Content

2 The eSports Market in:

Julian Heinz Anton Ströh

The eSports Market and eSports Sponsoring, page 16 - 66

1. Edition 2017, ISBN print: 978-3-8288-3891-8, ISBN online: 978-3-8288-6648-5, https://doi.org/10.5771/9783828866485-16

Tectum, Baden-Baden
Bibliographic information
16 2 The eSports Market 2.1 Historical Development At first, the development of eSports and its way to the shape it got in the 21st century is explained. 1970-1990: The First Tournaments and the Arcade Era While the first video game in history Tennis for Two10 was already developed in 195811, the first recorded video game competition took place on October 19 in 1972 at Stanford University, USA, for the game Spacewar!.12 This two-players game was developed by the student Steve Russell and his colleagues in 1961-1962 and became a leisure time activity for workers in research labs.13 The tournament was called Intergalactic Spacewar Olympics and the first prize was a year's subscription to the Rolling Stone magazine.14 In 1980, the video games company Atari hosted one of the first sponsored tournaments for its game Space Invaders, which was visited by over 10.000 people in the USA.15 In the late 70s built in high score lists enabled competition on arcade games in amusement arcades.16 In 1982, the arcade company Twin Galaxies launched the Twin Galaxies National Scoreboard to accumulate high scores from the USA and soon from all over the world.17 In July of the following year, this company established the first professional video gaming team called U.S. National Video Game Team. This team toured through the USA to show their abilities and organize competitions, even a World Championship against Japan, Great Britain and Italy, covered by famous magazines, e.g. LIFE and The Washington Post and television broadcasting companies, e.g. ABC-TV and NBC.18,19 1990-2000: Rise of Modern eSports Structures This period of arcade-focused competitions took an end when arcade gaming was to a high degree squeezed out of the market by home gaming consoles, such as the 10 There are debates about the title "first video game" as there are different definitions of related terminologies 11 Cf. Baker (2013), p. 9; Stanton, R. (2015), p. 19 12 Cf. Hiltscher (2015), p. 9 13 Cf. Kent (2010), part: Forgotten Fathers; Good (2012) 14 Cf. Brand (1972) - Transcription: http://www.wheels.org/spacewar/stone/rolling_stone.html 15 Cf. Winnan (2016), part: Introduction; Taylor (2014) 16 Cf. Zahard (2015) 17 Cf. Angelides/Agius (2014), part: 20.3.2 18 Cf. Stammermann/Thomas (2007), p. 44; Wolf (2012), p. 651 19 Video of the North American Video Game Challenge in the TV show That's Incredible! on ABC-TV is available at Settle it on the Screen (2008) 17 Nintendo Entertainment System,20 and personal computers (PC). Due to this, eSports was transformed to an at-home-activity.21 In the early and mid 90s, it was the PC gaming alongside with major developments, that shaped eSports towards its form it has today: 1) The introduction of Wolfenstein 3D by the studio id Software as first-person-shooter (FPS) (s. chapter 2.2) for PC in 1992 and its followers Doom (1993), Doom II (1994) and Quake (1996)22 and 2) The increase in network capabilities and connectivity that made it possible to play in a local area network (LAN) to compete against each other at home on so called LAN-parties23 and also online via the Internet against other players.24 Besides id Software, several other game developers started to integrate online clients into their games, most famously Blizzard Entertainment's Battle.net, which made automatic matchmaking (AMM)25 popular and thus finding similar skilled opponents to play and train easier.26,27 In this time players started to organize themselves in teams, so called clans, and leagues and tournaments started to arise creating the fundamental structure of modern eSports.28 Important milestones, all reached in 1997, were the Red Annihilation Quake Tournament at the Electronic Entertainment Expo (E3) in Atlanta, USA, that offered valuable prices such as a Ferrari car,29 and the establishing of the Cyberathlete Professional League (CPL) as well as the Deutsche Clanliga (DeCL) which became the Electronic Sports League (ESL) (s. chapter 2.3.4) in the year 2000.30 Yet, it is South Korea, that is seen as "the Mecca of eSports"31 and "the cradle of professional eSports"32, as the subsidized expansion of broadband internet connections ignited a high increase of players and a high social acceptance of pro-gaming, emphasized by the rise of TV channels dedicated to eSports33, especially the dominant real time strategy (RTS) game StarCraft (s. chapter 2.2).34 In the USA and Europe, 20 Cf. Nintendo of Europe GmbH (2016) 21 Cf. Taylor (2012), part: Playing for Keeps 22 Cf. Taylor (2012), part: Playing for Keeps 23 Cf. Stammermann/Thomas (2007), p. 41 24 Cf. Winnan (2016), part: Introduction; Taylor (2012), part: Playing for Keeps; Taylor (2014); Armitage et al. (2006), pp. 12-18 25 AMM systems automatically match players (of similar skill level) that are looking for an opponent on a provided server to play against each other 26 Cf. Winnan (2016), part: Introduction, p. 2 27 Cf. http://classic.battle.net 28 Cf. Armitage et al. (2006), p. 21; Stammermann/Thomas (2007), p. 44; Wagner (2006), p. 1 29 Cf. Winnan (2016), part: Introduction; Taylor (2012), part: Playing for Keeps 30 Cf. Stammermann/Thomas (2007), p. 44; Taylor (2012), part: Playing for Keeps 31 Winnan (2016), subchapter: South Korea, the Mecca of eSports 32 Stammermann/Thomas (2007), p. 44 33 Cf. Winnan (2016), subchapter: South Korea, the Mecca of eSports; Stammermann/Thomas (2007), p. 44; Wagner (2006), p. 2 34 Cf. Gackenbach/Snyder (2012), Chapter 2; Seo (2013), p. 1545 18 the FPS Counter-Strike, released in 2000,35 was the most important contributor to a following growth in prize money and viewership.36 In this time, the term eSports was created. One of the first sources for the use of this term dates back to 1999 to Mat Battinson and an article about the Online Gamers Association (OGA) at eurogamer.net.37 2000-Today: Steady Growth and Financial Crisis As in the previous period, decreasing costs and technological advancements of internet connections and personal computers are the catalyzing framework for eSports and its growth.38 Next to widespread leagues like ESL and CPL, the World Cyber Games, largely sponsored by Samsung and South-Korean ministries, became the most important yearly competition after its start in 2000.39 The basic concept was to create an eSports equivalent to the Olympic Games featuring e.g. national teams, medal tables and fair play awards. In 2005, approximately 800 players from 70 different nations participated in the final event in Singapore. Over a million joined the preliminary national qualifiers.40,41 The WCG shut down all activities in 2014 after some years of decline.42 The financial crisis in 2009 had a significant impact on eSports which in consequence led to a significant decrease in prize money, sponsorships and leagues despite of a growing number of eSports players.43 This struggle clarifies that eSports is already firmly rooted within industry and economy. Nevertheless, the eSports ecosystem recovered and experienced a rapid growth within the past five years as the next chapters illustrate. 35 Cf. Jakobsson et al. (2007), p. 157 36 Cf. Diserens/Lindahl (2012), p. 15; Taylor (2012), part: Playing for Keeps 37 Cf. www.eurogamer.net 38 Cf. Hjorth (2011), p. 143; Breuer (2011), pp. 9-10; Hutchins (2008), p. 852 39 Cf. Arora (2014); Tayor (2012), part: Playing for Keeps 40 Cf. Farquharson/Marjoribanks (2012), p. 208 41 Recommended documentation: Starcraft: World Cyber Games 2005 from National Geographic, available at MickeyToss (2010) 42 Cf. Arora (2014) 43 Cf. Messier (2011), p. 54; Breuer (2011), pp. 83-84 19 2.2 ESports Disciplines In this subchapter, a basic overview of the most important hardware devices and eSports disciplines is provided. The importance is analyzed via the data available at www.esportsearnings.com, a data base of eSports tournaments, teams, players and prize money driven by the eSports community members themselves.44 2.2.1 Hardware Systems The relevant hardware systems and devices (also often referred to as platform) on which eSports is practiced can be categorized as follows: 1. Personal computer 2. Three relevant major gaming consoles45 XBOX ONE from Microsoft Corporation Playstation 4 (PS4) from Sony Interactive Entertainment LLC Wii U from Nintendo Co., Ltd. 3. Mobile/handheld devices The PC is the most relevant platform as four of the five most important eSports disciplines of 2015 are only available for PC (s. Appendix 1). ESports on gaming consoles lags behind.46 This is mainly caused by higher entrance barriers, e.g. the need to buy a gaming console instead of using a PC, that is already available, because it is needed and used for other purposes as well, and a shorter history of playing online, according to expert Frank O'Connor.47 The expansion of eSports to mobile devices is a novel but growing phenomenon48 and will be closer examined in chapter 2.6.3. 2.2.2 Genres and Games The importance of and attention towards eSports genres and disciplines are very dynamic and can shift very quickly, when e.g. a new game is released.49 A clarifying example is Jonasson and Thilborg's quote in 2010, that "the most popular genres within eSport are first-person-shooter (FPS), real-time strategy (RTS) and sports games"50, not yet including multiplayer online battle arenas (MOBA) that are the most famous genre today in 2016 (s. Appendix 1). Yet, a certain longevity and per- 44 Cf. www.esportsearnings.com 45 Cf. Breuer (2011), p. 125 46 Cf. Breuer (2011), p. 23 47 Cf. O'Connor (2015) 48 Cf. SuperData Research (2015a), p. 15 49 Cf. Breuer (2011), p. 79; a recent example is the title Overwatch from Blizzard Entertainment, see Szymborski (2016) 50 Jonasson/Thilborg (2010), p. 288 20 sistence can be observed too: the prime example Counter-Strike51 was able to keep its status as one of the most important eSports disciplines since its rise in the early 2000's until today. In 2015, esportsearnings.com lists games from seven different genres in the Top 25 of the eSports disciplines providing the highest amounts of prize money. The allocation of the prize money between the top 25 disciplines is visualized in Appendix 1. The listed publishers Blizzard Entertainment and Activision are legally acting as Activision Blizzard, the world's largest games publisher, since their fusion in 2008, but keep acting as separate entities in most matters of eSports.52 Appendix 2 provides a brief description of the most important genres' game plays. More detailed introductions, explanations and impressions of a certain discipline can be found on YouTube by e.g. searching for "let's play [name of eSports discipline]". Just like in traditional sports, the popularity of the genres and disciplines differ regionally.53 Traditionally in North America and Europe FPS disciplines, most of all Counter-Strike, are the central element of eSports54, while Korea and China are RTS dominated.55 Furthermore, data from esportsearnings.com show that fighter games are most popular in Japan and the fascination for MOBAs is globally very high. As most publishers are trying to get their share of this fascination, there are already at least 28 MOBA based games on the market.56 For sports games, the assumption of a correlation of a sports game's popularity and the popularity of the respective type of sport that is simulated (e.g. football) within certain countries and regions seems plausible. Regarding differences in the preference of team and individual disciplines, Western cultures seem to be more affine to the former and Eastern cultures to the latter.57 2.3 Key Components of the eSports Ecosystem In this chapter, the key elements and stakeholders of the eSports ecosystem, that contribute to the function of the previously introduced games as eSports are introduced and analyzed. Image 1 visualizes these elements. Next to these components, the role and status of associations is being investigated. 51 Referring to the whole franchise series from the first Counterstrike game to the newest release Counterstrike: Global Offensive 52 Cf. Activision Blizzard (2008) 53 Cf. Wagner (2006), p. 2 54 Cf. Witkowski (2012); Taylor (2012), part: Playing for Keeps 55 Cf. Huhh (2008) as cited in Seo (2013), p. 1545 56 Cf. www.mmobomb.com 57 Cf. Wagner (2006), p. 3 21 Image 1: The eSports Economy and Its Key Components Source: Newzoo (2015b), p. 6 2.3.1 Consumers: The eSports Fans The basis of large media sports industries are the media recipients, the passive viewers that are watching the sports being played.58 In former literature, e.g. Sauer (2004) and Breuer (2011, p. 27), the passive viewers and the active players are considered as being congruent. This congruency is built up on the assumption that a viewer’s interest in watching an eSports game mostly derives from playing the game in the first place and because he/she is most likely still playing as eSports is a rather young phenomenon.59 Yet, according to a recent Newzoo report, 40% of all viewers are not playing any of the popular eSports disciplines themselves anymore. This result clarifies that the proposed congruency does not hold true anymore and there is a trend towards eSports as a spectator sport as it and its fans grow older and a certain share of fans may stop playing themselves.60 Also an expansion towards TV in Europe and America may lead to an increase of consumers that are only passive viewers as further discussed in chapter 58 Cf. Hagenah (2008), p. 30 59 Cf. Breuer (2011), p. 27; Sauer (2004), p .39; Taylor (2012), part: The nature of eSports fandom 60 Cf. Newzoo (2015b), p. 4 22 2.3.6.2. The sum of all passive viewers and active players are referred to as the entity eSports fans in this thesis. Two research companies released estimations for the number of worldwide eSports fans in 2016. The image below shows the estimations of Superdata Research and Newzoo: Image 2: Global eSports Audience in 2016 and Beyond Sources: Superdata Research (2015a), p. 10; Newzoo (2016c) As visualized, the estimations for 2016 differ to a certain extent: 218.4 million (Superdata Research) versus 292 million (Newzoo). Averaging both estimations leads to a global amount of eSports fans of approximately 255.2 million people, roughly 3% of the world population. Both studies predict annual growth rates of 9- 14% for the future.61 According to Newzoo, 148 million of the eSports fans (~51%) are eSports enthusiasts, meaning that they watch regularly and/or participate in amateur championships.62 Newzoo furthermore estimates that with slightly over 1,1 billion people almost 15% of the world population is aware of eSports. 61 The future growth of eSports is analyzed in detail in chapter 2.6 62 This definition is used in Newzoo (2015b), p. 4 for the analog data of 2014 23 Image 3: Global eSports Audience by Region in 2016 Source: Newzoo (2016), p. 9 (facsimile) To evaluate regional shares and the globality of the eSports fans, Fehler! Verweisquelle konnte nicht gefunden werden. shows the distribution of total audience in 2016 according to Newzoo. The Western eSports fans (Europe + North America) are now equalizing the Asian eSports fans in quantity. But there are also rapidly growing eSports communities in countries outside of the three major regions, such as Brazil, where 14.000 fans filled an instantly sold-out arena in Sao Paolo to watch the final games of the national League of Legends championship (CBLOL).63 These figures clarify that eSports is a global phenomenon and may get a similar high maturity in other countries that it already has in South Korea. It is important to mention that despite eSports' globality, the market in Asia and Western countries differ due to an overall higher acceptance of video games in society in Asia. For detailed data about single countries, Newzoo’s offerings of country specific reports are recommended.64 According to market research data of the Entertainment Software Association (2015), playing video games in general is popular within all age segments and genders, e.g. due to the easy accessibility of casual games for smartphones.65 The situation for competitive gaming is different. Traditionally, eSports is male dominated. Euroforum Deutschland (2015) evaluates, that 85% of all competitive gamers are 63 Cf. Winnan (2016), subchapter: Brazil; see also Pase/Schulz (2015), pp. 23-28 for a detailed analysis of eSports in Brazil 64 These reports are available/purchasable at: www.newzoo.com/solutions/consumer-insights/esports 65 Cf. Euroforum Deutschland SE (2015), p. 6 24 male. Yet, the interest of women in eSports is growing: current results from The Nielsen Company (2016a, as cited in Brightman (2016a)) evaluates a 19% share of women in the eSports audience and Newzoo (2015b, p. 16) determines that even 31% of all eSports enthusiasts are female (s. Image 4). Even though women are allowed to participate in tournaments and there are competitions only for female players (s. also chapter 2.3.2), the difficult stand of female players and fans due to sexism is a problem within the eSports scene - as well as in online gaming in general66 - and a barrier for higher female participation.67 Marketing efforts and game development within eSports almost exclusively target the male audience.68 Furthermore, according to games studies, women prefer the aspect of competition in games less than men and are rather affine to less violent games with a focus on co-operation and social aspects.69 It can be concluded, that creating an overall better atmosphere for female fans and taking female gaming preferences into consideration when developing eSports games can enhance the female fan base, which is a potential growth opportunity for eSports. Analog to this, there is a threat of image loss due to bad publicity concerning sexist harassment or discrimination that may hinder potential industry partners to engage with eSports or even lead to the exit of existing partners. Concerning age, Newzoo's estimation of the age distribution clarifies the dominance of a rather young audience as 80% of all enthusiasts are below 35 years old as visualized in Image 4. The highest share is obtained by enthusiasts between 21 and 35 years. This is due to the fact that the players of the "early years", when the modern eSports scene was created and growing, are now in this age segment.70 Euroforum Deutschland's experts state that the current situation puts "[...] the main part of the age structure of eSports fans to a segment between finishing school and getting a graduation from a university."71 Yet, according to Newzoo, 65% of all eSports enthusiasts are already full-time employed, which is further evidence for an increasing maturity of the eSports fans (s. also chapter 2.5.3). In the respective conducted interviews the experts Malph Minns (2016, s. Appendix 20) and Alex Fletcher (2016e, s. Appendix 21) confirm this demographic core of the male millennials72, but also emphasize the diversity of the overall eSports fan base regarding disciplines and the need for segmentation by different fan types. 66 Cf. Fletcher (2012) 67 For detailed information see Winnan (2016), subchapter: Women in eSports, further firsthand insights of sexism affected women in eSports are given by Campbell (2015) 68 Cf. Winnan (2016), subchapter: Women in eSports 69 Cf. Cassell/Jenkins (1998); Hartmann/Klimmt (2006) as cited in Shen et al. (2016), p. 3 70 Cf. Euroforum Deutschland SE (2015), p. 8 71 Euroforum Deutschland SE (2015), p. 8 72 A term used for people born in the approximate time span from 1980 - 2000, also known as Generation Y as the following generation of Generation X, see Espinoza/Ukleja (2016) 25 Differentiating demographically between eSports disciplines, an analysis of the US eSports fans conducted by Electronic Entertainment Design and Research (EEDAR) (2015, pp. 10-12) reveals that there are differences in gender and age distribution within disciplines. The age of the players and the age of a game's franchise partly correlate as a part of "older" initial players stick to their first favorite franchise. Image 4: Age and Gender of eSports Enthusiasts in 2015 according to Newzoo Source: Newzoo (2015b), p. 16 A deeper analysis of further characteristics of eSports fans and their economical attractiveness within the eSports environment for companies and brands is provided in chapter 2.5.3: The Attractiveness of the Target Group. 2.3.2 Players Considering Newzoo's estimated 40% of eSports fans that are not playing themselves lead to an amount of 142.5 million73 active players that play eSports disci- 73 60% of the amount of viewers of 237,2 million as calculated by taking an average of the two studies 26 plines at least casually. From these players, approximately 32 million players competed in amateur eSports championships worldwide in 2015 according to Newzoo.74 As in traditional media sports, a very small share - according to Winnan (2016, chapter: Go Pro or Go Home) over 500075 - of these players are professionals.76 Within the eSports communities these professional players, so called progamers, can gain celebrity “superstar” status and their nicknames77 can become actual brands.78,79 In Appendix 3 a list of the most famous eSports players measured by fans and followers in social networks is provided. With such high reach and status, they are important influencers and as such interesting for companies and their communication policies (s. chapter 2.5). The role of female players is not yet determined: E.g. the competitions organized by the International e-Sports Federation (IeSF)80 held separate tournaments for female players in the past years, but changed its policy to a gender-independent "open for all" approach in 2015 according to its regulations.81 Rahul Sood, CEO of the eSports betting platform Unikrn, sees the possibility of women and men competing in eSports without physical gender-inequality as a unique advantageous characteristic that should be used and supported.82 Shen et al. (2016) identified this gender-equality at least in massive multiplayer online games (MMOs), yet clarifying that it is unclear if these observations hold true for eSports games that are considered more challenging. As for now, a separation or integration of female players depends on the respective competition provider. 2.3.3 Teams: eSports Clubs Historically, the clubs in which players unite are called clans.83 But there is a development towards overall more formal denotations as the degree of professionalism is growing.84 In this thesis the term eSports club instead of clan is used. An eSports club often houses players and teams for different eSports disciplines and if so are referred to as multi-gaming clubs.85 ESports clubs can be divided in three 74 Cf. Souza/Newzoo (2015), p. 16 based on data of Newzoo (2015a) 75 Cf. Winnan (2016), subchapter: Go Pro or Go Home 76 Cf. Breuer (2011) 77 In eSports a player is commonly known under an alias that the respective player chose for himself 78 Cf. Heaven (2014); Brightman (2016b) 79 Recommended documentation “E-Sports Superstars: gamers earning millions” by The Economist available at The Economist (2016) 80 The IeSF is introduced in chapter 2.3.9 81 Cf. Wood (2014); International e-Sports Federation (2015), p. 29 82 Cf. Silvers (2016) 83 Cf. Breuer (2011), p. 19 84 Cf. Kresse (2010) 85 Cf. Fletcher (2016j); Quandt et al. (2008), p. 152 27 categories: 1) Fun clubs in which the only focus is on fun and social interaction, 2) semi-professional clubs that also thrive for success in competitions to a certain degree and 3) pro-gaming clubs with a clear focus on competitive success.86 The formal organizational degree varies among the pro-gaming clubs. Some are registered clubs (German: eingetragener Verein (e.V.)) and most are various types of nonincorporated and incorporated companies each according to their specific country of origin's laws. There are also works teams that are directly internally operated by and belong to major companies, such as ALTERNATE aTTaX87or Samsung Galaxy Pro-Game Team.88 These organizational forms clarify that the management of pro-gaming clubs is getting more similar to professional traditional sports clubs.89 Also financial motives became important and pro-gaming clubs are run as profit oriented professional organizations: They close deals with sponsors, earn prize money, operate own eSports web portals and media channels90 and furthermore, the top pro-gaming clubs started to sell merchandise.91 Most clubs do not have a clear regional relation, because they were created and have their origin in the online world. Yet, teams start to consider to "settle" in a specific city, such as Team EnVyUs in Charlotte, North Carolina. This would open new potential revenue streams, such as revenue from own events (e.g. ticketing and catering), locally sold merchandise and memberships, and local sponsorship deals. Such income would decrease the dependency on performance, prize money and big sponsorships.92 Taking all this into consideration it can be concluded, that these clubs build up brand value. A first monetary quantification was done by Esports Entrepreneur (EE), a website dedicated to provide "intelligent, researched, and knowledgeable information on the business of esports".93 EE calculated the brand value of the top five Western eSports organizations taking the following variables into consideration: 1) Website viewership, 2) stream impressions (s. chapter 2.3.6.1), 3) social media followings, 4) sponsorships, 5) merchandise product mix & depth, and 6) tournament winnings. Table 1 visualizes the results: 86 Cf. Wenzler (2003) as cited in Breuer (2011), p. 20 87 Cf. Breuer (2011), p. 21; Müller-Lietzkow (2008), pp. 121-122 88 Cf. Keller (2015b) 89 Cf. Euroforum Deutschland SE (2015), p. 17 90 Cf. Taylor (2012), subchapter: Teams and their Owners; Euroforum Deutschland SE pp. 16-17; Jakobsson et al. (2007), p. 162 91 Cf. Seo (2013), p. 1552 92 Cf. Fletcher (2016i) 93 www.esportsentrepreneur.com 28 Table 1: Five Most Valuable Western eSports Team Brands Source: Own representation based on data of Nolte (2015) As the variables of calculations for the value of traditional sports team brands by other agencies differ a lot, comparisons to traditional sports team brands, for which evaluations are in the hundreds of millions94 are of very limited meaningfulness as for now. The variable sponsoring is the most important financial source, because neither ticketing revenue nor shared media revenue (s. chapter 2.6) - such as in major traditional sports - is generated.95 The announcement of an approximate 100,000,000$ investment of the multi-billion dollars company USM Holdings96 in the leading Russian eSports club/organization Virtus.Pro in 201597 set another benchmark that clarifies the high valuation of eSports clubs. A list of the most important clubs ranked by total prize money is available at www.esportsearnings.com/teams and in Appendix 4. Traditional sports clubs will be an important future aspect as some start to integrate eSports divisions into their covered sports disciplines. Fletcher (2016h) already includes clubs from traditional sports as an outside force in his illustration of the eSports ecosystem. A recent prime example is the purchase of a slot and employment of a team for the European League of Legends Championship Series (EU LCS), one of the most important leagues in eSports,98 by German football club FC 94 Cf. Brand Finance (2016) 95 Cf. Fletcher (2016c) 96 USM Holdings holds large shares in the metals and mining and telecommunication sectors with Alisher Uzmanov, an investor having the 3rd highest net worth in Russia, as majoritarian shareholder. See USM Holdings (2015) and Forbes Media LLC. (2016a) for more information. 97 Cf. USM Holdings (2015) 98 Cf. Fisher (2014), p. 1 29 Gelsenkirchen-Schalke 04 e. V.,99 the 14th most valuable football club in the world according to Forbes' ranking.100 Further involvements of other sports clubs101 may reshape the whole team landscape. In July 2016, the Spanish eSports website VandalSports announced that a national eSports league provided by the Spanish soccer league operator Liga Nacional de Fútbol Profesional is planned to be established in Spain in 2017.102 In the USA former and current sports stars started to invest in eSports organizations.103 According to Fletcher (2016d) involvement of traditional sports stakeholders opens opportunities for an increase of credibility, integration of new sponsors, strengthening of the teams' positions and better governance. But he also points out that the superior financial and social power of sports clubs leads to threats for native members of the eSports ecosystem and that eSports itself may be in risk to drift towards becoming a side product of large traditional sports and the respective clubs. 2.3.4 Leagues and Tournaments The clubs and their teams and players compete in leagues, tournaments and events against each other. These competitions range from small tournaments for amateur players, that are free to join and played only via the Internet, to football stadium filling offline events with prize money in the millions for qualified teams as shown in chapter 2.3.5. In an encyclopedia for eSports competitions, clubs, teams, players and strategies of Team Liquid, called Liquipedia, the gathered competitions are categorized by significance as follows: Table 2: Categorization of Tournaments by Significance Source: Own illustration based on www.wiki.teamliquid.net This categorization is to be seen as a first approach. Precise classifications for eSports are difficult to evaluate due to lack of centralized structures. In opposition 99 Cf. Bräutigam (2016a) 100 Cf. Forbes Media LLC. (2016b) 101 For further examples and analyses see Fletcher (2016h); for a timeline including 13 sports clubs entering eSports see The Esports Observer/Paspalaris (2016) 102 Cf. VandalSports (2016) 103 For examples see Mueller (2016a) and Rovell (2016) 30 to most media sports in Europe, competitions are organized by independent commercial companies instead of associations or companies closely tied to associations.104 ESports teams can participate in several leagues as they are not bound to a certain provider/league.105 An exception is League of Legends for which most of the professional and semi-professional competitive scene is governed and regulated by its publisher Riot Games and teams of the League of Legends Championship Series (LCS) are not allowed to participate in other competitions (s. chapter 2.3.7).106 ESports communities (e.g. TeamLiquid's), associations (s. chapter 2.3.9), and publishers for which eSports gains importance as marketing tool (s. chapter 2.3.7) also act as providers.107 The usage of eSports competitions for marketing purposes of other industry brands can also exceed the mere function as sponsor, such as the hardware company ZOTAC International (MCO) Ltd. acting as highest authority for its weekly ZOTAC Cup.108 In most competitions the matches are only played online via the Internet. As mentioned before, also so called offline events, analyzed in chapter 2.3.5, are organized, at which the teams play on stage in front of an audience. Independent from the level of professionalism and financial aspects, Breuer (2011, pp. 21-24) proposes a categorization of providers and competitions on the basis of regional and game-related attributes: 1) Regional focus, 2) focus on certain genres and/or disciplines 3) focus on a certain hardware system, 4) dependence on a single publisher. With today's Internet infrastructure, online eSports competitions can be easily held in a global framework. The only obstacle is the latency109 (or ping) which gives players from certain regions disadvantages.110 Yet, as in traditional sports, there are e.g. exclusive national or regional competitions, such as the ESL Meisterschaft (ESLM) as introduced in chapter 3.3. Concerning focus on games, there are leagues and providers that only focus on one discipline, such as the Global StarCraft II League (GSL).111 Publisher dependency and involvement is clarified in chapter 2.3.7. Next to those discipline specific leagues, there are providers that try to cover a lot of different disciplines each according to its popularity. The two most important organizations pursuing this strategy of high market coverage in the 104 E.g. the German Football Association (DFB) transferred the operative business for the Bundesliga to its own subsidiary DFL Deutsche Deutsche Fußball Liga GmbH 105 Cf. Müller-Lietzkow (2007), p. 231 106 Cf. Fisher (2014), p. 5 107 Cf. Seo (2013), p. 1551 108 Cf. www.zotac-cup.com 109 Latency is the time of delay in which a player's action is transmitted to the server. As eSports mostly requires fast reaction times, different latencies lead to (dis)advantages 110 Cf. Jakobsson et al. (2007), p. 161 111 Cf. http://event.afreeca.tv/gsl/ 31 Western eSports scene are the ESL, originated in Europe, and Major League Gaming (MLG),112 originated in the USA.: Electronic Sports League: The second largest provider measured by members/players is the ESL. It is run by Turtle Entertainment GmbH with headquarters in Cologne, Germany.113 In 2015, the Sweden based Modern Times Group AB (MTG) purchased a majority of Turtle Entertainment's shares for 78 million Euro.114 In the same year, MTG also purchased the Swedish provider Dreamhack (s. chapter 2.3.5), and thus became one of the most important investors in European eSports.115 The ESL is the most important organization of its type in Europe and expanded globally in the last decade and works with partners in over 40 different countries.116 The ESL's size and their strategy of high market coverage are directly illustrated on the website's front page on which is stated that "ESL Play is the world's leading platform for esports. It provides tournaments & ladders across all games and skill levels. 6.155.321 members have played 12.178.033 matches in 78.285 tournaments." 117 ESL's structure consists of amateur, semi-professional and professional competitions. Next to distinguishing its leagues and tournaments based on performance level, the ESL also provides regional competitions on national level (s. chapter 3.3). Furthermore, since 2007 the ESL is providing media coverage of its events itself via their streaming channel ESL TV (s. chapter 2.3.6.1)118 and produces some of its content in modern production studios installed in key markets. This content is also streamed on the platform Twitch.tv (s. chapter 2.3.6.1) on which ESL has a market share of 23% of all viewership hours of professional eSports providers (s. Appendix 5). Next to the commercial monetization of its content and events, the ESL also manages a network of over 400 influential eSports persons, e.g. pro-gamers, Twitch.tv streamers, and YouTube gaming content providers, to create significant social media reach with its campaigns for their commercial customers. 119 Major League Gaming: Founded in 2002 with headquarters in New York City, MLG became the largest provider in the Western eSports scene measured by members/players with approximately 9 million members.120 Its approach and structure is comparable to the ESL: coverage of a lot of disciplines, all levels of skill and regular offline pro-gaming 112 A name analog to e.g. Major League Baseball and Major League Soccer 113 Cf. www.turtle-entertainment.com 114 Cf. Turtle Entertainment GmbH (2015a) 115 Cf. Modern Times Group AB (2015) 116 Cf. Niemann (2016) 117 http://play.eslgaming.com (as of 15 August 2016) 118 Cf. Kopka/Weber (2011), p. 130 119 Cf. Niemann (2016) 120 Cf. Gaudiosi (2016a); www.majorleaguegaming.com 32 events.121 MLG is also broadcasting eSports content via own streaming services, called MLG.tv, such as the ESL. According to the MLG homepage, its mission is to "promote eSports globally through premier competition and to deliver premium gaming content to viewers anytime, anywhere through our global streaming platform - MLG.tv."122 On January 1st 2016, MLG was acquired by the world's biggest games publisher Activision Blizzard for $46 million.123 The most important parts of MLG’s international expansion strategy is MLG Brazil, a partnership with Grupo Âguia, the largest Brazilian sports entertainment company,124 and the construction of an eSports dedicated arena in China (s. chapter 2.3.5).125 2.3.5 Events ESports events and the provided price money have grown rapidly over the past years as displayed in Appendix 6. Final games of the most prestige championships are filling big arenas and commercial football stadiums with thousands of eSports fans, such as the Lanxess Arena, Germany's largest multi-purpose hall, for ESL One Cologne and the 2006 Football World Cup Stadium Commerzbank-Arena Frankfurt for ESL One Frankfurt.126 In the USA, the League of Legends 2016 World Championship will be held at Bill Graham Civic Auditorium in San Francisco, at The Chicago Theatre in Chicago, at Madison Square Garden in New York City and at Staples Center in Los Angeles in fall of 2016.127 Seo refers these events to as an "embodied monument of contemporary eSports culture"128, clarifying the important status for the eSports economy and culture. It is recommendable to watch so called aftermovies, such as of the ESL Intel Extreme Masters (IEM) and ESL One in Katowice, Poland, in 2015129 to get an impression of the makeup of these events. From the eSports fans' perspectives these events are a way to pass the threshold of the online to the offline experience to share their fascination with others in 'the real world'.130 Next to the given primary motive of watching the high level eSports competitions, a study amongst U.S. American and European eSports fans published by Eventbrite (2015, p. 3) identified social aspects, such as the sense of community and the meeting of online and potential new friends, as well as a different experience of games created by an event's unique atmosphere as most important motives to visit offline events. This study also identified an increasing de- 121 Cf. www.majorleaguegaming.com 122 www.majorleaguegaming.com 123 Cf. Gaudiosi (2016a) 124 Cf. Major League Gaming (2014a) 125 Cf. Major League Gaming (2014c) 126 Cf. http://en.esl-one.com 127 Cf. Rozelle (2016) 128 Seo (2013), p. 1551 129 Available at ESL (2015) 130 Cf. Seo (2013), p. 1551 33 mand for more events and a high willingness to pay for tickets. Most offline events focus on pro-gaming teams competing in final games for which they qualified in online leagues and tournaments before.131 But there are also 'hybrid' events, such as the Dreamhack, world's biggest LAN-party. It sticks to its roots and offers free-tojoin tournaments for everyone participating in the LAN-party as well as tournaments for professional players.132 Furthermore, some events are embedded in conventions, such as the Gamescom, the world's largest gaming exhibition, which was e.g. host for the European qualification tournament for the World Cyber Arena 2015 (WCA)133, as well as the ESL Sommermeisterschaft 2016.134 For advertisers, sponsors and publishers, these events are the most attractive way to reach the eSports fans, because 1) the matches have the highest overall media reach135 (s. chapter 2.3.6.1), 2) they can get in direct contact with the fans that are present at the event and 3) thus can clarify and emphasize their acceptance of and interest in eSports. These industry partners are the most important revenue sources for the providers. According to ESL Senior Sales Manager Marco Niemann (2016), 30-40% of an ESL event's revenue is generated with sponsors (s. also chapters 2.3.8 and 2.6.1). A list of the most important eSports events of 2015 measured in terms of prize money is provided in Appendix 7. Due to the increasing number of events and visitors, ticketing as a source of revenue is becoming more important. In 2015, ticket revenue is estimated at $15.9 million by SuperData Research (2016, p. 9) and at $21 million by Newzoo (2016a, p. 13, s. Image 5) contributing 2-6%136 of all eSports generated revenue as discussed in chapter 2.6.1. Globally, Newzoo lists 112 major events137 in 2015: 131 Cf. Witkowski (2013), p. 219 132 Cf. www.dreamhack.se 133 Cf. www.gamescom.de; www.wca-europe.com 134 Cf. www.pro.eslgaming.com 135 Cf. Scholz (2012), p. 95 136 Variance caused by different estimations and depending on the in- or exclusion of eSports betting revenue and prize money, see chapter 2.6.1 137 Newzoo does not provide a definition of "major event". The term is partly comparable with Liquipedia's definition of Premiere and Major events (s. table 2), but not to be confused with "ESL Majors" 34 Image 5: Regional Shares of Major Events and Ticket Revenues in 2015 Source: Newzoo (2016a), p. 13 Regionally, these major events are rather equally distributed between the three large regions with Northern America being the location for slightly more than a third of events while Europe and Asia contribute a bit less. ESports' growth in the other parts of America was already exemplified with Brazil in chapter 2.3.1. Events in Western Europe and Northern America generate significantly more revenue. Reasons for this are more events in large multipurpose halls138 and also the higher overall price level in these two regions139 can be assumed to lead to higher revenue in comparison. Regarding venues for eSports events, in most cases, as for now, event organizers are using venues that were made for other purposes (see above). This may change in the future to some degree as arenas are built that are devoted to eSports. The first eSports venue ever was opened in 2005 in South Korea.140 Recently new venues have been installed or planned around the globe. In the USA, for example, the Esports Arena, LLC opened an eSports arena in Orange County, California, in 2015 and is planning to install a whole infrastructure of eSports venues throughout 138 Cf. Kresse (2016a) 139 Cf. www.laenderdaten.info 140 Cf. Yoon (2015) 35 the country.141 Pro Gaming League Inc. is trying to further establish eSports in Las Vegas with a 500 seats eSports arena under its new name Millennial Esports.142 The largest eSports arena is being built as a part of a huge gaming theme park in Zhuhai, China, by the Chinese Lun Sai Group in co-operation with MLG. More details on these examples and further examples of eSports venues are listed and described in Appendix 8. The eSports events and its increasing popularity also become the interest of regions and cities as a way to integrate gaming in their "[...] entrepreneurial ambitions [...] to present themselves as "world-class" centers of digital industry, technological innovation, tourism and entertainment."143 An example is the previously mentioned World Cyber Arena that was established with the help of former WCG employees144 as successor of this event145 by the municipal government of the Chinese city Yinchuan and the Yinchuan International Game Investment Co. Ltd.146 According to a press release of the WCA, the main purpose of a fund of over $800 million from the Chinese Investment Corporation147 is to boost international eSports and to establish Yinchaun as an "eSports metropolis".148 This also includes a partnership with the International e-Sports Federation (IeSF) (s. chapter 2.3.9) to establish and improve a professional education system for the eSports value chain.149 2.3.6 Media Channels A large difference to traditional media sports is the use of media channels for coverage. As other sports rely on TV broadcasting, eSports’ most important media platform is the internet and can be considered the first sports segment that gained commercial success without mainstream television.150 Team and tournament websites, web portals dedicated to eSports such as www.readmore.de or gosugamers.net and recently established eSports sections of sports web portals, such as esport.kicker.de or espn.go.com/esports, are the most important source of information for fans.151 Also Yahoo!, one of the world's biggest web portals, started 141 Cf. www.esportsarena.com; an introduction movie is available at eSports Esports Arena (2014) 142 Cf. Carpenter (2016); www.millennialesports.com 143 Borowy/Jin (2016), p. 207 144 Cf. Custer (2014) 145 The approach as "Olympic Games of eSports" has not been adopted 146 Cf. www.wca-america.com 147 A state-owned company that manages China's foreign exchange holdings, see: www.chinainv.cn 148 In accordance World Cyber Arena (2015) 149 Cf. International e-Sports Federation/Yinchuan International Game Investment Co. Ltd. (2016) 150 Cf. Winnan (2016), subchapter: eSports as a Spectator Sport 151 Cf. Breuer (2011), pp. 118-119 36 an eSports section152 and already gained significant reach.153 Next to that, the eSports matches themselves are broadcasted via online streaming (see below). Because of the target group's high online affinity, eSports coverage in print media is low and mostly limited to single articles within print magazines about video games in common154 and does not need closer examination. 2.3.6.1 Online Streaming The matches are being brought to the eSports fans via online streaming, often referred to as WebTV and/or Internet Protocol Television (IPTV).155 The streaming content providers of competitions use the so called observer modes (also: spectator modes) in which they can join a game as a neutral observer, that does not affect the game play itself, and watch it from different perspectives while having additional information provided. The screen of what these streamers are viewing within the game is being captured and streamed to the viewers. The matches are commentated and analyzed by commentators like in traditional sports. Streams of pro-gaming events also consist of content beyond the in-game action such as camera recordings of the production site, the moderators' desk, the live audience, interviews with experts or players or the stage and the players themselves.156 Appendix 9 provides impressions of different content of an online stream of ESL Frühlingsmeisterschaft 2016 (s. chapter 3.3) and Heroes of the Storm World Championship 2015. This type of broadcasting has several advantages over classic TV broadcasting: the live streams and videos on demand are accessible at any place in the world with an internet connection at any time and also on mobile devices. Furthermore, chat clients are directly inserted in the stream interfaces allowing the viewers to discuss the matches live with other viewers and even the streamers/commentators themselves.157 When the first eSports online streaming provider started in 2003, technological capacities were still very limited. But with improvement of PC performance and internet bandwidth its accessibility increased quickly. With the start of platforms like Twitch.tv or own3d.tv in and after 2009, watching live streams and live streaming was made very easy for the broad audience and the platforms started to create ad-commercial revenue.158 152 Available esports.yahoo.com 153 Cf. Newzoo (2016a), p. 24 154 Cf. Breuer (2011), pp. 13-14 155 To avoid too detailed technical definitions, the term online streaming is used to describe any kind of live stream and video on demand offerings that is available via internet 156 Cf. Scholz/Stein (2016), p. 89; Scholz (2012), pp. 80 ff. 157 Cf. Scholz (2012), p. 90 158 Cf. Scholz (2012), p. 95 37 According to SuperData Research, 24% of all gaming video content viewed online in the US is related to eSports, showing eSports' importance within the whole gaming industry.159 Private streamers, e.g. gamers that are streaming their training sessions and giving advice to their viewers, generate revenue by subscriptions with monthly fees that provide certain privileges to the subscribers, donations from their viewers, and advertising and sponsorship.160,161 In Western eSports Twitch.tv is by far the largest platform for live streaming, considered a "monopoly on streaming in the West"162 by Winnan and "the biggest contributor to the growth of eSports"163 by the experts of Synergy Sponsorship, while YouTube is the most important platform for videos on demand. Most content providers use and benefit from both.164 Twitch.tv is further analyzed in this section below. Streaming platforms are also negotiating and collaborating with eSports leagues and events providers to gain exclusive rights of broadcasting certain competitions, e.g. Afreeca.tv and Global StarCraft II League,165 comparable to the traditional sports leagues and TV stations.166 Twitch.tv: In 2011, the online live-streaming provider Justin.tv established Twitch.tv as its new platform only dedicated to gaming and especially eSports streams.167 The rapid success and growth of Twitch.tv is visualized in the timeline below: Image 6: Timeline of Milestones and Gaming Viewership Trends for YouTube and Twitch.tv Source: SuperData Research (2015b), p. 17 159 Cf. SuperData Research (2015b), p. 6 160 Winnan (2016), part: subhcapter: eSports as a spectator mode; SuperData Research (2015b), p. 14 161 Private Twitch.tv channel examples: www.twitch.tv/followgrubby and www.twitch.tv/froggen 162 Winnan (2016), subchapter: Ancillary Employment Opportunities 163 Synergy Sponsorship (2015), p. 14 164 Cf. SuperData Research (2015b), pp. 15-17; Fisher (2014), p. 3 165 League website available at: event.afreeca.tv/gsl 166 Cf. Seo (2013), p. 1553 167 Cf. Lynley (2011) 38 Within only two years, Twitch.tv grew a user basis of 45 million unique viewers per month and got into focus of the "internet giants" Google and Amazon. In August 2014, Twitch.tv was finally purchased by Amazon for nearly $1 billion clarifying its huge success and potential within the rapid growth of eSports. According to Twitch.tv's website, over 100 million viewers watch content on Twitch.tv every month and over 1.7 million users broadcast themselves,168 resulting in a market share of all gaming video content of 43% with revenue of $1.8 billion in 2015.169 Such a large amount of streamers also clarifies the low entrance and production cost of broadcasting eSports.170 Twitch.tv's significance is further affirmed by the fact that ESL and MLG stream their content, e.g. the matches of the large offline events, on Twitch.tv next to their own platforms ESLTV and MLG.tv.171 Game publishers such as Riot Games and Activision Blizzard also run their own Twitch.tv channels.172 Blizzard Entertainment and Twitch.tv even have a partnership that allows users to connect their Battle.net173 and Twitch.tv accounts to gain some company related special bonuses.174 According to Newzoo (2016b) 14-31% of all viewership hours of Twitch is generated by professional eSports tournaments each month. Appendix 5 provides an overview over the shares of top eSports organizers showing the importance of the ESL (23%) as independent organizer with high market coverage and the media success of Riot Games' (28%) approach of controlling the competitive scene of its own game (s. chapter 2.3.7). The live streams of the largest events are being watched by millions of eSports fans. Appendix 7 lists the events attracting the highest numbers of viewers in 2015 illustrating the reach that online streaming can generate for eSports events. 2.3.6.2 TV In contradiction to South-Korea's eSports dedicated TV channels,175 eSports did not strongly take root in mainstream television in the Western world as for now. In the past several attempts have been made to establish TV shows but without sustainable success.176 Maric (2011) provides an analysis of former shows in Germany. Lingle (2016) illustrates former approaches and their problems in the USA. Never- 168 Cf. www.twitch.tv 169 Cf. SuperData Research (2015b), p. 15 170 Basic streaming equipment only includes a PC, broadband internet, a microphone/headset, an optional webcam, and an open source streaming software 171 ESL and MLG Twitch.tv channel examples: www.twitch.tv/ESLTV and www.twitch.tv/MLG 172 Riot Games and Blizzard Entertainment Twitch.tv channel examples: www.twitch.tv/riotgames and www.twitch.tv/team/blizzcon 173 Blizzard Entertainment's online gaming platform 174 Cf. Blizzard Entertainment (2015) 175 Cf. Winnan (2016), subchapter: eSports as a Spectator Sport; Breuer (2011), p. 18; p.109 176 Cf. Breuer (2011), p. 18 39 theless, with the growth of eSports in the past years, the interest of established TV channels increased: USA's largest sports channel, the Entertainment and Sports Programming Network (ESPN), aired eSports on their online streaming channel ESPN3 and made the transition to its cable TV channel ESPN2 in July 2015.177 Another large U.S. TV channel Turner Broadcasting System (TBS), owned by Time Warner, Inc., started the E-LEAGUE, its own Counter-Strike: GO league with $1.2 million prize money, and established a partnership with Twitch.tv to stream matches on Twitch.tv on the one hand and every Friday night on their television channel TBS on the other hand.178 According to daily data of the Nielsen Company approximately half a million TV viewers on average watched the first show during the broadcast.179 Sports TV Ratings calculated approximately 250,000 viewers per show on average.180 According to E-League general manager Christina Alejandre attracting new viewers to TBS was the primary target of the E-League.181 TBS stated in an announcement that E-League brought 3.4 million new viewers to its channel and led to an increase of 97% in the age group of the 18-34 years old male in comparison to their previews broadcasts on the same Friday night slot.182 Relating to these results, Alejandre evaluates that "we [TBS] think we have been hugely successful."183 Highlights of this league were also broadcasted in German television by ProSiebenSat. 1 Media SE's channel for the male audience ProSieben MAXX.184 The viewing figures were satisfying as analyzed by Meyer (2016). Yet, Germany's largest sports channel Sport1 premiered the DotA 2 finals of the ESL One Frankfurt 2016 with rather disappointing results below the channel's average share, partly caused by the one-sided match and the competing parallel broadcasting of football games of the UEFA Euro 2016.185 There are a lot of further recent examples, e.g. the launch of an eSports dedicated TV channel in the Nordic and Baltic states by ESL and its owner MTG186 or TV 2, Norway's largest private TV network, broadcasting several disciplines.187 ESports expert Alex Fletcher is summarizing those developments by stating that "2016 is shaping up as a big year for eSports programming on TV."188 177 Cf. Moris/Wolf (2016) 178 Cf. Minotti (2016); Hermann/Wingfield (2016) 179 Cf. Mueller (2016b) 180 Cf. Kresse (2016b) 181 Cf. Alejandre as cited in Erfanian (2016) 182 Cf. Turner Broadcasting System, Inc. (2016) 183 Alejandre as cited in Erfanian (2016) 184 Cf. ProSiebenSat.1 Digital GmbH (2016); full episodes formerly available at: www.prosiebenmaxx.de/tv/eleague/video 185 Cf. Weis (2016) 186 Cf. McConnell (2016) 187 Cf. Winnan (2016), subchapter: eSports as a Spectator Sport 188 Fletcher (2015) 40 Despite the involvement and investment of major players from the TV industry and the eSports economy, it is uncertain if and to what extent eSports on TV will be successful in the future. ESports' growth without TV support in the last years proved that it doesn't need TV coverage to function. Furthermore, TV is a rather "old" media channel with declining viewer numbers especially in the group of young adults according to Nielsen189 and does not provide the advantages of online streaming mentioned in the previous chapter. This, in addition with historical unsuccessful experiences, puts into question whether this regression from eSports' native and new media (PCs and the internet) to the foreign medium of classic television will be successful. This position is taken e.g. by Scholz who criticizes that "this distinct audience is solely reachable over the Internet and classical television has no place in it."190 and Winnan who asks if "eSports really need to go backwards to proceed forward?"191 referring to a decrease of television audience of 50% from 2002 to 2012. Yet in accord with Fletcher (2015), he also sees the chance of transforming people who are not yet aware of eSports into fans with the help of television broadcasting and thus increasing the eSports audience.192 The extent to which eSports will be accepted by traditional sports viewers is difficult to forecast as well as what status eSports will reach in between traditional sports on TV (s. also chapter 2.6.4). The overall increasing acceptance and integration of digital games in society193 give reasons for positive predictions from an eSports perspective. With the former mentioned success of the E-League, eSports on TV in the USA may be on a sustainable path. A higher awareness, acceptance and new viewership, if so, would raise the attention of eSports unrelated industry partners as future growth potential as analyzed in chapter 2.5.3. Nevertheless, eSports' main stream acceptance and TV success - at least in Germany - was harshly struck when the show on ProSieben MAXX was canceled due to external events, clarifying the hard and infirm stand of FPS games in the media and society as further analyzed in chapter 2.4.194 2.3.7 Publishers Publishers are the holder of the intellectual property of a game195 and mostly act as distributor.196 In 2011, Breuer (2011) stated that the significance of eSports for publishers, expect from Blizzard Entertainment and Electronic Arts, is rather 189 Cf. Wieser (2016) based on The Nielsen Company (2016b) 190 Scholz (2012), p. 102 191 Winnan (2016), subchapter: eSports as a Spectator Sport 192 Cf. Winnan (2016), subchapter: eSports as a Spectator Sport 193 Cf. Entertainment Software Association (2015) 194 Cf. Wartenberg (2016) 195 Cf. Blum (2016) 196 Cf. Breuer (2011), p. 123 41 low.197 This situation has changed drastically since then. As Appendix 7 shows, most of the most rewarded events are either organized by the publisher of the specific game itself or sponsored and planned in cooperation with the providers. In addition, as mentioned before, the largest provider MLG was purchased by publisher Activision Blizzard. This clarifies the increasing role of publisher investments for eSports and of eSports for publishers.198 As the eSports aspect of a game was mostly rather secondary in its development process, it now became a primary aspect for competitive multiplayer games.199 As consequence, an enhancement of the competitive game play and observer features will lead to an improved experience for the players, broadcasters and viewers and thus a higher production value can be expected. Primarily, supporting an organized professional competitive scene functions as a marketing tool to raise awareness and increase number of players to increase direct game revenue that is to a high share generated by microtransactional sales for in-game items and upgrades for the most big eSports disciplines.200 The perceived increased attractiveness of a game sparked by a well functioning professional eSports environment also helps to extend the lifespan of a game.201 Taking this even a step further, Joost van Dreunen, CEO of SuperData Research, predicts that “ESports will likely evolve into a method to monetize players indirectly by connecting audiences with brands, thereby further enlarging the revenue potential.”202 This statement clarifies that publishers also start considering eSports as a profitable direct source for monetizing their games and realize that also viewers, not only players, grant attractive revenue opportunities.203 Nevertheless, the overall role of publishers within eSports is not yet defined and differs in between disciplines. Furthermore, there is no comparable component in traditional sports as a sport discipline, in opposition to an eSports game, cannot be legally owned. A publisher for example has the rights to prohibit the broadcasting of matches of his games and can stop a certain stream provider from showing content related to its game.204 Blum (2016) carved out two different publisher approaches that arose and that lead to different consequences for the other members of the value chain: 1. "The Riot Model" based on control 197 Cf. Breuer (2011), p. 124 198 Cf. Winnan (2016), subchapter: Existing Real World Comparisons 199 Cf. Chapple (2015); Breuer (2011), p. 124 200 Cf. van Dreunen as cited in Gaudiosi (2016b) 201 Cf. Newzoo (2016a), p. 6 202 van Dreunen as cited in Gaudiosi (2016b) 203 Cf. Newzoo (2016a), p. 6 204 Cf. Blum (2016) 42 The first model is named after its prime example Riot Games. Its only title League of Legends is the most played eSports game in the world with approximately 67 million unique players each month according to Riot Games.205 Riot Games is controlling most parts of the professional competitive scene itself and acts as de-facto governing body.206 It manages, regulates and operates the most important leagues, LCS and its qualification leagues, itself. Teams participating in the LCS are not allowed to play in any other league and can be suspended by Riot Games.207 For example, at the 7th e-Sports World Championship Seoul 2015, organized by the International e-Sports Federation (IeSF) (s. chapter 2.3.9), Riot Games only allowed amateur players, that do not play in the LCS, to participate.208 Riot Games furthermore also functions as media producer for the matches that it streams on and in co-operation with several platforms including Twitch.tv, YouTube and Azubu.tv.209 It acts similar to a major association in traditional sports but with the difference that it is a profit oriented commercial company instead of an association of the clubs. Thus, the clubs’ interests are not represented sufficiently and they do not receive a share of revenue.210 Fletcher (2016a, 2016c) evaluates this situation that applies not only for the LCS, but most of the eSports scenes, as problematic and hindering for the eSports economy and its sustainability. An important step to change this situation is the formation of strong associations and unions as further analyzed in chapter 2.3.9. 2. "The Valve Model" based on a laissez-faire approach A different approach is used by Valve for Counter-Strike: GO. It is less involved in the competitive scene of its games and only acts at the highest level of competition. This leads to high decentralization with a lot of providers using different sets of rules. For the largest events, so called "Majors",211 Valve is basically only providing the price money.212 The events themselves were and are organized by MLG, ESL and DreamHack. These organizers also provide the media production and streaming.213 There are no restrictions for teams to participate in other leagues and events such as in the E-League that was introduced in chapter 2.3.6.2. Yet, Valve - just like Riot Games - also interfered by excluding certain players from all Valve sponsored competitions acting as a governing institution (s. also chapter 2.4.1).214 For DotA 2, Valve pursuits the same strategy to improve the competitive scene by sponsoring 205 Cf. www.riotgames.com 206 Cf. Fletcher (2016a); Fisher (2014), p. 1 ff. 207 Cf. Blum (2016); Fisher (2014), p. 1 ff. 208 Cf. International e-Sports Federation (2016a) 209 Cf. Cocke (2015) 210 Cf. Fletcher (2016a) 211 Not to be confused with the major category of Liquipedia in table 2 212 From 2013-2015 with $250,000, since 2016 with $1,000,000, see Lahti (2016) 213 Cf. wiki.teamliquid.net 214 Cf. Winnan (2016), subchapter: Gambling Opportunities 43 Majors next to the main event, called The International DotA Championships, which is organized by Valve itself and comparable to Riot Games' League of Legends World Championship. This way Valve provides four major events every year as highlights and let the rest of the scene develop itself independently.215 The International's high price money (s. Appendix 6) is partly crowd funded by Valve by giving all DotA 2 players the opportunity to contribute to the event as Valve puts a share of revenue (25%) of special in-game purchases in the prize pool.216 This crowd funding policy is also pursuit by Hi-Rez Studios for its game Smite.217 On the positive side this is a new revenue stream, or at least boost, directly related to professional eSports, that minimizes the publisher's event costs.218 On the negative side Minotti (2014) states, that this puts an eSports discipline under a certain pressure and risk: when the crowd funded prize pool is smaller compared to the year before, players and fans may interpret it as declining popularity and consider switching to a different discipline within the genre. 2.3.8 Brands The relevance of sponsors and advertisers for the eSports ecosystem in its appearance today is very high. According to estimations of SuperData Research, partnerships with these industry partners make up for approximately three quarters of all revenue as visualized in Image 9 on page 59. The improvements of online streaming and its processes and viewer numbers and the entrance to classic television lead to increasing revenue generated with advertisers. Newzoo (2016d) evaluated a doubling of this revenue stream in 2015 compared to 2014 and that advertising accounts for 60% and sponsorships for 40% of indirect revenue.219 According to analyses done by Franke (2015, pp. 140-141), the acceptance of online advertising in eSports content, e.g. commercial breaks or banner ads, of eSports fans is rather high. Yet, the usage of ad-blocking software220 is very popular among eSports fans as analyzed in chapter 2.5.3. In a five forces analysis221 Breuer (2011, pp. 132-133) identifies the power of the sponsors as a big threat for eSports providers. A confirming negative example is the abandoning of the sponsoring activities of computer chip producer NVIDIA 215 Cf. Zacny (2015) 216 Cf. Senior (2015) 217 Cf. Minotti (2014) 218 Cf. SuperData Research (2015a), p. 4; Souca, E./Newzoo (2015), p. 6 219 Cf. Janoff (2016) based on data of Newzoo (2016e) 220 For explanation and further analyses of ad-blocking in general see PageFair/Adobe Systems Inc. (2015) 221 In a Five Forces Analysis the competitive structure of an industry is investigated in terms of bargaining power of customers and suppliers, threats of substitute products and new entrants, and intra-industry rivalry. See Michaux (2015). 44 Corporation for the Electronic Sports World Cup (ESWC) during the financial crisis which led to liquidation of the operating company and enforced the sale of the ESWC brand.222 After the crisis former professional eSports athlete Messier (2011, pp. 54-60) took a critical view on this situation, stating that this high dependence on sponsors for mere survival (not only as leverage) and fast abandoning of sponsoring funds during the financial crisis is also internally caused by the lack of defined structures, a strong viewer base that is provided with a great spectator and social experience, degree of organization, and group thinking as an eSports unity instead of only caring for one's favorite game or league. The developments of the eSports ecosystem since then, as analyzed in the previous and next chapters, lead to the conclusion that these problems have been improved and eSports as a sport and as an industry became a) more self-sufficient b) less risky and more important for the marketing efforts of sponsors. To a certain extent the situation changed towards a 'natural' attraction of sponsors due to a constant large and well provided viewership and away from an attraction of viewers due to 'unnatural' large sponsored prize pools. Cornwell (2015) emphasizes, that sponsorship was, is and will be a key driver for eSports' development and furthermore, that the whole industry is under a certain pressure and risk to meet the big expectation sparked by high sponsor investments. Closer analyses about sponsors and sponsoring in Western eSports is provided in chapter 2.5. 2.3.9 Associations Associations, mostly national, formed over the past decades but did not reach a high significance yet. An exception is the Korean eSports Association (KeSPA) that was formed in 2000 with the approval of the Korean Ministry of Culture, Sports and Tourism to oversee and regulate eSports in South-Korea.223 The development and influence of the KeSPA makes it the most important national eSports association and puts it on a comparable level of traditional sport associations.224 Internationally, the IeSF is the most important institution. It was founded in 2008 by eight national associations225, 226 and has grown to a federation of 45 member states today.227 Germany is not represented in the IeSF, because the former Deutscher eSports Bund (ESB), a founder member of the IeSF, is not active anymore.228 The IeSF is sponsored by the Korean Ministry of Culture, Sports and Tourism and Ko- 222 Cf. Breuer (2011), pp. 83-84; Phillips (2009) 223 Cf. Taylor (2012), subchapter: Governing bodies 224 Cf. Thiborg (2009), p. 9 225 From Denmark, Germany, Austria, South-Korea, Belgium, The Netherlands, Switzerland, Vietnam and Taiwan 226 Cf. Winnan (2016), subchapter: Governing bodies 227 Cf. www.ie-sf.com 228 Despite of a "comeback" statement in 2010, the ESB's website www.e-sb.de is offline since 2011 45 rea's largest telecommunication company SK telecom and furthermore partners with several publishers.229 Its subjects include global development, standardization and regulation, human resource development and the organization of the IeSF World Championship. The regulation efforts also include an anti-doping policy230 as doping becomes a problem and risk factor like in traditional sports (s. chapter 2.4.1).231 To fight problems that threaten the integrity of eSports, the Esports Integrity Coalition (ESIC) was founded,232 which is further analyzed in chapter 2.4. Furthermore, seven clubs of the top eSports clubs in the West joined together in 2006 to form the G7 Teams233 with the aim "to promote and improve all aspects of professional e-sports and safeguard the general interests of the entire e-sports community."234 Triggered by a conflict between the significant members Fnatic and SK Gaming, this union split in 2010, showing the difficult situation for associations in eSports.235 In May 2016, a new similar effort has been undertaken by creating the World Esports Association (WESA). It's an association of seven leading Western eSports clubs236 and the ESL.237 For now, it is only focused on CS:GO and leagues organized by the ESL.238 If successful, other games may be considered as well for implementation in the future.239 WESA positions itself as "Based on similar traditional sports associations [...]" and "[...] an open and inclusive organization that will further professionalize eSports by introducing elements of player representation, standardized regulations, and revenue shares for teams."240 As mentioned in chapter 2.3.7, Fletcher (2016a, 2016c) identifies the missing of revenue sharing for teams as a hindering problem and sees equal distribution of generated revenues as an important factor when "eSports evolves out of [its] current role as marketing channel for game publishers and line of business for tournament organizers, into a standalone ecosystem".241 The WESA can be seen as a first step to overcome this problem. Nevertheless, the WESA is also seen skeptically, especially by the eSports 229 Cf. www.ie-sf.com 230 Cf. International e-Sports Federation (2014) 231 Cf. Winnan (2016), subchapter: Nootropics and Drug Use 232 Cf. www.esportsintegrity.com 233 Cf. Breuer (2011), pp. 25-26 234 www.G7Teams.com as cited in Breuer (2011), pp. 25-26 235 Cf. Syrota (2011) 236 Fnatic, Team EnVyUs, Ninjas in Pyjamas, G2 eSports, Virtus.Pro, Natus Vincere and Mouseports 237 Cf. www.wesa.gg 238 Cf. Campbell (2016) 239 Cf. Gaudiosi (2016c) 240 www.wesa.gg 241 Fletcher (2016c) 46 fans themselves.242 The overall skepticism is further clarified by the exit of the founder member FaZe Clan approximately two weeks after the launch of WESA due to lack of transparency regarding the plans of how to reach WESA's stated goals.243 The association is too young to evaluate its success, but a SWOT analysis244 conducted by Fletcher (2016b) as well as a first analysis of Blum (2016) grants an overview on potentials and limitations, that are summarized and visualized in Appendix 10. A comparative approach including e.g. share of profit and social benefits for players is undertaken by seven North American team organizations that formed the Professional eSports Association in September 2016 that will start to operate a CS:GO league in 2017.245 If such associations grow in the future, the significance of and interaction between them and the games' publishers will be another important factor, because publishers as owners of the intellectual properties can put a spoke in an association’s wheel and thus gaining their support is an inevitable necessity. 2.4 Risk Factors ESports underlies several risk factors that may negatively affect the reputation of the whole ecosystem and can cause the aversion of fans, players and industry partners. ESports sponsors must be aware of these risks as they can lead to negative spillover effects and to decreasing media reach of sponsoring activities. The risk factor sexism has already been discussed in chapter 2.3.1. 2.4.1 Corruption To tackle corruption, ESL and Dreamhack created the ESIC with the help of the British sports lawyer Ian Smith to become "guardian of the sporting integrity of esports".246 Members from various stakeholder groups, such as Intel and betway, already joined.247 Ian Smith identified four significant problems:248 1) Manipulating a player's internet connection By manipulating or disrupting a player's internet connection in online matches, e.g. by a so called DDoS249 attack in which a large amount of internet data traffic is send to a player's PC leading to a denial of internet access, the outcome of a match 242 Cf. Fletcher (2016b) 243 Cf. Blum (2016) 244 A SWAT analysis figures out internal strengths and weaknesses and external opportunities and threats, see Pahl/Richter (2007) 245 Cf. Auxent (2016b) 246 According to its mission statement at www.esportsintegrity.com 247 All members are listed at www.esportsintegrity.com 248 Cf. Fischer (2016) 249 Abbreviation for Distributed Denial of Service 47 can be influenced. This can be either used to win matches or to manipulate a match's result for illegal betting purposes (s. 4) Match Fixing and Gambling).250 For more details on DDoS in eSports see Maiberg (2015): eSports has a DDos Problem. 2) Cheating Commonly, cheating can be referred to as consciously breaking any kind of rule of a competition's regulation. This subchapter will focus on cheating in the matter of manipulating the game itself251 such as using cheating software that helps aiming ('aim bot') or grants more vision of the virtual battleground ('wallhack' or 'maphack'). Programming and distributing such software is a lucrative business with revenue in the millions.252 To detect cheating, publishers are operating anti-cheating programs, such as Valve's Anti-Cheat System (VACS).253 The ESL One Rulebook for CS:GO makes the usage of ESL's control software 'ESL Wire Anti-Cheat' mandatory for players of the important leagues.254 Cheating in amateur and casual gaming of a discipline negatively influences the gaming experience and can lead to a decrease of players. The problem affects mostly online competitions in which the players and their hard- and software setups cannot be controlled completely. In 2014, well-known professional CS:GO players were caught cheating and thus banned by Valve. These players subsequently claimed that several other players are cheating as well. This incident has put the whole scene and the integrity of other players into question.255 In offline events this problem basically disappears as hard- and software are under full control of the organizers.256 Nevertheless, the loss of integrity and reputation due to cheating incidents or suspicions in the professional and semi-professional scene can harm it by dragging away viewers and industry partners.257 Thus, cheating is a risk for all stakeholders involved. 3) Doping As in traditional sports, players can enhance their performance by taking stimulating substances which necessarily led to the integration of anti-doping policies. In eSports, mostly psychological stimulants to improve e.g. concentration, reaction 250 Cf. Maiberg (2015) 251 Other cheating methods are e.g. the abusing of in-game bugs or the installation of macros, that allow to execute a certain combination of klicks/keypresses by only pressing one key/mousebutton 252 Cf. Maiberg (2014) 253 Cf. Winnan (2016), chapter: Cheaters and Hackers 254 Turtle Entertainment GmbH (2015b), p. 18 255 Cf. Lahti (2014) 256 Cf. Winnan (2016) 257 Cf. Minns (2016) 48 time and alertness, such as Ritalin, Adderall and Vyvanse, are effective drugs.258 The IeSF already published an anti-doping policy in its regulations.259 In 2015, a CS:GO player of the professional eSports club Cloud 9 admitted to have taken Adderall in a match played at ESL One Katowice and furthermore claimed that the use of Adderall is very common in the professional CS:GO scene.260 ESL has started to implement anti-doping policies with the help of the National Doping Agency of Germany and the World Anti Doping Agency (WADA). The ESL One Rulebook now states in section 2.6.4 Drugs and Alcohol, that playing an online or offline match "[...] under the influence of any drugs, alcohol, or other performance enhancers is strictly prohibited, and may be punished with exclusion [...]".261 Since ESL One Cologne in August 2015, ESL is performing tests for prohibited substances at their major offline events (regardless of the featured disciplines) with support of WADA.262 While such tests can be done at offline events, there are no opportunities to control players of online matches. In conclusion, drug abuse and eventual consequences of it for the respective players in eSports can harm its image and thus can lead to economical consequences. The IeSF's regulations and the ESL's efforts with the support of major agencies are a first step to fight doping and diminish this risk. 4) Match Fixing and Gambling The problem of match fixing – the manipulation of a match by the players itself, e.g. by being bribed to lose intentionally or agree on the outcome with the opponent beforehand – to make profit with wagering is a problem that occurred with the rise of eSports betting opportunities.263 Several incidents concerning multiple disciplines happened in the last years. Scandals in the South-Korean StarCraft II scene included top players and the arrest of several involved people.264 A League of Legends pro-gamer attempted suicide after admitting match manipulation that was commanded by his team manager.265 In Western eSports, the lack of regulating bodies is a problem when dealing with match fixing, and thus the publishers are the most important institution to deal with such issues.266 For instance, Valve permanently banned several players from Valve involved CS:GO competitions because of match fixing for skin gambling profit (see below).267 Companies that help sports 258 Cf. and more detailed information available at Winnan (2016), chapter: Nootropics and Drug Use 259 Cf. International e-Sports Federation (2014) 260 Cf. Winnan, chapter: Nootropics and Drug Use 261 Turtle Entertainment GmbH (2015b), p. 7 262 Cf. McConnell (2015) 263 Cf. Winnan (2016), subchapter: Gambling Opportunities 264 Cf. Sinclair (2015); Wood (2016a); Durrani (2016) 265 Cf. Mitchell (2014) 266 Cf. SportTechie (2016) 267 Cf. Durrani (2016) 49 institution with such issues, such as SportsIM and Sportradar AG, start to integrate services for eSports league providers and publishers.268 ESL already has a partnership with Sportradar which includes e.g. the usage of the Sportsradar's Fraud Detection System to monitor betting activities.269 According to Ian Smith, match fixing is still on a very low level, but when eSports and eSports betting is growing as expected (s. chapter 2.6.1), it reaches a size at which "[...] serious fixers get involved [...]" and "[...] organized crime gets interested."270 In conclusion, the potential loss of integrity due to illegal betting activities is a threat for the affected scene and the whole eSports industry, but the stakeholders are aware of this risk and steps to diminish it have already been taken. The gambling with virtual items of Valve's games, so called "skin gambling", for real money on third-party sites is a market with a total wagered amount of $7,4 billion according to a study of Narus Advisors and Eilers & Krejcik Gaming.271 This kind of betting is in a legal 'grey area', e.g. due to lack of regulations to avoid gambling of underage players. As consequence of the mentioned match fixing scandal, criticism that skin gambling leads to serious gambling problems of young gamers272 and even law suits against Valve,273,274 Valve announced the prohibition of such third-party skin gambling offerings on 13th of July 2016 and clarified that the rumors about its involvement in such gambling pages are not true.275 As a first consequence, several effected sites ceased its operations.276 The impact on eSports of Valve's decision cannot yet be determined. But it can be assumed, that on the one hand, this may positively impact the image of the eSports scene as perceived by industry partners and governmental authorities, but on the other hand may decrease viewer numbers as for some viewers the main motive to watch might be to see their bets being played out.277 A possible transition of viewers to real money betting sites is an opportunity for those sites. 2.4.2 Virtual Violence A lot of research about the display of violence in media and its consequences has been conducted in the past.278 Whether playing of computer games can transfer 268 Cf. SportTechie (2016); Wood (2016c) 269 Cf. Sportsradar AG (2015) 270 Smith (2016) 271 Cf. Narus Advisors LLC/Eilers & Krejcik Gaming (2016), as seen in Grove (2016) 272 Cf. Brustein/Novy-Williams (2016) 273 Cf. Bräutigam (2016b) 274 For the document of a law suit see United States District Court District of Connecticut (2016) 275 Cf. Johnson/Valve Corporation (2016) 276 Cf. Bräutigam (2016b) 277 Ebenda 278 For a summarization see Breuer (2011), pp. 209-216; see also Zimmermann/Schulz (2007) 50 virtual violence into the real world is not to discuss in this thesis, but instead the focus is on the influence that media attention towards this topic can have on eSports. Virtual violence in computer games got into media focus as the cause of shootings in high schools was partly attributed to FPS games, mostly referred to as 'killer games' with Counter-Strike as primary example.279 For instance, in 2002 the Frankfurter Allgemeine Zeitung, one of Germany's most important news papers, published an article called "The software for the massacre: A computer program of Sierra Entertainment [author's note: Counter-Strike] trained the school shooter of Erfurt".280,281 A subsequent examination of responsible German authorities did not lead to the prohibition of the game.282 A certain risk of potential bans on national markets for eSports disciplines that include virtual violence remains. A certain level of skepticism towards Counter-Strike can still be observed, as for example Wüstenrot excluded CS:GO in its branding activities at the multi-discipline event ESL Frühlingsmeisterschaft 2016 (s. chapter 3.3). This clarifies, that in conclusion, the eSports scenes of such games, especially CS:GO, are under a certain risk of losing (potential) industry partners due to negative display in the media concerning this topic.283 The assumption that in case of another shooting incident, that is being associated with 'killer games' in the mass media, companies may end their support of competitions or teams related to CS:GO to avoid possible negative spillover effects seems plausible and is thus a big risk. This assumption was proven right when the killing of ten persons in a shooting in Munich284 ignited a new discussion about 'killer games' and as consequence the newly joined media partner ProSiebenSat. 1 Media SE's canceled the broadcasting of their TV show about the E-League.285 As the significance of CS:GO for major eSports clubs and providers is very high, it can be concluded that this is a risk for the whole eSports ecosystem. The potential generalization of this topic for all of eSports in mass media may also affect the whole industry and especially other eSports disciplines that include virtual violence, e.g. MOBAs, fighter games and RTS games. 2.5 Sponsoring in Western eSports In marketing literature sponsoring is considered as an own instrument within the communication mix.286 Sponsoring and especially sport sponsoring have gained 279 Cf. Breuer (2011), pp. 201-215; Müller-Lietzkow (2008), pp. 111-112 280 Literal translation 281 Article online available at www.genios.de, see Frankfurter Allgemeine Zeitung (2002) 282 Cf. Spiegel Online (2002) 283 Cf. Minns (2016) 284 For more information see Portal München Betriebs-GmbH & Co. KG (2016) 285 Cf. Wartenberg (2016) 286 Cf. Bruhn (2003), pp. 39-41; Sachse (2010), pp. 11-13 51 significance over the last decades.287 For the integration into the communication mix Bruhn (2003, pp. 39-43) emphasizes the importance of inter-instrumental integration, the systematic coordination with other instruments288 as exemplified in the case study in chapter 3.3, as well as intra-instrumental integration, the systematic coordination with other sponsoring activities. The common motives of sports sponsoring are reaching a target group or a broad mass with the multiplier effect of mass media in a non-commercial environment to increase brand awareness, improve brand image and gain goodwill.289 Minns (2016), Pilcavage (2015) and Keller (2015a) point out the importance of inter-instrumental integration by creating relevant added value for the target group that should go along with sponsoring engagement in eSports. In the following, sponsoring properties and activities in eSports and their major differences to traditional sports, the sponsor composition and the special attractiveness of eSports sponsoring and the eSports fans are analyzed. These analyses only consider the Western eSports sphere. 2.5.1 Sponsoring Properties and Activities To classify sponsoring properties, a classification approach as used by Drees (2003, pp. 55-58) and Bruhn (2010, pp. 83-85) for traditional sports sponsorship is applied and adapted to eSports (Image 7, left). In addition with further specifications of sponsorships (Image 7, right), significant special sponsoring conditions in eSports are analyzed. Despite basic similarities of the sponsoring properties, Fletcher (2016e) emphasizes that it is important to keep in mind that eSports derives from the gaming community and not the sports community and thus mere copying of approaches from traditional media sports sponsoring is not a reliable strategy. The sponsoring properties are mainly characterized by the chosen discipline/s, the level of performance and professionalism and the organizational unit. Concerning disciplines, the changeability of popularity caused by the constant creation of new disciplines explained in chapter 2.2 is very high and unique to eSports.290 287 Cf. Bruhn (2003), pp. 12-41; Lucas (2015), p. 141 288 A list of other instruments and how they can systematically interact with sport sponsoring is available in Bruhn (2003), p. 40; pp. 149-155 289 Cf. Drees (2003), pp. 52-54 290 The popularity of traditional types of sport also vary, but mostly triggered by the success/failure of national athletes and not due to the emergence of new disciplines, see Horky (2009) 52 Image 7: Dimensions and Specifications in eSports Sponsoring Source: Own illustration based on Drees (2003), pp. 55-64; Bruhn (2010), pp. 83-85; Lucas (2015), p. 16 For sponsors deciding to specifically focus on the support of certain disciplines, it is important to observe and eventually adapt to possible shifts. The main differences in comparison with traditional sports are triggered by the dichotomy of offline and online which also is unique to eSports. On the one hand, this grants the possibility to organize and/or sponsor online events with (top) teams from around the world participate at very low cost. On the other hand it limits regional sponsoring: In popular traditional sports teams of all performance levels mostly have a clear regional relation and origin. This gives the opportunity for big companies as well as medium or small sized enterprises to address geographically narrowed target groups.291 In eSports most clubs were created online and given fantasy names by its regionally spread founders (s. chapter 2.3.3) and thus there is a "lack of built-in regional affinity".292 Furthermore, eSports clubs do not have (offline) club facilities to play their matches with nearby residents as spectators.293 These given factors largely limit the potential of regional sponsoring and an identification of a company with a region and its residents via sponsoring of a local eSports club. Settling of major clubs, such as EnVyUs (s. chapter 2.3.3), and the establishment of eSports dedicated arenas may open new opportunities in the future. This situation of limited targeting does not hold true on a country basis. There is an increasing number of national leagues and events.294 Furthermore, players and streamers that are especially popular in their countries of origin can serve as gateways to respective national segments. In general, the wide-spread online streaming is considered a unique strength of eSports by Pilcavage (2015), as it allows eSports 291 Cf. Drees (2003), p. 57 292 Fletcher (2016f) 293 Cf. Fletcher (2016i) 294 For examples see Newzoo (2016c) 53 persons and pro-gamers to have constant bilateral interaction with their fans. He identifies this situation as an "incredible opportunity to activate a highly contagious network of advocates and influencers on a global scale at such a low cost".295 Associations do not grant as attractive sponsoring opportunities as in traditional sports due to their lack of significance. If they are able to strengthen their status in the future, they may grant new possibilities for expansive sponsoring on an international and national level. The possible activities to implement sponsorships are rather similar to traditional sports. Bruhn (2010, pp. 82-85) and Drees (2003, pp. 58-63) categorize those activities as follows: Branding of equipment Physical presence at sports events Usage of titles296 Naming of sponsoring properties Use of popular sports persons as endorsers Next to those, a direct integration in an eSports broadcast is predominately done by standard online stream branding.297 For a sponsor with indirect appearance of its logo on used branded equipment and peripherals as well as branded player jerseys display time is rather low, as a major share of broadcasting time is spent showing the virtual playground of the discipline. To increase a sponsor's display time and effectiveness 'in-game branding' opens new opportunities special to eSports: The brand is directly inserted into the game itself by appearing on an accordingly modified virtual playground. In this way the brand is directly part of the game and the action. This does not only increase the overall time of display, but also increase the unconscious and conscious awareness of the logo and lead to stronger perceived connections of the brand with the respective eSports discipline, tournament and players/teams.298 For an example for a solution of Valve for DotA 2 see LaFleuer (2015) and for an example in StarCraft II see HuskyStarcraft (2014). 2.5.2 Sponsor Composition In sports sponsoring sponsors can be categorized by the degree of relation of their products to the respective type of sports and its activities. Drees (2003, pp. 50-52) and Berndt (2005, p. 157) distinguish between four different categories: 295 Pilcavage (2015) 296 E.g. "Official sponsor of", "sponsored by", "presented by" 297 The display of the logo on the stream, as visible in Appendix 9 and Appendix 12 298 Cf. LaFleur (2015) 54 Table 3: Sponsor Categories by Degree of Relation to Respective Type of Sports Source: Own illustration based on Drees (2003), pp. 50-52; Berndt (2005), p. 157; Fletcher (2016i) The first degree companies are usually referred to as endemic sponsors. Yet, the border to distinguish between endemic and non-endemic is fluent for second degree companies.299 Sponsoring has the highest significance for those endemic companies.300 That's why mostly endemic brands are using the young eSports landscape for sponsoring as a channel to present and sell their products to the gamers.301 This situation is usual for immature marketplaces that grant sponsoring opportunities.302 Fletcher (2016e) estimates this share of sponsors at approximately 95% and confirms their financial importance.303 Important second degree sponsors are beverage companies. Historically, there is a linkage between video gaming and drinking caffeinated soft drinks to stay concentrated and thus eSports is attracting big beverage companies, such as Cola- Cola,304 PepsiCo305 Red Bull,306 Rockstar,307 Bud Light308 and more.309 These companies installed own marketing teams that focus on eSports.310 Next to sponsorships, Red Bull opened an eSports studio in its Red Bull Media House in Santa Monica, California, to host some of its own tournaments and produce high quality 299 Cf. Fletcher (2016e, 2016i); Newzoo (2016a), p16 300 Cf. Drees (2003), p. 51 301 Cf. Franke (2015), pp. 121-122; Minns (2016) 302 Cf. Minns (2016) 303 Examples are listed in Euroforum Deutschland SE (2015), p. 19 304 eSports section on website available at www.coca-colacompany.com/tags/coke-esports; for details also see SuperData Research (2015a), p. 17 and Euroforum Deutschland SE (2015), p. 15 305 Twitch cooperation section on website available at: www.ampenergy.com/Twitch 306 eSports section on website available at www.redbull.com/de/de/esports; for details also see Fletcher (2016f) 307 Rockstar appears as "Official Drinks Partner" for the European Gaming League, see Wadsworth (2016) 308 eSports section on webiste available at www.budlight.com/eSports.html 309 Cf. Fletcher (2016g) 310 Cf. Pilcavage (2015) 55 eSports content.311 Similarly, telecommunication companies, such as Verizon, T- Mobile and Vodafone started to engage in eSports to address the millennials.312 Yet, despite from these branches, investments of non-endemic companies is still on a low level313 and a possible entrance is often rather seen as an 'experiment' instead of a valid long term strategic investment.314 Only few third and fourth degree companies are engaged as sponsors. Examples include the U.S. based Government Employees Insurance Company (known as GEICO),315 car care company Turtle Wax,316 and car manufacturer Nissan.317 Several reasons that lead to this overall hesitating and skeptical behavior can be identified: Most marketing decision makers are not in the age segment of "native" gamers and have no personal identification with or real knowledge of eSports and its scene318 Doubts about adequate representation of the brand and its products319 The still partly negatively shaped perception of video gaming in society and the representation in mass media by being considered unhealthy and lazy, addictive, and advocating and transferring violence (s. chapter 2.4.2).320 Fragmentation and a lack of professionalization, fixed structures and governance321 Possible bad publicity due to the introduced risk factors in chapter 2.4.322 Nevertheless, SuperData Research (2015a, pp. 8, 17), Newzoo (2016a, p. 16) and experts from the industry323 expect an increase of non-endemic brands in eSports due to the growing media reach (chapter 2.3.6) and increasing professionalization and maturity of the market (chapter 2.3). Furthermore, agencies and consultancies start to integrate eSports in their portfolio and eSports specialized agencies and consultancies arise. These companies are able to close the 'gap' between eSports unfamiliar companies and the respective partners for co-operations from the 311 Cf. Daley (2015) 312 Cf. Fletcher (2016f) 313 Cf. Fletcher (2016f) 314 Cf. Franke (2015), p. 120 315 Cf. Lingle (2015) 316 Cf. Gaudiosi (2016d) 317 Cf. www.teamliquidpro.com 318 Cf. Minns (2016) 319 Cf. Härig (2014), p. 56 320 Cf. Minns (2016); Breuer (2011), pp. 201-215; Müller-Lietzkow (2008), pp. 111-112 321 Cf. Minns (2016) 322 Cf. Minns (2016) 323 E.g. Minns (2016), Visser (2015), Cornwell (2015), Gehlen (2015), Galvin (2015), Remmert (2015), Bister (2015) 56 eSports ecosystem to a certain extent.324 Considering the past and predicted developments, Fletcher clarifies, that "for non-endemics eSports is emerging as a costeffective way to reach valuable audiences."325 A further analysis of these valuable audiences is provided in the next chapter. 2.5.3 The Attractiveness of the Target Group For endemic brands, whose products are directly demonstrated in eSports, the target group is an obvious fit. The eSports fans are high spenders on computer equipment.326 In a study of Eventbrite (2015, p. 4) 38% of the surveyed eSports fans are likely to buy equipment of showcased products after attaining an event. Their affinity to technology and often taken roles as early adopters make them important influencers and multipliers: According to Euroforum Deutschland SE (2015, p.7) on average each eSports fan has an influence on the technology-related buying decision of four of their friends or family members. Non-endemic brands lack this obvious fit. This raises the question of what other factors increase the attractiveness of eSports sponsoring and the target group. Four major factors can be identified: 1) The financial strength of the eSports fans: According to Newzoo (2016a, p. 17) 65% of eSports enthusiasts have a full time job and 53% are in the high income segment, which is a significantly higher share than for all internet users. As the fan base matures, more eSports fans will graduate, have full time jobs and enter this high income segment.327 2) The (in-)accessability of the millennials: This age segment is a target group that is specifically difficult to reach via advertising and classic media, as they spend more time online and less time watching TV or reading printed media.328 Furthermore, millennials and especially tech-savvy eSports fans are likely to use ad-blockers.329 According to a report of Pagefair and Adobe Systems Inc. (2015, p. 8), websites related to gaming have the highest ad-blocking rate of 26.5% and Twitch.tv-streamer Steven "Destiny" Bonnell330 estimates that over three fourth of his channel's viewers use ad- 324 Cf. Fletcher (2016e); Minns (2016) 325 Fletcher (2016e) 326 Cf. PricewaterhouseCoopers AG (2016), p. 10; Newzoo (2016a), p. 19 327 Cf. Minns (2016) 328 Cf. Newzoo (2016a), p. 16; Minns (2016); Euroforum Deutschland SE (2015), p. 7; Fletcher (2016e); Spiegelmann as cited in Knight (2016) 329 Cf. Minns (2016); Fletcher (2016e) 330 The respective channel is available at www.twitch.tv/destiny 57 blockers.331 By using sponsoring as a communication approach, these barriers can be bypassed, as the brand's engagement can directly contribute to the eSports content instead of being perceived as unpleasent interruptions and distractions.332 3) The emotional environment and the fans' involvement: In their eSports environment, the fans are very involved and engaged with the games they follow.333 The particular followed discipline provides escape, entertainment and excitement.334 Even though this attachment primarily derives from passion for the discipline itself,335 the fandom for particular players and teams increases: According to SuperData Research's results, 69% of the U.S. fans cheer for a favorite player and even 76% have a favorite team. Furthermore, almost a third watches particular competitions due to the involvement of a certain team or player.336 In conclusion, this emotionality makes eSports more valuable for marketing efforts - on a common and also on a team/player-related level.337 4) The development towards mainstream and mass media reach: The mere growth in viewer numbers and eSports' potential to gather significant mainstream attention can lead to higher media multiplier effects. If so, the entrance costs will increase. Thus, in conclusion, gaining a strong position in the eSports ecosystem and build up close partnerships while entrance costs are still rather low can be a cost efficient investment with the potential of high pay offs in the future.338 2.6 Consolidation and Future Outlook To summarize and consolidate, this chapter provides an overall picture about size and growth prospects of the economical side of eSports. Furthermore, possible changes triggered by new technologies, prospective legal and political consequences, and the relation of eSports and traditional media sports are analyzed. 2.6.1 Overall Market Size and Growth As reference, numbers about the market size and growth are taken from the freely available insights provided by SuperData Research and Newzoo. These figures do 331 Cf. Bannell as cited in Egger (2015) 332 Cf. Minns (2016); Pilcavage (2015) 333 Cf. Seo (2013) 334 Cf. Lee/Schoenstedt (2011) 335 Cf. Blicx Ltd. Market Research Services (2016) 336 Cf. SuperData Research (2015a) , p. 10 337 Cf. Franke (2015), p. 121 338 Cf. Spiegelmann as cited in Knight (2016); Minns (2016) 58 not include direct game revenue of the game publishers339, but revenue generated by eSports as a popular competitive sports marketed via media (s. Image 9). Image 8: eSports Market Size and Growth Prediction According to SuperData Research and Newzoo Sources: SuperData Research (2015a), p. 5; Newzoo (2016a), p. 10 As Newzoo does not include prize money and revenue generated by eSports betting, the estimations of SuperData Research for those two revenue streams (s. Image 9) must be added for the purpose of comparison, resulting in an adjusted estimated market size of $462.3 million by Newzoo in 2015. Taking this into consideration, the given range of reference is between $462.3 million and 748$ million. Newzoo's alternative best case scenario (s. Image 10) predicts very similar numbers to those of SuperData research. Both research institutions predict high future growth rates of approximately 40% p.a. for the future, making eSports become a billion dollar industry in the next years. 339 For an overview of game revenue of five important eSports game, see SuperData Research (2015a), p. 4 59 Image 9: Size of the eSports Market by Revenue Sources in 2015 Source: Superdata Research (2015a), p. 9 As the image above visualizes, the market's revenue is dominated by indirect revenue generated with sponsoring and advertising. The increasing audience (s. chapter 2.3.1) sparked high investments340 by publishers (s. chapter 2.3.7) and media companies (s. chapter 2.3.6) and puts eSports on classic television and a path to more mainstream acceptance and attention. In combination with higher professionalization and learning curve effects regarding commercialization processes, indirect revenues are expected to grow. Ticket sales and merchandise are a rather young significant source of direct revenue. The analyzed growing popularity of eSports clubs (s. chapter 2.3.3 and 2.5.3) and events paired with installments of eSports venues (s. chapter 2.3.5) are signals of an absolute growth of these revenue streams. Nevertheless, a higher relative significance in comparison to indirect revenue is questionable. Another new 340 A list of major investments is provided in Appendix 11 60 important source, eSports betting, is lagging behind expectations. ESports fans are only slowly transitioning from betting virtual in-game goods to wagering real money, yet after the prohibition of skin gambling on third-party websites (s. chapter 2.4.1) this transition may speed up. Illegal match making is a factor for reluctance to do so (s. chapter 2.4.1).341 Yet, SuperData Research (2015a, p. 9) expects a fivefold growth until 2018 due to high investments into eSports betting platforms.342 Moritz Maurer (as cited in Sporttechie (2016)), Head of eSport Integrity for SportIM, confirms this growth prospect as major sports and virtual casino gambling platforms increase their offerings to bet on eSports matches. Considering the regional distribution of revenue, Northern America has outpaced Asia as largest region with a prospected share of 38% in 2016 according to Newzoo (2016a, p. 10; 2015d). SuperData Research (2015a, p. 5) estimates Asia as the largest market in 2015 but predicts a relatively larger growth in the Western world due to high investments. Next to the mere quantity of fans, revenue per fan is another important indicator for growth potential in a media sports industry. Compared to other media sports the revenue per eSports enthusiast is yet low (s. Image 10). Next to the total market growth, Newzoo also expects a relative revenue growth per enthusiast due to the discussed developments. . Image 10: Revenue per eSports Enthusiast 2012-2020 Source: Newzoo (2016), p. 11 341 Cf. SuperData Research (2015a), pp. 11-12 342 Also see Grove (2016) 61 2.6.2 Magic Triangle of Sports and the Flow of Money In traditional media sports the Magic Triangle of Sports, as proposed by Bruhn in the 1980s, is one fundamental model to explain the basic clockwork of a popular sports industry.343 It describes the relation between the sport, the (mass) media and the industry as strongly separated elements with the audience as the respective consumers as central component in between.344 The more efficiently and cooperatively these three parts interact, the more successfully revenue can be generated from commercial partners and the fans.345 In research literature the model of the magic triangle has also been applied for eSports.346 It can be assumed that revenue generated per fan lags behind traditional media sports, because the key elements did not yet have that much time to optimize their interaction with each other. Thus, on a fundamental basis, the improvement of this interplay can be seen as an economical key factor for each component and the ecosystem as a whole. Image 11 illustrates the parts of the triangle and visualizes the flow of money within the eSports ecosystem as an overview of the monetary connections of the different elements. The respective findings of the secondary research and the various analyses in chapter 2 revealed two major unique characteristics and differences to the traditional media sports triangle: Firstly, a strong overlapping or even merge of media and sports as playing video games itself is a form of media and furthermore, broadcasting rights are not strictly sold, but tournament organizers produce content on their own and even operate own broadcasting platforms to monetize their tournaments. Also clubs, players and even consumers create monetized media content. Secondly, publishers are unique to eSports and can act as sponsors, tournament organizers, governing bodies and media channels themselves. These differences, the recent entrance of eSports into classic mass media television and the undefined, but increasingly significant role of publishers and associations give reasons for future research of a potential adapted Magic Tri- or Rectangle347 of eSports and close analyses of single factors of the elements' interactions to reveal potentials for economical growth and improvements of respective stakeholders. 343 Cf. Breuer (2011), p. 71; Hagenah (2008) 344 Cf. Bembennek/Meier (2003), p. 121; Breuer (2011), pp. 71-72 345 Cf. Onnen/Ufer (2005) 346 Cf. Müller-Lietzkow (2008), pp. 123-125; Breuer (2011), pp. 71-72; pp. 108-109 347 With publishers as a new fourth element 62 Image 11: Flow of Money in the eSports Ecosystem and the Magic Triangle of Sports Source: Modified illustration based on Fletcher (2016c) (facsimile); Bembennek/Meier (2003), p. 121 2.6.3 New Technologies Progress and innovations in consumer electronics can bring changes or additions to the eSports industry. As for now, two technological trends are or may be significant for eSports in the future: Mobile devices and virtual reality devices. For watching eSports, mobile devices348 are already popular: 69% of U.S. eSports fans use mobile apps, e.g. the apps of YouTube Gaming and Twitch.tv, to view eSports according to SuperData Research (2015a, p. 14). With expected generated revenue of $36.9 billion, mobile games take a share of 37% of the games market in 2016349 and over two billion people play games on mobile devices.350 Considering this potential, games developed as eSports disciplines for mobile devices were released. Blizzard's collectible card game Hearthstone, that exceeds 50 million regis- 348 Mobile devices include smartphones and tablet computers with touch screens and do not include handheld gaming consoles 349 Cf. Newzoo (2016f), p. 11 350 Cf. van Dreunen as cited in Gaudiosi (2015) 63 tered users351 and is managed as an eSports title by Blizzard, is available as mobile app and its mobile release in 2014 increased the number of players by approximately 140%.352 The game's mobile playability derives from its game play, which does not require any specific control devices, e.g. a computer mouse and a keyboard, and is only based on strategy and not on skills like fast reactions and aiming comparable to chess or skat (s. Appendix 2). Next to that, the game Vainglory, a MOBA designed for touch screens, entered the eSports market and is considered the first mobile-only eSports title. In 2015, the ESL added Vainglory to their covered eSports titles and partnered with its publisher, Super Evil MegaCorp, for tournaments.353 In South-Korea, a Vainglory competition in 2015 already attracted over a million viewers.354 Red Bull's eSports studio in Santa Monica was host for the offline finals of a $25,000 dollar North American Vainglory championship in March 2016.355 More insights and information on Vainglory can be found in an interview video with executive director Kristian Segerstrale.356 For Kristian Segerstrale and Joost van Dreuen (as cited in Gaudiosi (2015)) the easier accessibility and higher penetration of mobile devices in comparison with eSports capable PCs and the possibility to play everywhere are a strong basis for high future growth potential. This may attract new consumers and fans to the eSports ecosystem.357 The future of eSports on mobile devices is not yet defined, but the current success of Hearthstone and Vainglory are positive signals for increasing popularity that may reach the significance of PC and console games. A more radical new way to play video games is opened by virtual reality358 devices. Virtual reality headsets (VRH) of major companies359 made for gaming were launched in 2016 for the consumer market. It is predicted that approximately 12.2 million VRHs will be sold in 2016.360 VR in combination with locomotion simulators ("treadmills") can add a new physical element to gaming and eSports as actual physical movements like jumping, walking or moving a gun are translated into the game. This is referred to as Active VR.361,362 Valve, who partners with HTC Corpo- 351 Cf. Activision Blizzard (2016) 352 Cf. SuperData Research (2015a), p. 15 353 Cf. SuperData Research (2015a), p. 15 354 Cf. Gaudiosi (2015) 355 Cf. Klick (2016) 356 Conducted by Andrea Rene for Yahoo!'s eSports section, available at Yahoo! eSports (2016) 357 Cf. Newzoo (2016f) 358 For detailed information about this technology see Fuchs et al. (2011) 359 Facebook (via Oculus VR, Inc.), Sony, HTC and MergeVR 360 Cf. Winnan (2016), chapter: The Advent of Virtual Reality; Gaudiosi (2016e) 361 Cf. Bastian (2016); Dyet (2016) 362 A demonstration video of the from locomotion simulator Virtuix Omni is available at Virtuix Omni (2016a) 64 ration in terms of VR, is already on the forefront of VR gaming with the operating system SteamVR. For Valve's VR developer Chet Faliszek (as cited in Gaudiosi (2016e)) a merger of eSports and VR is first of all about spectating: On the one hand Valve is already developing an integrated VR observer mode for DotA 2 to grant a whole new experience for spectators in a normal eSports discipline.363 On the other hand for an Active VR game, "it is fun to watch someone play a VR game because they’re physically moving around in this space and making these motions that people can understand what’s happening,".364 Virtuix already hosted a tournament for their Active VR first-person-shooter.365 With its technology, Virtuix wants to add a clear physical element to eSports, already referring it to as "active eSports" for which it predicts high gaming and watching potential.366 The role of VR for eSports in the future is not yet determinable. VR overall and in gaming may become mainstream.367 As for now, due to the low accessibility and very high prices of the technology, VR may not yet have a great impact on eSports.368 Yet, in conclusion it can be predicted that a higher penetration of the VR technology can lead to 1) additive VR integration for normal eSports games and 2) the development of significant active eSports scenes surrounding VR games. Furthermore, it seems likely that publishers of VR games and producers of VR hardware will organize and sponsor a competitive scene as a marketing tool analogy to today's publishers of normal eSports disciplines (s. chapter 2.3.7). For van Dreunen (as cited in Gaudiosi (2016e)), the eSports enthusiasts as early adopters, heavy spenders on technology and passionate gamers are a key target group for initial consumer demand and thus VR companies need to compete for their attention. 2.6.4 Legal and Political Aspects and the Relation to Traditional Sports The increasing awareness and acceptance of eSports in Western society also lead to legal and political changes. Governments start to pay closer attention to evaluate needed regulations from the legislative point of view. A report written by French parliament members lists eleven propositions concerning governmental regulation of eSports including e.g. the status of competitions, player rights and status and financial aspects such as tax regulations.369 Furthermore, eSports players are increasingly accepted as professional athletes. This was e.g. achieved in the U.S. in 2013 and is important in terms of VISA issues to participate in major tournaments 363 Cf. Plumlier (2016) 364 Faliskek as cited in Gaudiosi (2016e) 365 Impressions of the tournament available at Virtuix Omni (2016b) 366 Cf. Bastian (2016) 367 Cf. Walker as cited in Dyet (2016) 368 Cf. Dyet (2016) 369 Cf. Durain/Salles (2016); for a brief summarization of the report see Auxent (2016a) 65 abroad.370 Official recognition as sports (s. Scenario 2 below) also qualifies eSports for integration in government sports funding programs.371 As counterpart to possible negative influences on the players and viewers, such as transfer of violence and addiction, Breuer (2011, pp. 190-201) analyses four positive influential aspects of eSports: 1) The transfer of positive values, such as team work and the acceptance and adherence of rules, 2) the improvement of media literacy, 3) the development of technological skills, and 4) the improvement of motoric abilities, such as hand-eye-coordination. A study of Glass et al. (2013) revealed a positive impact on decision-making and cognitive flexibility. Considering these effects, eSports is integrated in educational institutions.372 Some disciplines are already housed as varsity sports in universities to play collegiate tournaments373 and eSports athletes can apply for scholarships.374 In Norway in 2016, a school added eSports as an elective subject to its curriculum.375 To investigate the current and future relation to traditional sports three formulated scenarios by Jonasson and Thilborg (2010) are used as basis. Scenario 1: eSport as a counterculture or alternative to modern sport This scenario is based on the fact, that eSports derives from gaming and not from sports culture and is not (yet) or only partly considered as a conventional sport in society. Within eSports fans take different positions in this matter and don't fully identify with traditional sports and rather call themselves "gamers".376 In a survey among eSports fans conducted by Franke (2015), approximately only a fourth of the respondents thought that eSports belongs to general sports sphere and over a half sees eSports as an independent own culture.377 Yet, recent developments (s. Scenario 2) show that the separation from traditional sports is decreasing and the realization of the scenario of eSports as a mostly isolated counterculture in the future is unlikely. Scenario 2: eSport accepted as part of the hegemony of sport In the second scenario, eSports becomes part of the hegemonic sport family.378 Thriving forces of this integration are Western national eSports associations that are pursuing the official recognition of eSports as sport. The current situation in 370 Cf. Tassi (2013) 371 Cf. Breuer (2011), pp. 227-238 372 Cf. Borowy/Jin (2016), p. 2015 373 Cf. Hiltscher (2015), p. 14 374 Cf. and detailed information to be found at Winnan (2016), chapter: eSports Scholarships 375 Cf. Ciubotaru (2016) 376 Cf. Jonasson/Thilborg (2010), pp. 292-293 377 Cf. Franke (2015), p. 130 378 Cf. Jonasson/Thilborg (2010), pp. 193-194 66 this matter differs from country to country.379 The official recognition as sport in Russia, Italy and Denmark380 and the effort of the IeSF regarding acceptance by the International Olympic Committee (IOC)381 are indicators for overall further advancements in the future. Another sign of this integration in the sports hegemony is the increasing involvement of traditional sports clubs as discussed in chapter 2.3.3. The main barriers for such integration indentified by Jonasson and Thilborg (2010, pp. 293-394) in 2010 are the lack of internal organization to fit IOC standards382 and the negative aspects connected with computer gaming in society. Previously mentioned efforts of the IeSF, WESA and ESIC show that the first barrier is steadily diminished. With increasing numbers of people playing video games383 and adults that grew up with video games and the inclusion of video games in educational institutions the associated negative aspects are also decreasing. Yet, negative public perception due to the display of virtual violence in eSports disciplines is still very present as shown in chapter 2.4.2. Furthermore, Jonasson and Thilborg identified a possible expansion to traditional TV and sports channels as a clear sign for this scenario. This expansion is ongoing as previously examined in chapter 2.3.6.2. Scenario 3: eSport as the future hegemonic sport The third scenario is formulated as a speculative outlook to the distant future. In this scenario eSports replaces traditional sports as predominant type when the development of the knowledge society continues and intensifies to a point at which the attitude towards sports changes to a high preference of intellectual skills over physical capacity. As for now, this scenario is not relevant from a business point of view. In summary eSports combines characteristics of the first and second scenario. Recent developments show that it is in a transitional phase from the first to the second scenario which is the likeliest one for the near future. Yet, the attitude of the fans indicates the conservation of a certain degree of separation. The possible replacement of traditional sports as hegemonic sports is speculative and not relevant at this point of time. It can be concluded, that the transition will go along with an increase of the social awareness and legal credibility of eSports and will thus attract more attention of consumers and industry partners.384 379 The author has no complete list of countries in which eSports is recognized as official sports. The Deutsche Olympische Sportbund in Germany rejected all applications so far (July 2016). 380 Cf. International e-Sports Federation (2016b) 381 Cf. International e-Sports Federation (2016c) 382 Such as an autonomous representative association and adherence of anti-doping-policies 383 Cf. Electronic Entertainment Design and Research (2015) 384 Cf. Jonasson/Thilborg (2010), p. 293

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Abstract

In the last decades, the market for digital games has grown to nearly $100 billion. During this growth, a special gaming segment and community formed surrounding the direct competitive aspect of games: eSports. The core of eSports is similar to traditional types of sport. Players train to become better, clubs are established, tournaments are organized and fans enjoy watching their game being played on the highest level of performance. With viewers and prize money in the millions, eSports have grown into an economically significant media sport ecosystem and a marketing landscape that started to attract non-endemic companies as advertisers and sponsors. This book analyzes the components of the eSports ecosystem as well as their interactions with each other. Furthermore, the attitude of eSports fans towards engagements of non-endemic companies is researched by using a real case study including the Electronic Sports League and German home loan bank Wüstenrot.