Jonathan Pan

It seems like records are being broken every other day in esports (competitive gaming) and streaming. The International 2016 had a record $24.8 million dollars in prize pool. The ELEAGUE Major broke the peak concurrent users record on Twitch two years in a row, with a peak of 1.13 million users watching the final match. Most recently, the Ninja — Drake stream has brought all of these topics into the attention of mainstream media.

All of this record-breaking is happening with PC games and console makers — Nintendo, Sony, and Microsoft — are looking to get a piece of the action too, each pursing a distinct strategy. Before we dive into each company’s strategy, we should take a look at what mobile esports has tried to do and is trying to do. It is arguable that mobile esports is the first non-PC platform to explore what esports means for their platform.

When I say mobile esports, I’m focusing on the big three — Vainglory, Clash Royale, and most recently Arena of Valor (the Western adaptation of Honor of Kings). Collectively, they’ve tried everything: pay esports teams to get involved, created leagues, hosted tournaments, created esports broadcasts, and more. Yet none of these efforts have gained as much traction as PC esports has.

And that’s okay, because the industry has yet to define what a successful “mobile esports” looks like. While I don’t have a definition, I offer the opinion that mobile esports is more suited as a participatory esport rather than a spectator esport. And as a participatory esport, mobile esports may be doing quite well. But it’ll probably never eclipse PC esports as a spectator esport.

Therefore, the biggest lesson learned that console esports can learn from mobile esports is to define it’s own success criteria.

Strategic Framework

Looking from the outside in, Nintendo, Sony, and Microsoft’s esports strategies seem to focus on one to three of these areas: first-party/exclusive games, input devices, and platform services.

1. Creating an esport requires esports potential, financial investment, developer buy-in, and most importantly, community buy-in. In total, it’s a big commitment and only makes sense for first-party and exclusive third-party games where the publisher has influence or control over these inputs.
2. Another lesson learned from mobile esports is that input devices matter. High-level and professional players of mobile games use keyboard and mouse when available because it offers more precision and complexity than the touch screen. We’ve seen this in the past with Vainglory and more recently with mobile PUBG. That’s also why arcade sticks are used by most professional fighting game players.
3. Platform services make participating and watching tournaments easier. Tournament participation has demonstrated increased retention and monetization for some companies. For example, players in World of Tanks who participate in esports tournaments have 3x longer lifespan and 3.5x higher spending. Meanwhile, gamers watching esports on consoles can help console makers prove the case that watching esports can lead to increased engagement.

Nintendo’s Esports Strategy

Nintendo has taken an about face on esports. After years of actively suppressing the Super Smash Bros competitive community, most notably at Evo 2013, Nintendo recently announced hosting the first official Super Smash Bros tournament and the first Splatoon 2 World Championship tournament at E3 2018.

Nintendo’s esports strategy appears to be focused on growing their two first-party games, Smash and Splatoon 2, on the Switch. Smash already had a vibrant competitive community before Nintendo’s official involvement. If Smash represents Nintendo’s past, Splatoon 2 represents Nintendo’s future. The team-based, family-friendly, third-person shooter has a burgeoning competitive community with professional and amateur teams. The Switch trailer in October 2016 ends with two teams playing Splatoon 2 in front of a huge live audience.

The Switch is interesting as it seems to straddle the unique space between console and portable. If you recall the participatory esports distinction I made earlier, the Switch definitely enables participation as you can bring it to tournaments — enabling larger brackets. There’s much more friction in bringing a PS4 or Xbox One and their accessories around. Outside of being a unique input device, the Switch has been a major commercial success. Nintendo has sold 14.86 million units of the Switch in 2017 with 52.57 million units of software sold alongside the system. It broke the U.S. record for the fastest selling console ever, with 4.8 million units sold in just 10 months.

Sony’s Esports Strategy

Sony doesn’t have a first-party game like Super Smash Bros or Splatoon 2 that they can build a competitive ecosystem around just yet. In the meantime, Sony’s esports strategy appears to be positioning itself around the most popular console franchise, Call of Duty, while making improvements in input devices and enabling tournament participation directly from the PlayStation 4 (PS4).

The Call of Duty franchise is widely acknowledged as one of the most recognizable esports to mainstream audiences. Starting in 2015, PS4 owners started getting timed exclusivity for Call of Duty DLCs. The Call of Duty World League, which started in 2016, is played on PS4. Sony announced in March that they will reorganize in an effort to focus more on first-party games. If this effort yields first-party games with esports potential, they may shift their esports strategy.

On the input device front, Sony has partnered with Razer and Nacon to create two pro controllers: the Razer Raiju and the Nacon Revolution. There are two reasons for creating these. First, console competitive gamers have needs that are more unique than the average console gamer. For example, Call of of Duty players put their hand in a shape of claw in order to hit circle (crouch), move the right stick to aim and R2 to shoot all at the same time. However, pro controllers have input buttons on the back, so this allows them to map circle (crouch) to the back, so they can hold the controller normally without straining their hand. Second, there is pressure from Microsoft and unlicensed third-party manufacturers such as Cinch and SCUF, who are modding PlayStation controllers. This helped push PlayStation to license pro controllers to stay competitive and to show an understanding of the competitive community’s needs.

On the platform services front, PS4 players can play in ESL tournaments directly from their PS4.

Microsoft’s Esports Strategy

Microsoft’s esports strategy appears to be growing the competitive communities of these first-party games: Halo, Gears of War, and Forza. Halo esports has been around for a long time and has kick-started the careers of some famous players today. In fact, the most popular streamer today, Ninja, was a former pro Halo player. However, he had some choice words to say about why he started taking a break from competitive Halo last year.

Gears of War appears to be doing better in terms of esports teams/player relations. Last week, they announced sharing 50% of revenues from skin sales to esports teams. Here’s how a team owner responded.

On the input device front, the Xbox Elite controller is a hit. The controller is customizable with various features to help competitive gamers play better such as rear triggers, bumpers with adjustable sensitivity, adjustable sticks and better grips for long play sessions. Also, more button placements allows players to do more actions more comfortably, increasing performance.

On the platform services front, Xbox Arena allows players to create their own tournaments. It remains to be seen if tournament organizers will adopt to use Xbox Arena to create tournaments are continue to use established third-party tournament platforms such as Battlefy and FACEIT. Battlefy powers Nintendo’s Splatoon 2 tournaments as mentioned earlier. FACEIT became “one of the first Tournament Organizer partners for the Xbox Live Tournaments Platform” in 2016.

Which Strategy is Working?

It’s too soon to tell if Sony or Nintendo’s strategies are working, but they are on good footing. The PS4 is the established market leader with 73.6 million units sold as of December 31, 2017. While Microsoft has not announced sales figures for Xbox One, analysts estimate that figure to be around 30 million. Size matters and Sony is well positioned to leverage their large install base once they have a first-party esports game.

In the meantime, positioning itself around the Call of Duty franchise in a time when Activision-Blizzard is making significant investment across all of their esports games, especially on the tournament administration and broadcast front, is a smart move as gamers won’t likely hear the words that plague other console esports efforts — “lack of investment” or “poor production.”

Nintendo is well-positioned to leverage Smash’s vibrant competitive community while continuing to build up the Splatoon 2 competitive community. The main complaint about Nintendo is that they haven’t done enough to support their esports efforts —now we have an opportunity to see what they will do in 2018.

Microsoft is on shakier ground. They clearly recognize what esports can do for its ecosystem and its games, which is why they have made significant investment in full-fledged esports leagues. However, the main hurdle seems to be spotty execution and not going all in when they need to. This is to be expected as many companies underestimate the amount of money it takes to run in-house tournaments with accompany broadcasts or outsourced ones.