“The chirp of a small bird”

Until 2006, this quote contained the only meaning of the word ‘tweet’. Today, 10 years later, the world is dominated both socially and economically by information giants. Even our language is changing to match. The use of the word ‘google’ to mean an internet search is indubitably more common than its namesake – a cartoonishly large number used almost only hyperbolically. So it is for Twitter – the social media giant that has shaped all manners of social interaction. Besides introducing the ‘hashtag’ to a new generation of linguists, twitter has revolutionized the areas of journalism, artistic expression and, perhaps most essential from an economic point of view, big data. For the latter, Twitter has proven perhaps the most apt of all digital giants at accumulating sentiments: By outperforming most indices, Twitter changed academic appreciation for central limit theory, and the network has since its inception built a staggering base of over 313 million monthly users[i].

However, despite the formidable list of accomplishments attributable to Twitter, its recent history has been all but easy sailing. First, the immense user base has all but stopped growing – a serious problem in an industry so reliant on network effects. Additionally, even loyal users are spending increasingly less time on the service. Unlike the main competitor Facebook, whose users today spend over 50-minutes on the service per day (a rising number)[ii], Twitter users are down to just 2.8 minutes per day[i] – less than a third of what it was in 2014.

Following a long-hailed, Steve Jobs-like return by original co-founder Jack Dorsey in 2015, the company has attempted to alter the course. Dorsey, fresh off the boat from his most recent project ‘Square’, has introduced multiple initiatives intended to revamp the service[i]. However, not much has seemed to work.

Most recently, rumours surfaced that Twitter was up for the, now commonplace, (Silicon) Valley treatment. Various groups, including Disney and competitors like Alphabet and Facebook, had expressed interest in an acquisition. The giant that was once competing for market domination was looked over for salvage value. In the beginning of October, most potential acquirers, of which there were few (due mostly to the app. $12 billion market value of the company), dropped out one by one. This left only intensifying rumor that CRM goliath ‘Salesforce’ would take up the torch.

At point blank, the acquisition would have seemed natural. Salesforce has in many ways perfected the art of utilizing acquisition of emergent tech companies to enrich its platform. Twitter would have been their biggest takeover to date, but at a market cap of $50.7 billion [iii] it was well within the realm of possibility. However, rumors of an acquisition were put to bed once and for all on October 14th, with Salesforce CEO Mark Benioff stating that: “In this case we’ve walked away. It wasn’t the right fit for us,” [iv].

He might have been right. Many shareholders at Salesforce had expressed doubt as to whether the large investment would have been lucrative – considering that Twitter is not profitable by GAAP accounting standards [i] . However, this decision leaves Twitter in an awkward position – and shareholders know it. Following the Salesforce announcement, Twitter stock dropped by almost 7% [iv]. The latest news is that negotiations were initiated with the Japanese tech giant ‘SoftBank’, but as evident from what happened with Salesforce, rumors are far from set in stone [v].

The future of Twitter remains open, yet the company represents an interesting case study in what happens to tech giants that stop growing. Is impending doom the only possible outcome for an ageing star, or is there hope yet for a rekindling?

[i] http://www.economist.com/news/business/21707258-it-too-late-social-media-firm-become-giant-people-once-expected-twitter

[ii] http://www.businessinsider.com/how-much-time-do-people-spend-on-facebook-per-day-2016-4?international=true&r=US&IR=T

[iii] http://www.wikinvest.com/stock/Salesforce.com_(CRM)/Data/Market_Capitalization

[iv] https://techcrunch.com/2016/10/14/salesforce-officially-walks-away-from-twitter-acquisition-for-real-this-time/

[v] http://www.investors.com/news/technology/twitter-spikes-on-reports-softbank-is-considering-acquisition-bid/

You’ve read articles about this topic before. Facebook posts and VICE documentaries hailing e-commerce as the ‘next big thing’. That one friend who dressed up as Legolas for your high-school Halloween party shared a Buzzfeed article about it once. It made grandiose statements about computer games in the Olympics, and the death of traditional athleticism.
‘Fat chance’ you thought. Modern sports have been enjoyed for centuries, why should anything change now?
In 2016, conviction on the longevity of e-sports is no longer optional – the phenomenon is here to stay.

Estimated at a market value of almost a billion US dollars (Grubb 2016), e-sports is by far the fastest growing facet of the entertainment industry, and most analysts agree that it is only going to get bigger.

The Legolas cosplayers have been replaced by billionaire investors, and the streamed events have ousted long-standing entertainment giants like the World Series and the NBA finals in viewership.

But how did this happen?

The first step to understanding the monumental shift occurring in sports entertainment today, is acknowledging that the average viewer has changed. The gamer stereotype of yore is dead.
The pale, socially awkward boy living in his mom’s basement has been replaced by a working adult in his mid-20’s, earning $30,000 a year (Casselman).
Unlike the pale boy, the modern gamer has a significant disposable income, and corporate advertisers take notice. Omnicom, a marketing agency, named employed 25-year-olds the most profitable target demographic in terms of advertising returns (Marketing Interactive 2016) and video games are quickly breaking into the top-4 facets of personal entertainment in terms of generated value (Kresse 2016). E-sports associations have leveraged this fact to attract large sponsors with deep pockets. Even the gender stereotype is under siege. With estimates that 40% of e-sports viewers are female, potential sponsors are no longer limited to a demographic niche (Casselman).

Furthermore, the inflow of money has changed the look of the sports themselves. The LAN-party tournaments of 2012 are gone, and in their stead have come sold-out arenas as large as Madison Square Garden, or the Staples Centre – venues usually reserved for the highest tier professional sports, or the largest musical and theatrical events (Grubb 2016, Kresse 2016) Events today attract hundreds of thousands, and the infrastructure has kept up.
Professional gamers today have adopted much of the support structure that traditional sports have utilized for decades. Teams participating in e-sports tournaments hire coaches, physical therapists, strategic analysts and entire marketing departments aimed at feeding the ever-growing fan base. Top gamers today make immense incomes from various sources, and many have even started to adopt the lavish and sensational lifestyle often associated with traditional athletes.

Much like in traditional sports, viewers today tune in, not only for the suspense of the game, but for the behind-the-scenes action of the professional gamers themselves. But why? Unlike most sports, watching e-sports means viewing the screen of the player, not the player himself. So why do viewers forge personal relationships with the people behind the clicks?
Consider for a moment that all sports began as participant entertainment. You had to play to have fun. The concept of enjoying watching a computer game being played by others more than playing it yourself is curiously unintuitive for many non-gamers. And yet, statistics indicate that the total hours spent world-wide watching football vastly outweigh the hours spent playing it.

How can this be?

The answer has to do with ‘sports identification’: Sports fans experience the success of their team vicariously as if it were their own. Viewers are personally invested. The same concept has taken hold in e-sports, and viewers are no longer watching anonymous participants as pixels on the screen, but know and follow the players they support outside of the game as well (Balint 2016). This personal relationship, while artificial, is immensely powerful. It breeds deep loyalties to teams and players, and encourages fans to tune in whenever ‘their’ team is playing. For context, the largest European e-sports team, Fnatic, commands a daunting fan club of over 2 million members. Former gamer Ocelote has even managed to turn his own, personal brand into an immense revenue stream of almost $1 mil annually after his retirement (Dailydot 2016).

I started this post out by saying that e-sports are here to stay. Yet, despite my undeniably solid arguments, the gnawing feeling of skepticism remains with you: “It is not a sport, and it never will be.”

Are gamers athletes? With millions of dollars on the line – does it matter?

Cited:

Balint, Ed. “The Psychology of Sports: Why Do Fans Care so Much?” The Repository. -, 14 June 2010. Web. 27 Sept. 2016.

Dailydot. “This Pro League of Legends Player Is Making Close to $1 Million a Year.” The Daily Dot. N.p., 21 Oct. 2013. Web. 27 Sept. 2016.

Grubb, Jeff. “Esports Is Already worth $748M, but It’ll Reach $1.9B By 2018.” VentureBeat. N.p., 1 Oct. 2015. Web. 27 Sept. 2016.

Kresse, Christian. “ESports in 2015 by the Numbers: Attendance Figures, Investments and Prize Money – ESports Marketing Blog.” ESports Marketing Blog. N.p., 09 Jan. 2016. Web. 27 Sept. 2016.

Casselman, Ben. “Resistance Is Futile: ESports Is the Future.”ESPN.com. ESPN, 13 May 2015. Web. 27 Sept. 2016.