A League of Legendary Opportunities

 

 

Kyle Kosnoff is currently a Sophomore currently studying in Hong Kong as part of the World Bachelor in Business Program. In his freshman year at USC, he worked on multiple consulting projects as part of the World Bachelor in Business consulting team and travelled to Rio de Janeiro to work with Viva Rio’s Young Apprentice Program. He enjoys playing volleyball, League of Legends, and travelling the world.

 

 

 

 

A League of Legendary Opportunities by Kyle Kosnoff

 

3…2…1…We’re Live

The lights flash, the crowd roars. Tens of thousands of fans have flocked around the world for a chance to watch their favorite teams compete for the championship, and hundreds of thousands more are watching the live feed. No, my friends, this isn’t the Super Bowl. It’s not the NBA finals, or the Stanley Cup. This is League of Legends. This is eSports.

You glance again at the stage to see the players taking their seats, setting up their computers. Wait, their computers? Yes, eSports are video games. Well, to be more precise, video games played for massive amounts of money. You may initially be skeptical, perhaps even insulted, at this game’s audacity to call itself a sport. After all, kids play video games for fun. Well, soccer is a sport created as a game for children to play when they’re bored, yet professional soccer has an estimated following of almost 3.5 billion. That’s almost half of the entire planet who avidly follow a simple game! But I digress, I’m not here to discuss the definition of a sport, or what traits are necessary to be an athlete. The fact of the matter is that eSports are already here, and games such as League of Legends have deeply entrenched themselves in the personal and professional lives of millions, providing business professionals with an expansive array of opportunities.

Genesis I: The Far East

For those of you unfamiliar with eSports, perhaps you would be more comfortable with a brief history of the industry. While video games have been around for many decades, the professional eSports scene began relatively recently, when in 2000 the South Korean government’s Ministry of Culture and Tourism founded the Korean eSports Association, better known as KeSPA (Taylor). It may seem odd that the government itself would choose to legitimize eSports, but from a business standpoint it makes a great deal of sense. Before official eSports leagues, any tournaments would be held by independent hosts. By creating an official avenue in which video game championships could be played, KeSPA can gain revenue from a previously untapped market.

But before any of this market could be tapped, KeSPA needed funding, teams, and most importantly, players. Before KeSPA’s inaugural season, eleven corporations ventured capital to create teams for the upcoming competition (Saile). Featuring the game StarCraft: Brood War, players such as Le Young Ho and Lee Jae Dong quickly forged lasting legacies for themselves and their teams. Known by their respective monikers of Flash and Jaedong, these players reached the highest echelons of professional play, both earning over USD $500,000 through tournaments alone (“Highest Overall Earnings”). This massive success started an eSports boom in the East, as Chinese and Korean players alike began practicing relentlessly in the hopes of etching their name into the history of the blossoming scene.

But many of these new players would find their ascent blocked by simple economics. The supply of eSports teams was too low for overwhelming demand for the industry. But the economy is a fair master; other companies soon created their own eSports teams, and began hiring these new players in an attempt to wrest control from the pioneers. While many would find success, the old guard could not be swept aside entirely. As of today, five of the original eleven teams still exist within KeSPA, all of which now field multiple teams to compete in the ever expanding KeSPA catalogue (Saile).

With an astonishing 45% of venture corporations succeeding in this new field, the success of eSports appears clear. Indeed, you may wonder why you are only now learning about this trend.  Truth be told, firms have attempted to cash in on eSports before. While Eastern nations, such as China, were quick to create their own StarCraft teams, the West’s adaption of eSports is somewhat puzzling. As Chinese eSports began an arms race with Korea, Western markets evolved independently of Korean influence for years. Whereas Eastern games were heavily focused on tactics, the West grew enamored with fighting and shooting games. But this segregation of regions would soon come to an end with the release of StarCraft’s sequel. StarCraft 2, adopted across the globe, would offer the world its first chance to witness a virtual clash of East and West. Western investors were hopeful of their chances, many dreaming of victory and glory.

The Great Freeze

These dreams quickly morphed into nightmares. While the original StarCraft had annual international competitions in the 10 years that Brood War was included in the “World Cyber Games,” Korea had never failed to take the crown. Within the first year of StarCraft 2’s release, it became evident that this trend would not change, as European players showed clear struggles against these established titans (Saile). Yet despite never winning international competition, the Western StarCraft fan-base was experiencing growth, and many thought that, given time, the Western teams could eventually challenge those from China and Korea.

Time was not something Western investors were willing to give. It is fitting, then, that they killed StarCraft quickly. Teams in both North America and Europe, aware of the massive skill gap that currently existed between their players and the Koreans, found a solution to solve this problem immediately: simply replace their Western rosters with Korean players (Saile). Whether guaranteeing existing Korean players higher pay, or by offering highly ranked Koreans that could not find space in the professional scene a job, Western leagues became more and more like subsidiary Korean events. Eventually, Western fans found themselves with few national players left to cheer for, and as such, little motivation to continue supporting StarCraft 2 (KerriganSon).

For the Western scene to survive, drastic changes would have to be made. Yet the professional circuit, either through arrogance or ignorance, made no changes until it was too late. While some organizations raced to fix the problem by creating exclusively domestic tournaments, it was too little too late. The growth of eSports in the West slowed to a halt. StarCraft 2, regarded as the West’s best hope for competitive gaming, had failed. Yet where StarCraft 2 failed, many believed another could succeed. After all, in its wake, StarCraft 2 provided a perfect manual of steps for future games to avoid.

The Virtual Renaissance

This manual spawned the birth of League of Legends, or “League.” Brainchild of the fledgling North American company Riot Games, League of Legends was created in 2009 with the purposeful intent of becoming an eSport. This was a truly novel approach to the gaming industry, as all existing eSports titles were still created for consumer enjoyment, and only incidentally entered the professional circuit through the support of their fans. Yet despite this difference in design philosophy, League still managed to attract players from all corners of the globe, quickly becoming the most played game in the world. Yet Korea was still too enamored with StarCraft 2 to commit to a new eSports centerpiece, and League’s competitive scene found itself born in the West.

After drawing headlines with its first world championship in 2011, interest surged in both China and Korea, where League quickly began to overtake StarCraft 2 in popularity (Tassi). Korea’s previous experience with eSports became quickly apparent; instead of relying on a multitude of independent tournaments, a single league system was created, where teams would compete weekly, with a playoff system similar to more conventional sports, such as the NHL or NFL. This preexisting infrastructure would play a large role in cultivating the talent necessary to not only catch up to the West, but quickly surpass them.

The following season proved to be League’s largest leap towards validation in the West. Whereas in the past Western teams were forced to travel to different tournaments in the hopes of receiving a qualifying bid to the championship, Riot created a domestic, weekly competitive league similar to the Korean structure. In addition to changes in competitive format, League of Legends began to receive federal recognition as a professional sport. Canadian player Danny “Shiphtur” Le became the first League player to receive an athlete visa, allowing him to compete in the Los-Angeles hosted North American series (Robertson).

Here, you may see a parallel to the StarCraft issue of utilizing foreign players. While Shiphtur, being a resident of Canada, needed the visa to compete in his local “North American” league, many worried that the availability of athlete visas would lead to importing players from either China or Korea. These fears were realized when all Korean team, Quantic, left Korea for Los Angeles, thinking they could waltz through the easier competition of North America to qualify for the world championship (Campbell). Though Quantic suffered from internal problems and eventually collapsed, Riot was quick to see very real possibility of “import players” wreaking havoc on domestic development. Eventually, Riot released a restriction on the number of foreign players allowed in a team, limiting organizations to fielding no more than two foreign members per team, which could consist of anywhere from five to seven players.

Seeing is Believing, Selling is Succeeding

With the fear of foreign takeover alleviated, I forecast League of Legends to spearhead a period of continued growth for eSports, and will thus lay out different realms of business that I believe this growth will effect. Not only do the 90 million individuals who play League every month outnumber the population of France, but the market for eSports itself is expanding as well (DiChristopher). While viewership of the multi-week season 2 world championship capped at a respectable 8.2 million individuals, the view count of the next year’s championship, in which the finals were held in the Los Angeles Staples Center, ballooned to over 32 million (RedBeard). Season four’s championship was viewed on over 288 million different devices, and Season 5 eclipsed 334 million unique viewers during its four-week span (Magus). Not only does an audience exist, but it also seems to be expanding at an impressive rate.

Yet the size of the market does not matter if you cannot effectively access it. While the sheer quantity of consumers may seem intimidating, the steps to penetrating this market are actually relatively simple, and multiple avenues exist from which to take advantage of the industry. The most obvious choice to get the audience familiar with your brand is to buy a competitive team, yet while we have established the risks associated with this practice are less severe than in the past, the amount of capital necessary to invest in a modern team has increased. This is the highest risk, highest reward option. If you decide to follow this route, allow me to offer some advice. While League’s origin was indeed dominated by individual players, the sport has progressed beyond the point that players can win the game on their own. Ensure you hire talent in all positions. Stemming from this inherent need for teamwork, successful Western teams have followed the footsteps of their Korean counterparts, and begun to hire official coaches to keep players focused. If Korean dominance of eSports has taught us anything, it is that both discipline and teamwork are necessary for teams to survive in the world of eSports, where new talent is always looking to steal the show.

A similar, yet safer approach to breaching this industry is to simply sponsor teams. While owning a team will provide inherent roadblocks in appealing to fans of other teams, corporate sponsors have no issue making partnerships with multiple teams. In fact, many computer accessory companies, such as Logitech and Razer, have already started down this path. These companies know that fans are always eager to emulate their idols, and often willing to buy the same gear in the hopes of reaching similar performance levels, increasing market sales. In addition to simple hero worship, eSports jerseys, similar to soccer kits, bear the logos of their sponsors, and players make conscious attempts to reference and thank their sponsors in every interview opportunity.

But maybe you are not interested in marketing, and struggle to see how eSports provides a relevant business opportunity for you. Rest assured, eSports offers a vast array of other opportunities beyond simple marketing. To provide quality content to players and eSports fans alike, games such as League utilize a multitude of audio-visual designers. From a commercial standpoint, retail and apparel companies, for example, will find no shortage of teams looking to expand their sales catalogue of the aforementioned uniforms, jackets, or trinkets. eSports has also opened the door for leagues of legal experts to find success, either through helping young players negotiate their first contracts, or protecting said youth from employers that may abuse their naivety.

As the scene grows increasingly competitive, many other new job opportunities are being created as well. Because many Western players live together in corporate funded gaming house, owners employ specialized life coaches to help foster team cohesion and trust, as well as deal with the egos that some adolescent males carry with them. However, arrogance is not the only emotional obstacle that players face; many suffer from stage-fright and nervousness, both extremely problematic when competing in front of live audiences every week. To combat this, teams have begun hiring specialized sports psychologists to help their young superstars adjust to the high pressure competition. With their mental needs taken care of, the competitive quality of the scene can continue to ascend to new heights, accelerating the West’s rise to match the success of the Koreans.

The End…Or the Beginning?

Clearly, League of Legends has opened the door for many new exciting job opportunities. But how long will this success last? History has shown that games can only last so long before they are replaced, either by their own sequel, or an innovative new game. I forecast that while League will reach its critical player mass within the next few years, it should continue to maintain its eSports audience, as well as build general interest for eSports far into the foreseeable future.

What is truly remarkable about investing in eSports, however, is that most investments will not fade away when League meets its eventual end. Just as Korean support for StarCraft paved the way for their global domination of League of Legends, League has accelerated Western infrastructure for eSports to be prepared for any new development. While League itself will eventually fade into eSports legend, the organizations, teams, and partnerships created will live on, constantly adapting to whatever game currently finds itself in the heart of eSports.

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Author’s Note: Some of the information may have changed since this was originally written.

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Sources:

Allen, Nick. “Interregional Movement Policy: Official Rule | LoL Esports.” LoL ESports. Riot Games, 13 Sept. 2014. Web. 23 Feb. 2016.

Campbell, Colin. “The Bitter End to a Desperate ESports Gamble.” Polygon. N.p., 10 Jan. 2014. Web. 23 Feb. 2016.

DiChristopher, Tom. “The Hottest Video Game Genre around Is Cooling off.” CNBC. N.p., 04 July 2015. Web. 20 Feb. 2016.

“Highest Overall Earnings.” ESports Player Rankings. E-Sports Earnings, n.d. Web. 23 Feb. 2016.

KerriganSon. “Why Have Korean Players in NA and EU WCS?” StarCraft II. Blizzard, 9 May 2013. Web. 23 Feb. 2016.

Magus. “Worlds 2015 Viewership.” LoL Esports. Riot Games, 9 Dec. 2015. Web. 23 Feb. 2016.

RedBeard. “One World Championship, 32 Million Viewers.” League of Legends. Riot Games, 2014. Web. 23 Feb. 2016.

Robertson, Adi. “US Visa Bureau Says ‘League of Legends’ Is a Professional Sport.” The Verge. N.p., 13 July 2013. Web. 23 Feb. 2016.

Saile¹. “The StarCraft Encyclopeida.” Liquipedia Starcraft Wiki. N.p., n.d. Web. 23 Feb. 2016.²

Saile¹. “The StarCraft II Encyclopedia.” Liquipedia Starcraft Wiki. N.p., n.d. Web. 23 Feb. 2016.²

Senior, Tom. “League of Legends Season 1 Championship to Have $100,000 Prize Pool.” PC Gamer. PC Gamer, 7 Apr. 2011. Web. 23 Feb. 2016.

Tassi, Paul. “Starcraft 2 Struggles as League of Legends Rises.” Forbes. Forbes Magazine, 18 Oct. 2012. Web. 23 Feb. 2016.

Taylor, T. L. Raising the Stakse. N.p.: MIT, 2012. Google Books. The MIT Press. Web. 14 Feb. 2016.

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