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eSports: another worthwhile conquest for the mighty economist


Kyneton Morris

By

May 26th, 2017


With sports economics dominating a fair share of work for an economist, how can electronic sports fit into this domain? Kyneton delves into the world of videogames and their impact on sports entertainment.


eSports is defined as any form of competition that uses videogames. There are several games that put a large emphasis on competitions or tournaments; these games offer investment return through huge prize pools and a very wide audience. These competitions are mostly held in arenas or large halls, with many screens and commentators to help engage the audience. These events are generally freely available to watch through streaming websites, such as Twitch.tv. eSports commands a huge audience, and it is commonplace for hundreds of thousands of viewers to be watching simultaneously.
 
The dominant games tend to fall under the MOBA (Multiplayer Online Battle Arena) genre, where two teams of 5 players each face off in a fantasy ‘arena’ with the objective of destroying the opponents base. Alongside MOBAs, there is an array of games such as first person shooters, strategy, sports and fighting, catering to the diverse tastes of gaming enthusiasts. How do these games, as well as the competitors of top-tier tournaments and leagues, fit into the realms and grasp of economics?
 
With this growing industry and the significant levels of investment or sponsorships, there are considerable profits to be made. The AFL has recently announced their interest towards owning competitive teams and players. As of May 17th 2017, the Adelaide Crows have obtained a competitive videogame team Legacy eSports[1], and there are signs that many more teams will become involved. The idea of AFL franchises investing in videogame competitors may seem absurd, and appear to be nothing more than an advertising push towards a young demographic. However, there is lots of evidence in the US and Europe for the sustained returns possible from investing in these players. Sponsorships and advertising are the main sources of revenue for teams, with huge sponsors getting involved such as HTC,[2] Intel, Asus and Red Bull.  Advertisement money, like any athletic sport, is crucial for sustainable growth and development of competition. It provides opportunities for progression after retirement and ensures that teams can have steady revenue regardless of merchandise sales and prize money.
 
If it is evident that eSports is here to stay, what avenues are there for research and data analytics? There is a wealth of stats that can be examined, from what makes a good player, to what time of year is the best to host tournaments. For example, in the popular MOBA League of Legends, there is exhaustive data on the number of kills, amount of damage, where the players moved, speed of objectives and the amount of participation in fights. Seen below is an example of stats for player Ryan ‘Chippys’ Short, who recently represented Australia internationally.
 

 

 

 

 

 

 

 

 

(Source: League of Legends, 2017 Chippys rankings, compiled by and available from Best.gg)
 
As seen, there is always an onslaught of possibilities for analysts, and therefore the economic applications for private organisations are plentiful. Both supply and demand can be examined, like in any sport, and it could be signs of many applications of sports economic theories into a new field.
 
Given a globalised market and dynamic revenue mechanisms, there are many choices that need to be made in the realm of eSports. Economics can use this to study the organic nature of competition and is still in its research infancy. Gamification, which is the application of games, is a small field of economics, teaching and psychology being developed, however eSports is yet to be discovered.
 
Applied econometrics is the discipline needed in eSports now, however current use appears to be very limited. The hiring of professional analysts, coaches and sports psychologists is currently increasing, though discussion as to what makes a good eSports analyst is still up in the air. Many gaming teams and organisations are focusing on hiring analysts that understand the game and the players. However, questions of revenue, success and costing are best handled with the right assumptions and controls. Much like behavioural economics and sports economics, I believe that the field of eSports is an endeavour for economists to tackle and provide rigorous and robust analysis.

 

Image: Kevin Pham

[1] Adelaide Football Club, 2017 Crows strike Esports agreement, available at < http://www.afc.com.au/news/2017-05-17/crows-strike-esports-agreement>

[2] HTC, 2015 HTC SPONSORS ELITE ESPORTS TEAMS CLOUD 9, TEAM LIQUID AND TEAM SOLOMID, available at < https://www.htc.com/au/about/newsroom/2015/2015-01-26-htc-sponsors-elite-esports-team s-cloud-9-team-liquid-and-team-solomid/>

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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