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2017 August
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Business Opportunities from eSports Not to Be Undervalued

Competitive gaming, or “eSports”, has become a sport in its own right in recent years. International eSports tournaments are generating massive profits from advertising, title sponsorship, admission, television broadcast, and the like.

 

Competitive gaming has developed into highly entertaining professional sports tournaments, drawing as many as 300 million viewers around the globe. Professional eSports players or teams could sign themselves with eSports companies to earn a basic salary and undergo training. With an aim for victory, players are eying on the monetary rewards and honors from tournaments, which can be worth as much as USD10 million. Tournament organizers, on the other hand, can earn profits from selling admission tickets, broadcast rights, title sponsorship and advertising.

 

Similar to the commercial operation of professional sports such as NBA and football leagues, the industry has now developed maturely with its own league system, regular tournament venues, a transfer market and sports management agencies, etc. Earlier on, eSports has also officially become a competition event in the 2018 Asian Games in Jakarta and the 19th Asian Games in 2022.

 

Prize money in international competitions up to hundred millions

According to the eSports website “e-Sports Earnings”, a total of 1,536 contests were organized worldwide during the first approximately 6 months of 2017, with 8,748 active eSports players. The total prize now measures over USD37 million (approximately HKD290 million), with the reward of each contest reaching USD24,250 (approximately HKD189,000). While you may consider that quite a substantial amount, the overall reward of the previous year could be described as “glorious” - the total prize amount for eSports in 2016 valued at USD95 million (approximately HKD740 million).

 

Comparing to Korea, Taiwan, China, Europe and the US, the competitive gaming industry in Hong Kong is relatively lackluster. In 2013, the Asian Indoor and Martial Arts Games held in Korea included electronic sports as one of its nine game categories. In Taiwan, the Education and Culture Committee of the Legislative Yuan has approved the incorporation of the eSports industry into the “Sports Industry Development Regulations”, with technical colleges allowed to run specialist courses related to eSports and apply for subsidies. In fact, China already approved eSports as an official sports event all the way back in 2003. In Europe and America, the British Esports Association (BEA) is an arm of the UK Government’s Department for Digital, Culture, Media & Sport; in addition to supporting eSports contestants, the British government also builds eSports training centers. In the US, League of Legends was officially recognized as a sport in 2013, and foreign contestants are granted professional athlete’s visas.

 

Public impression hindering development of eSports

As for Hong Kong, the government has only announced the initiative to reserve more than HKD10 billion to support the development of innovation and technology in this year’s Budget. This includes studies on further promoting eSports, but there is yet to be any concrete policies or fund allocation. Meanwhile, the Tourism Board will be hosting the “e-Sports & Music Festival Hong Kong” in August this year at the Hong Kong Coliseum.

 

Ryan Chow, President of e-Sports Association Hong Kong, sees a growing market for the emerging entertainment of eSports, as the number of players joining the gaming community soars as much as the number of online viewers, with more and more viewers willing to pay for a subscription of eSports channels. “Comparing to other Asian regions, the only inadequacy is the relatively smaller population of Hong Kong, which implies a smaller market.” Chow also points out that the prevailing culture of Hong Kong is also posing challenges to the development of eSports. “The older generation and the general public usually connects video-gaming to poorer academic performance. These ideas are certainly hindering the growth of eSports. The first steps taken by the government to develop the eSports industry are certainly a good start. I do hope the government can act as the industry’s leader and consolidate resources to improve the public’s impression on eSports so as to guide this emerging industry to grow further.”

 

International eSports players have their own ranking

According to Chow, former Asia-Pacific champion of the classic online first-person shooter game Rainbow Six, there are only four professional teams in Hong Kong and about 100 active players; only 60 to 80 are playing professionally. Their salary depends on their competence and performance. For example, Hong Kong professional players are mostly paid 8,000 to slightly more than 10,000 dollars per month. In the powerful eSports nation of China, certain players could earn as much as dozens of thousands of RMB per month. In 2016, the top five players winning the biggest prize money all came from China.

 

In fact, eSports players are already competing for ranking and prize money just like professional athletes. In the overseas setting, a professional team is basically formed by 5 players, a few backup players, a coach, an analyst and a team leader. The costs of setting up a high-quality team, undoubtedly, are quite high. In foreign countries where the development of eSports began much earlier, certain managers would put together all-star teams, who may even have their own social media managers, to attract more online viewers for better revenues.

 

Business opportunities beyond tournaments

Chow has now stepped down from the frontline and become an organizer and facilitator for eSports tournaments. He reveals that the costs for organizing tournaments depend on the scale. If it takes place in an exhibition venue, such as the HKCEC, the whole tournament can cost around HKD6 million, which includes the selection round, stage, lighting, promotion, live broadcast, etc. A smaller-scale one can cost as little as just a few dozens of thousands.

 

Speaking of the cost-efficiency of organizing tournaments, he reckons that single-event tournaments could indeed achieve breakeven, but running the competition part alone would not be enough. “As the event organizer, we must expand our business. Versus Stadium, for example, is an eSports bar. We also invest in overseas markets. On the other hand, some game developers would commission us to organize tournaments. eSports is an industry that calls for creativity. The experience of foreign industry players tells us that most expanded their business horizons with live broadcast, participation, sponsorship or production of eSports merchandises.”