From a Ferrari 328 to a billion-dollar global business: History of Esports Economy

The esports industry is keeping its international worth thanks to the widespread internet usage around the world and the popularity of video games, especially the competitive ones. For a new industry that was nearly started 35-40 years ago, it is unbelievable to see how the esports economy grew at a rapid pace and impressed other big corporations from several different industries including fashion, food, and of course, technology.

The teams created by gamers at that time got out of their tiny little rooms and started to do their favorite things in life: playing video games while they are in front of thousands of people and winning a good amount of money. Today, we will talk about the evolution of the esports business.

Firt Big Esports Prize: Red Annihilation‌‌

The first tournament in esports history was a Spacewar tournament. The date for the tournament was 1972 and it was held at Stanford University, with the prize of one year Rolling Stones subscription. Even though it was the first tournament, Red Annihilation got its specialty with its reward and competitive gaming design.

The Quake tournament which got the title of the first competitive game tournament with an acceptable reward, the Ferrari 328 of John Carmack, is one of the important event for economy of esports.

The tournament was organized in May 1997 in the USA while also becoming the first national tournament in the United States. At first, it was created as Kings Of Capture Quake by Michael “Hawthrone” Shearon but after the possibility of sponsorship with Intergraph, the tournament turned into the Red Annihilation and was developed by Rob Esterling.

Ferrari 328 GTS (Source: Wikipedia)

As a partner of Red Annihilation, Mpath Interactive, an online gaming company helped 2000 players from the United States to have one-on-one matches with its MPlayer Network. The best 16 players who elected their rivals and came to that stage were supposed to go to Atlanta, the World Congress Center. Intergraph built a gaming room for gamers on the floor of the Electronic Entertainment Expo (E3). At that stage, vQuake, hardware that presents a faster version of the game was used while players also have fancy equipment for Intergraph computers.

While the final of the tournament took place on the show floor of several daily newspapers, Dennis “Thresh” Fong was the winner of the tournament and also the Ferrari of John Carmack. Even though he wasn't an owner of insurance for driving a car like that, Carmack signed the insurance for Fong so he would be able to drive the car later.

This tournament is showing us how some companies and individuals were trying to put the gaming activity into a big industry with all of these investments and the opportunities that they gave to the gamers. Thanks to their efforts, the industry continued to grow, also with the usage of the internet around the world.

At present, the esports economy is a part of one of the biggest industries with its specialty of being so easy for people to reach and enjoy in our “e-world”. Let’s talk about what kind of sponsorships or big tournaments were made in terms of esports.

DOTA: The International (TI)‌‌

The International or TI is a Dota 2 tournament organized by Valve Corporation every year since 2011. The first tournament was in Cologne, Germany, as a part of the trade show Gamescom to increase the popularity of Dota 2 worldwide. The prize pool was announced as $1.6 Million while $1 Million belonged to the champion of the tournament and it grabbed the attention of others while 16 teams played in this tournament.

Credit: Valve Corporation

Year on year, the prize pool grew and by 2021, the tenth iteration of TI saw the purse shoot up north of $40 million. Even though the initial prize pool of the tournament was $1,600,000, Dota 2 decided to add 25% of Battle Pass purchases to the total pool while it led to more purchases during the tournament. That is an extremely great example of how esports fans are giving attention and caring about that kind of organization for the games that they like.

League of Legends - Louis Vuitton Collaboration: LOL X LV‌‌

There is also a need for mentioning how League of Legends made a collaboration with Louis Vuitton, a worldwide brand based in Paris, France.

Credit: Riot Games

Their collaboration started in 2019, while the League of Legends World Championship Finals were held in Paris. Other than that, there was also a collection which featured about 40 products while many of them cost over $1.000. Both the skins inside of the game that were designed for heroes Qiyana and Senna and other 40 products were designed by Nicolas Ghesquiere, a director of women’s collections for Louis Vuitton.

It is incredible to see how this business started with a person’s Ferrari and became a market that takes interest in well-known and expensive clothing brands into designing special clothes both in-game and real life. According to Newzoo, total income from the esports industry was $1.1 billion dollar in 2019. Every day, with the improvement of technology and the interest of more people in the industry, esports will continue to improve its business and we will talk more about this sector.

Let’s see what the future will take you esports!

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