The rise, fall, and uncertain future of eSports

Kelsie "Kels" Greg is a statistical oddity. She became the first woman to qualify for the Call of Duty Challengers Elite tournament, one of the toughest in its class. At 22, Kels is also in the latter portion of any professional gamer's career, as most eSports athletes retire by age 24. So, she's breaking stereotypes, and her story is one of the few positive news stories from the eSports industry. Whereas just two years ago, the world had high hopes for the eSports industry, now, it's struggling to make ends meet. So, while some startups are making huge strides in providing more platforms to gamers, such as Kels, these stories are few and far between, and the future of eSports hangs in the balance. 

It's hard to believe that it's been almost twenty years since the game was launched, and Kelsie Greg is one of the first female gamers to make it big in Call of Duty, her favorite game. However, it's astonishing when one analyzes the sector's behavior. The eSports market has grown tremendously since its earliest days of LAN networks and tournaments. 

Since its launch in 2003, Call of Duty has become one of the most popular shooter games. Newer versions included current scenarios, more complex gameplay, and one big party trick: multiplayer ability. While it wasn't the first game to have it, the combination made it perfect for online battles, eventually giving way to the first championship - The Major League Championship - in 2009. Back then, the payouts ranged between $10,000 and $25,0000. The prize pool for 2023's The Challengers Elite is $216,000, and that's not the highest in the world. 

From 2017 to 2023, revenue has gone from $132 million to $316 million, and estimates indicate it could reach $425 million by 2027. Due to this massive rise in popularity, eSports also saw an influx of money from venture capital. From 2014 to 2017, there were only nine disclosed investment deals in the eSports industry. One year later, in 2018, that number was 11. In 2021, there were 138, and ten funding rounds alone were more valuable than the industry's worth in 2017, with many averaging $200 million. 

Markets have also grown incredibly, with projections estimating that there will be an annual growth rate of around 20%, led by China, which accounts for a third of the global market. China also made history earlier this month when VSPO managed to secure $235 million from a Saudi Arabian investor. This startup focuses on one of the biggest challenges around eSports tournaments: supplying enough power, bandwidth, and all the technology needed for a tournament to run smoothly. 

As far as salaries, they saw tremendous growth. In 2019, in the US alone, eSports players earned a combined $46 million. So, what has once been considered only for nerds is now an industry with a following in the millions. In addition, some eSports teams are just as valuable as those in other professional sports, such as hockey and basketball. eSports are even making their way into the Olympics, though the International Olympic Committee (IOC) has made some strange choices regarding the games. I mean: Olympic virtual dancing, really? Well, to each their own. 

The games aren't the only aspects coming under fire. For example, advocates for physical activities have criticized the IOC for considering eSports for the 2024 Olympics, citing that sitting on a chair isn't an actual sport. In that sense, it has fallen into the same discussion as Chess. Meanwhile, eSports advocates say it's ultimately the opposite, as eSports lend themselves more to diversity and inclusivity. 

From the outside, this argument seems true. eSports have the ideal combination to be inclusive, but this is rarely the case. As with other sports, there's a vast gap between the casual gamer and the elite cyber athlete, which can frustrate many. Still, one startup is tackling the issue from the core. Moxy eSports has created a platform where gamers and developers alike can hone their skills and, most importantly, earn while competing in eSports tournaments. This was something only reserved for the top-level performers. 

Moxy's efforts are at a grassroots level, addressing social issues. Still, the eSports industry faces an even more significant challenge, which might void all these efforts. The short answer is that funding is drying up. As I mentioned earlier, there were almost 140 funding deals in 2021, but in 2022, this number dropped to 50, and there's a reasonable explanation for this. 

After seeing massive growth in 2019 and 2020, investors had fallen into the hype, but one aspect had changed drastically. Many ventured into eSports because there was no other form of competitiveness or sports. The problem was that the pandemic eventually subsided, and the industry failed to maintain momentum. So, deal values went from $2.1 billion in 2021 to $310 million in 2022. 

While it's normal for the startup world to see considerable changes in funding, the eSports market felt particularly rough because the hype died down. After a steamrolling growth from 2017 to 2021, the public, investors, and advertisers saw no clear path to profitability, even if the sport was more popular than ever. One example is FanClash. In 2021, the startup had raised $10 million, making it one of India's most successful eSports companies. Now, things aren't looking good. The startup has had to layoff 75% of its workforce. Moreover, these figures make VSPO's accomplishments an impressive feat.

It hasn't gotten any easier for athletes, even before the funds dried up. While the combined earnings of eSports athletes in the US in 2019 was $46 million, it dropped to almost half in 2020 and has yet to replicate its impressive growth. In that sense, Kels isn't only an oddity regarding her gender; she also makes money, which is also unusual. There are no other female eSports gamers in the top 400 list, and in a way, Kelsie "Kels" Greg reflects the industry itself. There's plenty of hype around. In 2022 and early 2023, the industry saw some market growth, yet nowhere near that of 2019 and 2020. Still, many want, or need, for this hype to continue.

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