This may come as a surprise to those of you not living in a college dorm room, but there is a new spectator sport sweeping the world and it’s called eSports. Yes, that is correct–you watch other people play video games in a competitive match much like you would watch tennis or a football game. There are teams with star players, color commentators, and even “sideline” reporters.

eSports is all the rage on college campuses and is an emerging business and a potential moneymaker for companies willing to spend the capital to get in on the action. One of the main outlets for the eSports competitions is through livestreaming over the internet. Many companies are jumping in with both feet, including Amazon, Disney, and Microsoft.

Beam me up

On August 11, 2016, Microsoft announced that its Xbox division was acquiring Beam, an interactive livestreaming service, for an undisclosed amount. Beam’s service is unique because not only does it livestream games as they are being played, but it contains infrastructure that allows spectators to interact with players inside the game itself.

Under the Beam system, spectators watching Minecraft, for example, can give players specific challenges or direct them to certain areas where the spectator has found an object the player was looking for. In other words, spectators can participate in the game play. The technology surpasses systems from competitors like Twitch, where spectators have to rely on a chat room to make suggestions and otherwise interact with the player.

Just as it did when Amazon acquired Twitch, the business and investment press is generally panning Microsoft’s acquisition as folly. But just as before, the press is missing the point. Microsoft did not acquire Beam so it could show eSports. It acquired Beam so people could, and hopefully would, watch eSports on Xbox Live. It is all about the Xbox community and the subscriptions that grant access to it.

A Gold membership to Xbox Live costs about $10/month. That is a measurable and predictable revenue stream that shareholders love to see. And if you can grow those memberships by including an interactive livestreaming eSports package, you have something to bank on. It also doesn’t hurt that the demographic for livestreaming is squarely in the 18- to 30-year-old range.

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Bottom line

Microsoft has to keep the Xbox console, and particularly the Xbox Live service, fresh and relevant. Video game players are notoriously fickle, turning their attention from one game franchise to the next at the drop of a virtual hat. Companies need to be nimble and flexible if they want to survive in the video gaming market.

Most important, unlike many in the general press stuck in a stereotype that never actually existed, Microsoft realizes that video gaming is big business. Pretending the old stereotypes of social misfits playing games in their mother’s darkened basement is a reality will only put your company out of business.

Livestreaming, eSports, and social interaction are what the 18- to 30-year-old demographic are into these days, and companies better understand that if they want to reach them. Video gaming is not just for nerds, geeks, and social misfits. Everyone plays them and many are willing to pay for the privilege. Now it seems, many are willing to pay to watch other people play them. Games are the social activity of this century. Welcome to that strange new world you have been hearing about.

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Your thoughts

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