A disclaimer: I do NOT have a degree in Economics; I am currently studying music as a major, economics as a minor at university. I come from a family of Economics professors. You can‘t walk through the house without tripping over Economics texts and journals. I’m an econ junkie at heart, and while I don’t have the piece of paper to prove it (yet), I have a solid enough understanding of the principles to address the problems that are restricting StarCraft 2 from growing. Economics is full of empirical questions, as such I encourage you to fact check my work and challenge my conclusions.
The end of growth as we know it
As far as growing StarCraft 2 eSports is concerned, there are three questions that need answering.
1) Why are the prize pools stagnating?
2) Why did we see growth plateau in 2012?
3) Why has LoL seen explosive growth, and how do we stay competitive?
I put it to you that all of these problems stem from the same basic narrative. Before I explain, I am going to put forth a prediction. League Of legends is going to go through the EXACT SAME TRENDS as StarCraft 2: a period of explosive growth, followed by stagnation. It will happen in the same timeframe that it did for Sc2, and for the same reasons. Trust me, I’m an economist.
Everything you forgot after college, and then some
Here we go, the real nitty gritty of economic principles. Lets start from the very beginning.
What is the value of a given product? If I have a candy bar, and you want it, how much are you willing to pay. What are YOU willing to give up for my candy bar? That is the very essence of value. My candy bar is worthless unless you want it, and its value is what you are willing to pay for it. Nothing has any inherent value, so sayth the economics textbook. Another way to think about this is, a given product is worth what most people are willing and able to pay for it. Here we have the first (and arguably most important) principle of economics: people face tradeoffs. Everything has an opportunity cost, if you choose to consume something, you must give up all of the equally valuable alternatives to get it.
Fast forward several chapters, and we land on supply and demand. Demand is simply how much of a good people are willing and able to consume. Supply, as you might have guessed, is the amount of a good that is available on the market for purchase and consumption. There is a third factor in all of this: price.
The price of a product is dictated by supply and demand. Simply put, making stuff costs money. If you want to make more stuff, it is more expensive then if you want to make less stuff. If people are demanding more of your good, you must supply more, and spend more to do so. As demand goes up, so does the price. Likewise, if you supply more then is demanded, you have a surplus of goods. Lowering the price creates an incentive for consumers to purchase your good. Ideally, you want to supply the amount that is demanded. If this is happening, we refer to the price of the good as the equilibrium price.
In summary:
If demand is greater then supply, then the price will rise.
If supply is greater then demand then the price will fall.
If supply is equal to demand, the price will stabilize, and we refer to this price as the equilibrium price.
What does that have to do with the price of tea in China?
Where am I going with all of this? Lets examine the rise of StarCraft 2 eSports in terms of supply and demand. 2010 and 2011 saw tremendous growth for StarCraft 2. We took over the main stage at MLG, we saw the creation of several leagues, and teams started investing in training houses, as well as up and coming talent. And who paid for all of that, you ask? We did. You, me, everyone. We consumed StarCraft 2, we DEMANDED it, and the market supplied. Remember the third factor in all of this, always remember price. At first the price was our time, all we had to do was tune in. But as we demanded more, the price went up, per the principle of supply and demand. Eventually the price level went up such that streaming revenue was not enough to sustain supply, and we saw the implementation of a pay wall. The community was able to consume more StarCraft, but we where not willing. We simply didn’t want to pay for eSports. So what happened? Demand went down, less eSports was supplied, and the price reached equilibrium.
Vote with your money
At this point, I imagine some of you are thinking to yourselves: Wait! All of this stagnation is OUR FAULT! Well, kind of. The market is going to supply exactly as much eSports as the community is going to consume. Pay walls are inevitable and necessary for the growth of StarCraft 2. Never mind how well Blizzard is balancing the game, never mind the battle.net interface. If you want the game to grow as a sport you MUST pay for it. You can make a difference; all you need to do is shell out a little bit.
Enter League of Legends
I mentioned earlier that I think LoL will experience the same growth trends as StarCraft 2. I hold this view despite the growth LoL is seeing in Korea. Sc2 has benefited from retaining the viewership of people who have since stopped playing the game. I am editorializing here, but I don’t think LoL has the same long-term viewership potential. LoL is constantly seeing new heroes introduced, and the old ones are constantly being patched. If you stop paying attention for a while, you could come back to a completely foreign game. StarCraft is more consistent in this regard. If you stopped watching for awhile the maps will change, the metagame will evolve, the big name players may even change during your hiatus. But a colossus will always be a colossus.
The next step
Suppose all of our current viewers buy passes for their favorite leagues. Prize pools will increase in size, leagues will be able to experiment with new content, and maybe we land a big name sponsor. Can we really consider that growth by any reasonable standard? Yes, in the sense that the industry will be producing more, but to really take the next big step we need to reach new customers.
StarCraft and LoL are what we call substitutes. That is, they provide the same basic service, and are interchangeable to a degree. If StarCraft isn’t providing what you want from an eSport, you can consume (vote for) something else. Or you can do both, and a lot of people do. Typically people will opt for the cheaper of two substitutes. If apples are too expensive, then you can always eat pears.
But Sc2 and LoL aren’t true substitutes in everyway. They are fundamentally different in many significant areas. I sincerely believe that StarCraft is the better of the two. I’m not saying that because I prefer StarCraft. StarCraft has much greater potential to reach customers that are completely ignorant of eSports.
The snowstorm in the room
Blizzard. As much as I hate to say it, Blizzard has all the power here. Think about how people get into eSports in the first place. For the most part, eSports is discovered as a result of buying and playing a game that is played professionally. There is no way around it. Hook more players, get more eSports customers.
Blizzard is a superpower in the video game industry. Everyone knows it. They have the money, the resources, and the brand recognition to make StarCraft 2 the shining standard for eSports. At this juncture, they have an opportunity to put Sc2 back on top, by way of Heart of the Swarm. Two things need to happen to draw in and retain new viewership. (1) HoTs need to bring new players to StarCraft, and (2) it needs to keep them interested. The first piece is easy, if Blizzard does that marketing voodoo they do so well, and make effective use of price discrimination (buying WoL and HotS as a combo pack should be cheaper then buying them separately) then it will sell. But the game needs to be really damn good. The 1v1 aspect needs to be balanced at the highest levels with dynamic strategic options, and casuals need a social centric way to enjoy the game.
Reality check
If everyone is willing to spend some money on eSports viewership AND HotS is everything it needs to be, StarCraft 2 will be the greatest eSport to date. Not one or the other; both, and it needs to start soon. If you love this game, and this community then you need to be active. Save that $20 you would spend at a bar or restaurant and spend it on eSports. Put CONTSRUCTIVE pressure on Blizzard to get their act together with Heart Of The Swarm.
Folks, we are going to get the eSport we deserve. StarCraft players are renowned for being manner, intelligent, devoted and passionate. If we can live up to those standards, then we deserve a damn good eSport.