetheless an indicator of what’s to come in the esports industry.

In Conclusion

While esports doesn’t necessarily need blockchain technology to continue growing, it needs blockchain if it wants to improve how things are currently done. Blockchain will allow esports to become more transparent, more secure, less elitist, and less fragmented. It will give gamers a better chance to earn money gaming and it’s another step towards a future where gaming is no longer seen as a pastime, but as a profession instead.