As the surging popularity of esports opens new opportunities for game producers, their success in an increasingly competitive environment depends on finding a way to deliver feature-rich interactive services in real time without relying on third-party outlets.
This new direction in esports operations has been mapped by Riot Games and a handful of other major game producers who have gone to extraordinary lengths to create network infrastructures capable of fulfilling such ambitions. But the opportunity to maximize returns from esports isn’t limited to the providers with the deepest pockets.
All the networking capabilities essential to competing in this rapidly evolving multi-billion-dollar market are available to any producer who chooses to implement esports services on the Experience Delivery Network (XDN) platform developed by Red5 Pro. Using XDN-enabled infrastructure, providers can deliver fully interactive real-time experiences with remotely played and produced esports competitions to any size audience over any distance.
The multi-cloud XDN architecture not only offers a vast improvement in performance over traditional one-way streaming through content delivery networks (CDNs). It also makes it possible to employ remote production techniques that substantially reduce costs while enabling more varied professional commentary, viewer participation in video chat, and other features.
1. Market Prospects for Esports Are Greater than Ever
Such capabilities are rapidly becoming table stakes in the wake of esports market trends accelerated by the Covid 19 pandemic. Streaming Media reports that, in response to those trends, forecaster Arizton Advisory has bumped its esports global audience projection for YE 2021 by 23% to 679 million, nearly double the audience total calculated for 2018.
Juniper Research predicts the YE 2021 esports audience will be even larger, reaching 800 million on its way to one billion by 2024. The researcher says revenue generated by esports will increase at a 10.76% compound annual growth rate (CAGR), going from $2.1 billion in 2021 to $3.6 billion in 2025.
With game playing on consoles, PCs, and mobile devices soaring as well, esports, like most sports, is benefitting from the fact that people who love to play love to watch competition among the best players. According to a report on the global gaming market issued by Nielsen’s SuperData group, 62% of game players like to watch others playing their favorite games.
This is a big audience with a big appetite. Parks Associates reports gamers can now be found in 75% of U.S. broadband households. One fourth of U.S. gamers who watch esports tune in for more than four hours a week, according to Deloitte. Forbes reports that U.S. consumers in the 18-25 age group who play video games spend 77% more time watching others playing games than they do watching traditional sports.
2. Game Publishers Want to Garner Higher Returns from Esports
Efforts across multiple categories of entities seeking to capitalize on the esports opportunity are generating increasingly dynamic trends in the staging, frequency, and types of events, socialization of the viewing experience, and modes of monetization. Most notably, game publishers, who began staging big esports events as a way to boost and extend the popularity of their core products, now view this aspect of their businesses in a broader light.
As PwC analyst Andy Fahey noted in a blog last year, development of diverse revenue streams through esports is vital to game producers’ pursuit of profitability. “This diversity of revenue opportunities reflects the innovative, agile infrastructure and passionate user base underpinning the esports market–strengths that are coupled with a frontier mindset and a relative lack of industry regulation,” Fahey wrote. “Together, these elements create an environment that encourages participants to try out new things, commercialize them at pace, and transfer them freely across borders into new markets.”
So far, game publishers’ esports successes have been closely aligned with the surging fortunes of game streaming platform providers like Twitch, YouTube Gaming, and Facebook Gaming. By alleviating publishers of the distribution headaches, these outlets became the primary go-to centers for viewers to find and stream esports competitions of every description.
During Q1 2020, viewing time on Amazon’s Twitch, the dominant market leader, grew by 17% over the previous quarter to a record 3.1 billion hours with a 33% increase in the number of unique hosted channels, according to a StreamLabs report. YouTube Gaming and Facebook Gaming, the second and third ranking platforms, also registered strong growth.
But publishers are beginning to look at these marriages of convenience with distributors as a lost revenue opportunity. As Twitch and the other streaming platforms continually add chat, or low latency options and other features to make themselves ever more indispensable in this booming market, they’re inspiring license holders to leverage their intellectual property to greater advantage by taking more control of the business and its monetization potential with instantiations of their own streaming platforms.
But publishers are beginning to look at these marriages of convenience with distributors as a lost revenue opportunity. Esports producers, of course, gain revenue from the sales of media rights to distributors, but the fees typically amount to a fraction of the ad and subscription revenue generated by their events. With ad sales booming, hitting an estimated $1 billion on Twitch, esports producers have an opportunity to do much better by capturing 100% of the ad revenue they generate.
Moreover, esports producers operating over their own distribution infrastructures can innovate their own features offered free or as paid value adds to compete with the types of features that Twitch and the other distributors use to draw users. This starts with the ability to leverage real-time interactive video streaming latency.
Twitch charges users for a “low-latency” option that cuts end-to-end streaming lag time to 3-5 seconds. Real-time latency at or below 400ms is a given of user experience on XDN-based esports infrastructure. This makes it possible for producers to capitalize on video-based real-time interactivity to offer video chat rooms that go beyond the text chat modes common to the generic distribution platforms.
There are many other features esports producers can emulate or surpass to draw users to their platforms, such as leaderboards tracking scores and other game-playing statistics, animated emotes (digital characters expressing emotion), and variations on Twitch’s Squad Stream widget, which allows up to four streamers to collaborate on exposing their gameplay in the same window on a given affiliate or partner channel.
Riot Games, publisher of League of Legends and producer of the game’s esports league competitions worldwide, offers an illustration of how bringing multi-camera feeds into play can be used to support a value-add subscription service above a basic free tier. Riot’s Pro View pass, priced at $9.99 monthly, gives users access to streams tracking individual players via an on-screen timeline, which allows them to skip around current and past action across the field of competition. In the process, they can eavesdrop on players’ in-game chat messages.
3. The Pandemic-Driven Transformation in Esports Strategies Will Endure
The pandemic lent new energy to publishers’ focus on esports strategies. The frequency of events and their exposure through streaming services helped to compensate for the losses in gate receipts and other revenue generated by live audiences. Greater event frequency served to drive up esports service ad revenues and, in some cases, triggered introduction of subscription fees.
And there are more entities than ever contributing to the momentum around esports streaming. Following the trails blazed in 2018 by the launches of Activision Blizzard’s Overwatch sports league and Riot Games’ North American League Championship Series, ever more publishers have franchised their esports brands to foster localized professional and amateur leagues in competitions that culminate in regional and even global championships.
“Esports teams operating within a franchise structure no longer need to rely on winning competitions and prize money as their core revenue source,” Fahey noted. “They can become media companies focused on creating content around their narratives, such as stories about their players or rivalries with other teams. Or they can morph into lifestyle brands based on products and diversity.”
Paralleling the uptick in event frequency, another legacy of the pandemic is the virtualization of esports competition and production. Rather than gathering in one place to compete and produce games, players and production personnel had to be connected via specialized streaming platforms that could support interaction in real time.
While publishers are scheduling a return to venue-based competitions for big audiences wherever circumstances permit, the success of virtualization during the pandemic has led to adoption of hybrid approaches with live competitions interspersed among a steady flow of virtualized events.
This is having a profound impact on how capital is spent as investors pour ever more funding into esports.
4. Game Publishers Can Make Smart Investments in Infrastructure
Globally, total disclosed investments in esports jumped from $4.5 billion in 2018 to $8 billion in 2020. A lot of this money is being directed toward infrastructure. In fact, this was the case even before the pandemic brought virtualized event connectivity to the front burner.
While growing teams was the biggest focus for investments in 2019, that wasn’t the whole story, according to Allna Soltys, co-founder of esports consulting firm Quantum Tech Partners. “[I]f we look at it more holistically,” Soltys told VentureBeat in early 2020, “there’s also a lot of great investment going into the underlying infrastructure that’s incredibly important to have available, both for engaging players and measuring what that engagement level is.”
If building interactive real-time network streaming support is now vital to game producers’ monetization of esports, the topline strategic questions come down to determining what’s to be expected from such infrastructure and how to meet those requirements cost effectively.
The most fundamental requirement is to ensure network-introduced latency doesn’t prevent the spontaneity of interactions essential to multiplayer game play. Fortunately, game production engineers have come up with ways to make this possible through use of advances like predictive intelligence, as described in this white paper written for the Valve developer community.
For example, the method known as extrapolation or interpolation brings an estimation of what’s happening at a distance into the viewer’s present. Another, called lag compensation, does the opposite by shaping the user’s present experience around how everything was rendered by the server at a distance in the past equivalent to the lag time between server and user.
Balancing these methods across all users achieves smooth, accurate rendering of competitive action, like the shooting of another avatar, sustaining an illusion of real-time interactions on every client device. This can be done provided latencies don’t exceed 200ms.
Real-time interactive connectivity, albeit at slightly less-daunting latencies ranging between 200 and 400ms, is fundamental to much else as well. When it comes to socializing viewing experiences among any number of viewers at any distance, a synchronized viewing experience in real time is essential to people’s ability to interact in tandem with the frenetic pace of esports competitions. And, if the provider wants to embellish that “watch party” experience by allowing people to see each other as they interact, the infrastructure must be able to support user generation of video from any point to all others within those same real-time parameters.
Real-time connectivity is also essential to remote productions of virtualized competitions, and to eliminating the need to mount a dedicated production operation at every live venue. This requires a massively scalable platform that can deliver all the camera feeds and commentary tracking players’ actions for cloud orchestration into the second-by-second views of the action transmitted to end users.
To meet these requirements cost effectively, producers need to rely on a single real-time interactive streaming infrastructure suited to supporting all requirements rather than setting up separate networking solutions for each one. And there are other requirements this infrastructure should be able to support as producers seek to enhance service appeal with additional features.
For example, as mentioned earlier, producers may want to provide users a richer experience by giving them multiple video streams to choose from as they view a multiplayer competition. And producers are likely to want to facilitate personalization of the user experience by enabling users to configure ancillary information feeds about players and games.
5. XDN Technology Can Support an Esports Infrastructure Suited to all Requirements
Every facet of network support for this next generation of esports services can be implemented on the Red5 Pro multi-cloud XDN platform. Critically, this eliminates the vulnerabilities to the conflict in interest producers would encounter with reliance on a platform operated by Amazon, owner of Twitch. While Amazon’s AWS IVS platform purports to support what amounts to a white label version of Twitch, producers can’t assume IVS would give them full control over all the functionalities that Twitch can employ to maintain its advantage. Nor (as of the time this post was written) can IVS support multi-directional and real-time video delivery, which means esports providers need to cobble together additional service to create true interactive video experiences.
As explained in this white paper, Red5 Pro’s open-source-based technology enables video delivered from any XDN-connected source to be streamed over any distance to any number of receivers at end-to-end latencies in the 200ms-400ms range. Latencies are even lower when transmissions are confined to a local geographic area, as is necessary in the case of remotely positioned participants in high-stakes professional gameplay.
For example, latencies well below 200ms are attained when fixed or mobile 5G traffic accesses XDN infrastructure through the on ramps to cloud compute platforms that mobile operators are implementing in 5G edge locations. AWS pioneered the concept in late 2019 when it inaugurated its Wavelength initiative in partnership with Verizon.
By hosting on ramps providing direct access to local extensions of the AWS platform, the carrier eliminates latency incurred when traffic traverses multiple Internet hops to reach the cloud. AT&T soon followed suit in partnership with Microsoft’s Azure Edge Zone initiative. And now carriers all over the world are working with these and other cloud providers to take advantage of this important means of reaching the latency parameters 5G providers are looking for.
In these and any other cloud-access scenarios, XDN architecture achieves unmatched levels of interactive video communications scalability through automated orchestration of the platform’s software stack in Origin, Relay and Edge Node clusters instantiated in private or public clouds. Cross-cloud configurations with no increase in latency and fully redundant fail-safe performance are supported through pre-integrations with AWS, Microsoft Azure, Google Cloud Platform and DigitalOcean and in easily executed implementations with a dozen other cloud providers utilizing the open-source Terraform multi-cloud toolset.
XDN architecture achieves unmatched levels of interactive video communications scalability through automated orchestration of the platform’s software stack in Origin, Relay and Edge Node clusters instantiated in private or public clouds. Cross-cloud configurations with no increase in latency and fully redundant fail-safe performance are supported through pre-integrations with AWS, Microsoft Azure, Google Cloud Platform, and DigitalOcean and in easily executed implementations with a dozen other cloud providers utilizing the open-source Terraform multi-cloud toolset.
XDN architecture supports a unique range of multiple transport protocol flexibility, which starts with reliance on the Real-Time Transport Protocol (RTP). This serves as the XDN foundation for streaming via WebRTC (Real-Time Communications) and Real-Time Streaming Protocol (RTSP).
In the case of fixed network connectivity, WebRTC is ideal because it eliminates the need for plug-ins or purpose-built hardware. Client-side support for interactions with the protocol have been implemented in all the major browsers, including Chrome, Edge, Firefox, Safari, and Opera. To stream content from or to mobile devices, Red5 Pro employs RTSP, which exploits the client-server architecture employed in mobile communications, eliminating the need for browser support.
XDN infrastructure can also ingest video formatted to all the other leading protocols used with video playout, including Real-Time Messaging Protocol (RTMP), Secure Reliable Transport (SRT) and MPEG Transport Protocol (TS). These are packaged for streaming on the RTP foundation with preservation of the original encapsulations for reception by clients that can’t be reached via WebRTC or RTSP.
And XDN infrastructure preserves the benefits of adaptive bitrate (ABR) streaming without incurring the multi-second latencies of HTTP-based CDNs. When Origin Nodes ingest ABR ladder profiles, they are streamed over the RTP-based transport system in push mode to Edge Nodes. From there the content is streamed in profiles matched by node intelligence to each session in accord with client device characteristics and access bandwidth availability.
Esports distribution platforms can utilize XDN infrastructure on a standalone basis or take advantage of XDN technology that has been integrated into traditional CDN infrastructures.
For example, Genvid Technologies, a developer of SDKs for esports providers, employed CDN operator Limelight’s XDN-based Realtime Streaming service to support customers whose applications require real-time interactive streaming.
Audio/visual quality parameters set by esports providers are fully maintained on XDN infrastructure. And providers benefit from the automated instantiation of the RTP-mandated Secure Real-Time Transport Protocol (SRTP), which provides content protection on par with advanced multi-digital rights management (DRM) systems.
6. There’s no Limit to Production and DevOps Versatility
Production versatility is another cornerstone of XDN architecture.
The ability to synchronize data and graphics feeds with individual content streams is baked into the XDN software stack. Shared objects manage the data feeds across multiple clients, allowing for the consistent transfer of data such as chat messages, live bets, auction bids, virtual chalkboards, and GPS data, all in sync with the audio and video files. This can be done in the production process through compilation of all elements into a single stream, or through delivery of data and graphics components as overlays for synchronized rendering with core content on each receiving device.
In addition, the platform’s new server-side Mixer feature enables collaborative real-time editing of video productions from diverse locations. Producers can combine multiple feeds from different cameras into a single stream for selection of views by end users. Producers can also bring multiple commentators together for access to and interaction with end users.
DevOps application versatility encompasses application-specific customization and integrations with other technologies. Developers working independently or in partnership with Red5 Pro experts can employ the XDN HTML5 SDK to build webapps that can be hosted on GitHub for review through two-way and conference chats.
The success of esports has gone far beyond what most game producers expected when they started out on this journey. As the drivers behind what has become a big business in its own right, producers have every reason to maximize their opportunities through control over their own infrastructures.
To learn more about how XDN infrastructure can be employed to enable the next generation of esports services contact firstname.lastname@example.org or schedule a call.