The Rise Of The Billion Dollar Esports Video Game Industry
It was just one year ago that Yeh Man Ho, who is better known in the booming world of esports by the alias “Hotdog29”, left his job in construction to become a full-time professional video gamer. He has already raked in US$60,000 in prize money on top of lucrative sponsorship deals and his beginner’s base salary as a team member of Talon Esports, a Hong Kong-based organisation that scouts and trains some of the most promising players throughout Hong Kong, Taiwan, Thailand and South Korea.
Hotdog29’s game of choice is Street Fighter V. In November 2019, he came in first in the Capcom Pro Tour North American Regional Finals in Las Vegas, the premier league for the iconic game, which brings together its biggest fans and the world’s best players. Not bad for his first year. “Street Fighter, to me, isn’t a game. I don’t play it for fun,” he says. “It’s my career. I treat it very seriously and I train very hard”.
At the Talon Esports headquarters in the Sai Ying Pun neighbourhood of Hong Kong, Hotdog29 appears as a tall, not-exactly-athletic young man with a moustache and a T-shirt printed with an illustration of a flaming skull eating a hot dog (hot dog was his childhood nickname, if you must know). These days, instead of putting on his hard hat and fluorescent vest in the mornings, he follows a strict daily schedule of training and preparing for his next tournament.
Much of his routine involves playing against other high-level players and their characters—Hotdog29’s is M Bison, a recurring villain with dictatorial ambitions in the series—to experience and understand every character in the game, their strengths, their weaknesses and the best way to beat them. He also spends hours doing mental exercises with apps like Lumosity, which features a collection of games designed to improve memory, attention, problem-solving and processing abilities.
In the evenings, he streams his games live via Twitch, the online platform where his legion of fans are ready and eager to watch him knock out his opponents. Some of them take notes, hoping to join him someday as one of the pros.
The rise of esports
Mankind’s affinity for all the gore and glory of sports is one that dates back at least as far as the Ancient Olympic Games of 776 BC, evolving over the centuries and marked by periods of intense violence (the gladiators of the Roman Empire), chivalrous codes (jousting in the Middle Ages) and competitive brand building (professional sports leagues of the modern era). And yet nothing quite compares to the seriousness and intensity with which participants take the contemporary phenomenon of esports.
Even the notion of whether or not esports can be classified as a ‘sport’ and its players as ‘athletes’ has been a touchy subject over the last decade, although there’s no denying that many parallels exist, including competitive sponsorship packages, massive fan bases and sometimes cruel disparities in the treatment of male and female players. But one critical distinction has become increasingly apparent in recent years, as Asia has asserted its outsized importance to the global success of esports.
South Korean team T1 is the most famous esports brand coming out of Asia and the most successful League of Legends team of all time. In China, team JD Gaming won the most recent League of Legends Pro League tournament, the highest competitive level in China, and Taiwanese J team, owned by singer Jay Chou, is gaining traction on the international stage. Hong Kong may be one of the smaller esports markets in Asia, but it’s steadily growing and backed by a formidable group of tycoons. Mario Ho, a son of the late gaming tycoon Stanley Ho, founded the professional esports organisation Victory Five, while Alex Yeung of the mega conglomerate Emperor Group founded Emperor Esports Stars in 2017 to represent more brand-name players. Last year, the city hosted its biggest esports event yet—the E-sports and Music Festival, which drew more than 80,000 visitors and an online viewership of 12 million people from around the world.
The differences between physical and simulated gameplay are many, but the fierce dedication, relentless training—some top players compete anywhere between 12 and 16 hours per day—and will to win are the same. Sean Zhang, who co-founded Talon with his friend Jarrold Tham in 2017, says, “The stigma is that they just play video games, but for someone like Hotdog to get to the level that he’s at takes time, skill and dedication. I really respect these guys. I know what it takes to be a high-level athlete, and the dedication and obsession for the game that you need to have is the same in esports”.
Nose To Grindstone
Before he moved to Hong Kong, Zhang coached a semi-professional football team back in Australia, where he’s originally from, deeming it one of “the most satisfying experiences” of his life. “Why not translate the lessons from traditional sport to esports? Putting structures and systems in place is important. These players want to know that the time they’re giving, the training, is all working towards something. We don’t like leaving things to chance. We’d rather have a systematic approach in how we build our team”.
For example, Talon recently signed Hotdog29 up for a body transformation programme at ATP Personal Training. “The programme is very much focused on hand-eye coordination and reaction speed,” adds Zhang, noting that as well as keeping his star players in shape, it could drastically improve their gaming skills.
Remember when your parents told you that you couldn’t make money playing video games all day? Well, it turns out you can, and if you’re good enough, you can make millions. Especially if you gain champion status in one of the five major games; League of Legends, Dota 2, Counter Strike: Global Offensive, Fortnight and Overwatch.
Playing To Win
Lee Sang-hyeok, who goes by the name Faker, is a South Korean esports champion who has won the League of Legends World Championship three times and earns an estimated US$4.6 million every year, which includes sponsorships and winnings. At the Dota 2 International tournament in Shanghai last year, 20-year-old Australian player Anathan ‘Ana’ Pham and his team of five won US$15 million. “He walked away with more money than Novak Djokovic did at the Australian Open. That’s the kind of money that’s in the esports space now,” says Zhang.
The trajectory for esports earnings is on the up, and the professional sports industry is taking notice. To marketers and enthusiasts, esports is a golden goose that presents the rare combination of a shiny brand-new market and a gameplay they already know like the back of their hand. If you still have questions about the legitimacy of esports, perhaps this will sway you—in December 2019, the International Olympic Committee announced that the 2024 Summer Olympics in Paris will feature demonstration esports events. Not quite ready for spell-casting elves and orcs, and certainly not games that glorify violence, the committee has stressed that the focus will be on games based on traditional sports like basketball and football. Still, that’s a pretty big deal.
Colleges and universities are also seeing the value in grooming esports champions, offering scholarships that aren’t dissimilar to those for football, basketball and other sports. It’s not just fringe schools, either. University of California Irvine was the first to open a dedicated on-campus esports arena, while UCLA, University of Southern California, Cornell University and the University of Texas at Dallas, to name a few, each offer scholarships to esports athletes.
Currently, the Golden State Warriors, Houston Rockets, Philadelphia 76ers, Sacramento Kings and Cleveland Cavaliers have each invested in League of Legends teams. Players like Steph Curry, Shaquille O’Neill, Michael Jordan... even Canadian rapper Drake, a die-hard basketball fan, have put their money on it. “There are NBA 2K esports teams, so you’ve got real-life NBA and then PlayStation NBA leagues,” explains Tham. “A lot of these people grew up playing video games, so the prospect of owning a team is pretty attractive to them”.
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In 2019, the esports industry generated US$1.1 billion in revenue, according to Newzoo, a market intelligence firm covering global games and esports. Of that, US$456 million came from sponsorship deals alone—a 34.3 per cent increase from the year before. Major companies like T-Mobile, Intel, Toyota and Coca-Cola sponsored The Overwatch League, while State Farm, Honda, Master- Card, Red Bull and Bud Light sponsored the League of Legends North America Championship Series. This January Nike became the official sponsor for South Korea’s T1 Entertainment & Sports, for whose League of Legends team Faker plays. In April, BMW signed deals with five major esports teams: California-based Cloud9, UK-based Fnatic, Beijing-based FunPlus Phoenix, Germany-based G2 and South Korea’s T1.
So why is it that companies are happily pouring millions of dollars to back these kids battling it out behind computer screens?
Viewership figures from Newzoo show that in 2019, there were 201.2 million esports enthusiasts (viewers who watch pro esports content more than once a month) and 252.6 million occasional viewers (viewers who watched less than once a month). Of these figures, 52 per cent of esports fans are aged between 21 and 35 and 20 per cent of them are between 10 and 20 years old, both ideal demographics for marketers. For this reason, Talon Esports started a dedicated creative studio and marketing agency focused solely on esports and gaming.
Even the luxury sector has caught esports fever. In 2019, Louis Vuitton teamed up with League of Legends for a series of collaborations including the skins of two in-game characters designed by Nicolas Ghesquière, Louis Vuitton’s artistic director for women’s collections. The house also created a monogrammed trophy case for the League of Legends World Championship in Paris—the esports equivalent of the FIFA World Cup or NFL Super Bowl—in November, and in December revealed a 40-piece capsule collection inspired by the game, dubbed LVxLoL.
Ups And Downs
The value in esports isn’t only monetary. From a social standpoint, esports is far more accessible than traditional sports. “You don’t need to be a seven-foot-tall basketball player, men and women can play on the same team, and as far as resources go, all you really need is a computer and a good internet connection,” Tham explains. But esports isn’t without its faults. Online harassment and trolling are rampant, and can take their toll on players—particularly women. T L Taylor, a sociologist at MIT who’s researched and written about esports culture since 2003, told The Washington Post last year, “The internet side of it amplifies the worst parts of the historical pattern of exclusion that women and girls face when it comes to equitable participation in so many aspects of our culture”.
Zhang, when asked about this, says, “It’s definitely a real problem that many players face, but we do our best to offer a strong support system and remind them to keep their focus on the game and let their work speak for them.”
For some players in Asia, however, the rise of esports represents a validation on the global stage unlike anything they have experienced, even with gains made by athletes in many professional sports. For them, victory is sweet.
“I never imagined that I would make a living playing video games,” Hotdog29 muses. “I’m pretty lucky.”