Vindex CEO Says Shift in Gaming Revenue Points Way Forward for Esports

As the founder of Major League Gaming and a veteran in the space, Vindex co-founder and CEO Mike Sepso has long been a believer in esports. Sepso told Sports Business Journal that a major shift in how game publishers generate revenue offers esports an opportunity to grow.

“The most exciting trend last year that I saw was how big digital distribution became…78% of all video game revenue was driven by free-to-play games. The big three publishers (Activision Blizzard, EA, and Take Two) generated the majority of their revenue last year from in-game purchases, which has never happened before.” 

“In-game purchases” refers to things like new costumes for characters, new dances in Fortnite, new characters, etc. While some games with a retail price tag such as Madden or Overwatch also offer in-game purchases, this revenue is primarily driven by free-to-play titles like Fortnite and League of Legends. However, some traditional retail franchises like Call of Duty are beginning to take advantage of the model. Currently, the largest Call of Duty-related player bases are in the game’s mobile version and its free-to-play battle royale mode called Warzone.

“Those kinds of ‘opening weekend’ franchises, games like Call of Duty, for those games to move so aggressively into an in-game digital distribution model is really telling for where the future of the industry is going,” Sepso said.

He explained that this shift in the ecosystem points to an increased opportunity for growth in the esports and gaming-related content space. Free-to-play games cannot generate a profit by simply selling a game during a holiday rush and moving on to the next project. Publishers need their players to remain engaged with the title, ideally for years. While the best way to drive engagement is through releasing new gameplay content, gamers consume new maps and game modes far faster than developers can create them.

As a result, content such as YouTube videos, livestreams, and of course esports competition becomes extremely valuable to keep players consistently engaged with a game in-between new content releases. With more game franchises and publishers moving to the in-game revenue model, the need to invest in esports and support competitive gaming ecosystems can only grow.

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