How did video games for fun turn into a sport with million-dollar prizes?

By moving from beating a score to beating a person, and then adding an audience. The earliest known video game competition took place on 19 October 1972 at Stanford University, for Spacewar! Students were invited to an "Intergalactic spacewar olympics", and the grand prize was a year's subscription to Rolling Stone.

The first big wave came in the arcades. Atari's Space Invaders Championship in 1980 was the earliest large scale video game competition, with more than 10,000 participants across the United States, and it was won by Rebecca Heineman. In 1984 a Track & Field arcade contest drew more than a million players from Japan and North America. Until then most contests were about high scores, but Street Fighter II in 1991 popularized direct competition between two players.

South Korea then turned it into a profession. Its growth is thought to have been influenced by the mass building of broadband networks after the 1997 Asian financial crisis, and by the PC bang, an internet cafe and LAN gaming centre. In 2000 the culture minister Park Jie-won coined the term Esports, and StarCraft matches ended up on dedicated 24-hour cable game channels.

The last ingredient was the internet. Contests had been largely between amateurs until streaming platforms, particularly YouTube and Twitch, enabled a surge in professional gamers and spectators. From 2013 The International, a Dota 2 championship, crowdfunded its prize pool from in-game purchases, and its largest pool reached US$40 million in 2021. Whether all this counts as a sport is still argued.