There's nothing inherently wrong with competition. Competition allows ideas and forms to be matched, compared, and improved. It creates changing challenges. And it can bring lots of entertainment for reasons of sport and companionship.
That said, I can't stand online competitive multiplayer. I don't hate competition itself; I wasn't the kid to take his ball and go home when s/he didn't win a game with friends and acquaintances. Even facing my much more athletic friends in basketball, soccer, floor hockey, football, etc. I always enjoyed myself.
Online competitive multiplayer is a different beast, however. It's a combination of pieces of technology. It's physical limits are created with numbers and polygons.
My first and foremost issue with playing online competitively is the technical issues. The data has to be sent up to thousands of miles to be interpreted, and thus, you get yourself lag. I've always had a good internet connection myself; normally getting <50 ping, >9mbps download, ~4mbps upload.....some people would kill for speeds like that.
But regardless, nothing is instantaneous. Nothing is physical. I can be playing a shooter and see on my screen, my gun putting a bullet into the head of an enemy not even directly facing me, and then drop dead and see something completely different in the "kill cam" of what "really" happened in the host's version of the game, or in the server. I can be playing an action game and have an enemy jump from one spot to another instantly, making it tough to catch them, and easy to be stabbed in the back by them.
This wasn't a problem in the ol' splitscreen days because everything was rendered on one piece of hardware, and it was the same for everyone.
But my discontent with online competitive play doesn't end at the technical difficulties. The attitudes have gotten rotten as of late.
The rise of competitions like MLG has caused an upswing in "pro" and faux pro players; People aren't just playing for fun, they're playing to win. Players yell and curse. They find the best spots to glitch and camp. They're obnoxious and unhelpful. They just aren't fun to play with.
I would much rather be killed by strategic AI than the host, 14 year old MLG player, from his glitched spot that he's camping from, getting airstrikes and all sorts of outrageous bonuses, ranting and cursing all the way.
Beyond the players and technical issues, one other thing really bugs me; game designers just seem to be absolutely clueless. They seem completely incapable of creating a balanced game. They create unlock trees that leave everyone who has played less than 50 hours at a severe disadvantage because the top teir players have guns with no kick, a massive range, high rates of fire, and large clips. Spawn camping is incredibly easy in so many games. There aren't enough safe regions or calculative work going into the spawning system.
But again, none of these are signs of inherent problems with competition. In splitscreen, those technical issues aren't issues, I play with friends who are not crazy or jerks, and there's no reason games can't be better designed. And perhaps things can get better. At the current rate, it will take decades for better cables to be installed universally (or as universally as you can get, considering third world areas); but perhaps my grandkids will have hardly any issue with lag at all. Maybe the gaming industry will mature further and 12 year olds will be less present in M rated games, and people will play for fun more than competitions. Perhaps a generation with more experience playing in 3D will be able to trump the silly design work of many current developers. Maybe some day. But for now, I can't find much love for online competitive play. Co-operative and single-player work much better for me.