The date is 18 March 2018, and we’re in Haikou (China). It’s the final battle of the World Electronic Sports Games. Millions of viewers worldwide watch their favourite e-sports players via live streams. After a fierce three-round Dota 2 match, Team Russia defeated their Brazilian rivals, earning 800000 dollars in prize money. This is Russia’s most resounding victory in recent years, giving the team top spot in the overall rankings.
Today, Russia is ranked seventh in terms of total prize money earned: Russian e-sports athletes have collectively brought in 13,7 million dollars, according to data from esportsearnings.com. The top three places were taken by China (70,7 million dollars), the (67 million dollars) and South Korea (59,3 million dollars).
Will Russia be able to come out top in terms of both e-sports achievements and economic standing in the industry? Emin Antonyan, Chairman of the Russian e-Sports Federation Executive Board, thinks the country can do it. “We are already hosting the largest e-sports competitions in Russia and building a fully-fledged infrastructure for mass e-sports: admin (referee) training and certification, venue accreditation, teaching materials, educational projects, and the development of e-sports clubs. All of this requires time and energy, but it creates the necessary foundation for Russia to occupy a commanding position in the global e-sports arena.”
A study conducted by the online payment system PayPal in conjunction with SuperData suggests that the Russian e-sports market is set to grow by 18% in 2018, surpassing 45 million dollars. This is backed up by last year’s performance, which saw Russia become the largest e-sports market in Europe. The audience for e-sports in Russia is also expanding, reaching 3.7 million in 2017. PayPal predicts that this figure will rise by a further 8% this year to 4.1 million and by 20% in 2019, to 4.9 million.
Another indication of the popularity of e-sports in Russia – which for the best players can often become a profession – is the amount of investment in this area. In 2015, USM Holdings, a company owned by billionaire Alisher Usmanov, invested 100 million dollars in Virtus.pro. Аnd this year Mail.Ru Group has announced its acquisition of ESforce for 100 million dollars. The venture capital fund NP Capital was founded this February with the funding of 100 million dollars. One area of investment for the fund will be e-sports. Aside from this, the NP Capital office hosted an informal meeting with the e-sports community on 29 March, the main goal of which was to form a community of engaged e-sports experts.
A goldmine for investors
What makes e-sports so attractive to investors? First, e-sports constitute a narrow, targeted audience of consumers of goods and services. Combined with the growth worldwide in the unemployed or flexibly employed population, this factor is resulting in exponential growth in the video games industry and online entertainment in general.
This primarily concerns the marketing opportunities e-sports teams and competitions provide. Advertising can be placed on real-world objects (such as T-shirts or equipment), or be integrated into games (even down to placing a logo on the game character). The key advantage of this kind of advertising is its broad – almost unparalleled – coverage. If a team performs well, they can also land sponsorship contracts and prize money.
The second target for investors are venues from which competitions are broadcast and online interactions with trainers, as well as various services for players such as the sharing and sale of equipment or services to analyse matches and train players. As Managing Partner at Buran Venture Capital Mihály Szalontay told Forbes, e-sports are a new type of entertainment for humanity, and in five or ten years will involve a large number of players who will require more than just computers.
The third important area for investment is streaming. Just look at the share prices for the largest video hosting and online streaming services owned by Google (YouTube) and Amazon (Twitch), each of which exceeds the share capital of the entire Russian stock market.
A real sport
E-sports have been an officially recognized discipline in Russia for two years. In 2016, the Russian Ministry of Sport included e-sports in its national sports register. “E-sports are becoming increasingly popular. People are taking up e-sports for the same reasons as they go into other sports. E-sports are match sports which attract people from a very early age,” said Alexey Zhukov, coach and teacher of e-sports theory and techniques at the Russian State University of Physical Education, Sport, Youth and Tourism.
According to Ivan Voznyak, E-Sports Producer at Mail.Ru Group, e-sports competitions are watched by millions in Russia, and played by hundreds of thousands of people. “Both professionals and amateurs are now playing e-sports. Amateur matches and live streams attract special interest from investors because they are particularly popular with all participants.”
“E-sports are real sports and have all the related infrastructure – training sessions, coaches and the cultivation of champions, competitions, and player transfers. Don’t believe people who say that e-sports have nothing to do with health and that e-sports athletes are all weak. They have to be able to survive a seven or eight game marathon in a noisy, overcrowded stadium, while staying focused and maintaining their reaction times. Some e-sports players also hold titles and achieve a lot in traditional sports,” says Vera Adayeva, Head of the Young Professionals Project Centre at the Agency for Strategic Initiatives.
The recognition of e-sports as an Olympic sport is currently under discussion. “The stresses experienced by e-sports players are similar to those in conventional sports, but video game competitions which feature murder, violence, or discrimination will never have a place at the Olympics,” said Thomas Bach, President of the International Olympic Committee, early this February.
VLADIMIR MINENKO, Player of the Russian Virtus.pro team
(20 years old, 68% of wins, total prize money earned 734 456 dollars):
I think that e-sports is attractive for viewers because it is show-like and dynamic, and sometimes even epic (if you understand the game well). Everything here depends on people, e.g. everybody likes it when Ramzik (Roman Kushnarev) or Miracle (Amer Al-Barkawi) do enormous things and kill an entire team of their rivals.
The best thing in e-sports is that it does not matter where you are from and what you look like. It is all about how well you play. For instance, we really work hard, that is why we can show top results.
Commentate on the game
Gaming live streamers – Internet users and players who give a live commentary on games – have made a substantial contribution to the expansion and growing popularity of e-sports. Young people watch both live and recorded streams. The most popular streamers have over a billion views (MrLoloshka, for instance, has 1.5 billion views).
According to Forbes, some online content streamers earned several million dollars in 2017, including Felix ‘PewDiePie’ Kjellberg (12 million dollars) and Logan Paul (12.5 million dollars).
Not just for men
Women are also involved with online gaming, but men currently out-earn women in prize money by 718%! The most successful woman in e-sports is Canadian Sasha Hostyn whose net worth is estimated at 200693 dollars. For comparison, the most successful male player, Kuro Takhasomi, is worth 3.5 million dollars. In the world rankings, two Russian female athletes, Ksenia Klyuenkova and Anna Ananikova, have taken sixth and seventh place, respectively. Klyuenkova has earned 42864 dollars in prize money, while Ananikova has made 33,458 dollars. These discrepancies in the figures for men and women are the result of investor marketing strategies. According to a SuperData study, when companies like Intel or Coca-Cola invest in e-sports, they are seeking to build contacts with rich young players, rather than connect with the profession as a whole. The players targeted are men, not women.
Source: SPIEF-2018 Official Magazine