This weekend I spent over six hours watching commentated Starcraft 2 replays while lying in bed. Luckily, since we do a lot in the gaming space at Justin.tv, all my time spent gets to count as "market research." As I approached my fifth hour, I realized a few things about the dynamics of the nascent esports industry:
- Money accrues to the distributors. Recently there was a debate on Team Liquid (the largest Starcraft community) about whether it was fair that casters (commentators who commentate and post replays to their Youtube or Blip channels) make much more than players. Casters generally make money through advertising, while players make money from winning tournament prize pools. Ethical dilemmas of fairness aside (considering that the players are creating the content), the reality is that casters are the in the distribution position with millions of subscribers on Youtube and control the audience (and therefore control which players get exposure).
- The real winners are the platforms (Youtube, Blip) to which the distributors are beholden for advertising dollars (which they take a hefty percentage of). Building a community for which you control all the distribution for creates a massive amount of lock in.
This pattern is mirrored in many other industries, such as the music industry, where record labels control radio / media distribution and are much more powerful than the actual artists, or the clothing industry, where small designers are beholden to retail outlets and have to take terrible terms to get distribution. The takeaway? Being the distribution platform is a lot better than being a producer.
Lastly, for Starcraft lovers in the Bay Area, get excited: we're doing Startupcraft 2 very soon. Details will be announced shortly.