When it comes to esports, people are invariably compared to traditional sports. These markets do develop in a similar way, but there will always be a big difference between them, because video games are the intellectual property of the developer or publisher. But imagine that all copyright holders followed Valve’s path and almost completely gave esports to third-party companies – will this benefit the industry?
We have not yet lived up to economic theories and works on the topic of esports, but we can highlight and categorize the general approaches of companies to how they develop competition in their games. So which ecosystems are we talking about?
One of the most successful and popular games, Counter-Strike, has developed almost independently for almost its entire 20-year history. The shooter appeared thanks to two enthusiasts who made the mod of the same name for Half-Life, some still relevant maps (the same Mirage) were also made by third parties, and championships were held in various countries of the world without any participation of developers. What did this lead to? Counter-Strike is the most recognizable shooter in the world, and esports is developed by companies from America to China.
Counter-Strike is the only example of an open esports ecosystem so far. This means that the publisher almost does not interfere in the industry and for the most part simply licenses the championships, and leaves the choice of format, prize pool, number of participants, etc. to the tournament operators.
But Valve hasn’t completely disconnected from Counter-Strike esports. The company insists that tournament operators run open qualifiers (it’s important for Valve that everyone has a chance to break through) and adhered to a specific map pool… Valve also sponsors the Majors – the primordially major tournaments in CS: GO. The company does not participate in these championships directly, but chooses from those TOs that can satisfy all of its requirements regarding location, broadcast conditions and production level.
However, in 2020, the CS: GO ecosystem began to change – some tournament operators began to gain more weight compared to their competitors. We are talking about ESL and Flashpoint, which began to function according to a quasi-franchise model and, in fact, divided all the top teams in the world among themselves. Now there are 13 partner teams in the ESL Pro League, which, according to insiders, will play in the league for at least the next three years, and in return will share all the tournament earnings with each other and TO. Flashpoint is one of the main competitors of ESL. The league was founded by top American clubs (as well as the Chinese FunPlus Phoenix and the Spanish MAD Lions), and the organization of the championship was given to the experienced company FACEIT.
ESL Pro League and Flashpoint are only two tournaments among several dozen major championships that are held in the discipline, but everything goes to the fact that partner teams will first of all give preference to these championships, rather than competitors. However, despite recent trends, the Counter-Strike ecosystem is still open, as Valve does not interfere with the relationship between tournament operators and teams. In addition, Gabe Newell’s company has repeatedly made it clear that they oppose pure franchises – which is why Flashpoint provides places for teams that will pass open qualifiers, and in the ESL Pro League – for teams from ESEA (second division).
Mixed (hybrid) ecosystems
In hybrid ecosystems, the publisher is more involved in the development of the esports scene, but still relies heavily on third-party tournament operators. They not only act as contractors, but they themselves can earn from championships.
The most obvious example of this system is the Dota 2 stage. Before the pandemic, the Dota season was divided into a system of qualifying championships (Dota Pro Circuit), which included majors and minors, which were held by tournament operators from all over the world – from small Beyond the Summit (USA ) and WePlay! (Ukraine) to large MDL (China) and EPICENTER (Russia). The International is Valve’s tournament. The organization of the championship is usually also carried out by third-party companies (for example, PGL and Perfect World), but TI is still positioned as a competition from Gabe Newell’s company.
The scene functions in the same way in Rainbow Six Siege. The discipline also has a series of regional and international tournaments that Ubisoft organizes in conjunction with third-party TOs – primarily with FACEIT and ESL. At the same time, the publisher conducts the main competitions in R6 itself, this applies to the majors and the Six Invitational – the unspoken World Shooter Championship. The same systems exist in other, less popular disciplines in the CIS – Quake Champions, StarCraft II and Fortnite.
If the esports part of the game is in demand, some publishers and developers close the stage on themselves and regulate it themselves. This usually means that the scene of a particular game moves to a franchise model, where slots in tournaments are sold to large esports organizations, and in return, they receive a permanent place in the competition and share the proceeds together.
The most prominent examples are Overwatch and League of Legends. The Blizzard shooter franchise league was founded in 2016, several well-known esports clubs (Cloud9, NRG, Team Envy), as well as new teams of major investors, such as Stan Krönke (owns Arsenal FC in London) and Robert Kraft (owns clubs in the NFL and MLS). According to unconfirmed information, in the first season, league positions cost about $ 20 million, and by the second season, the amount increased by 1.5-3 times.
In League of Legends, Riot Games has adopted the franchise model for several of the most successful regions. The initially closed system appeared in North America, then in Europe, and after that it was applied in China and South Korea. In the American LCS, slots are also worth tens of millions of dollars.
In closed ecosystems, all money is divided between a limited number of parties involved. Most e-sports clubs and all tournament operators are overboard. For example, the overwhelming majority of organizations left the discipline because of the Overwatch League, and the closed ecosystems of League of Legends and Overwatch hit hard on the Korean company OGN, which for several years held competitions in both games.
What will esports be like if all ecosystems become open?
In open ecosystems, there are a lot of parties involved, they are all interconnected, interdependent and have equal rights. Among the market participants are the following:
Publisher / Developer… Remains the main regulator of esports. He can give more powers to any of the parties, but the last word always rests with the copyright holder. For example, Valve has been increasingly working with ESL as the market leader in Counter-Strike in recent years. In the recent scandal with the coaches, the tournament operator banned three mentors, but previously coordinated the actions with Valve. Similarly, FACEIT and Flashpoint could not establish a proto-franchise model without the company’s approval.
Tournament operators… Directly those who hold the competition. They vary by location and of course budgets. At the moment, there are not many global TOs holding events around the world. There will be more TO in open ecosystems, but it is unlikely that many of them will become international – this requires too much money.
Cybersport organizations… As some esports figures note, clubs have been gaining more weight in esports lately. Most esports organizations appeared in the late 2000s and early 2010s, during which time they became recognizable: if before many fans were rooting for specific players, now the power of the tag is very important.
Lighting studios… They can function both independently (RuHub, Maincast) and be part of a tournament operator. Many Western casters are now freelancers – they are hired for specific championships, while the TO, as a rule, has its own in-house commentators.
Sponsors… The main sponsors of eSports are bookmakers: they are mainly the ones who sponsor eSports teams and tournaments. The number of non-endemic sponsors is also growing, there are many big brands in eSports, ranging from manufacturers of computer peripherals to automotive concerns.
mass media… There are not so many esports media yet, but they carry a lot of weight. The conditional HLTV.org portal is the Counter-Strike Mecca, it is in the bookmarks of anyone who is interested in the esports component of the shooter. At the same time, the media also influence the landscape of the stage: for example, in 2014, the investigation by Richard Lewis proved that the famous American team iBUYPOWER passed the match – Valve reacted and forever banned most of the players in their tournaments, in fact, depriving them of the opportunity to play on the professional Counter- stage. Strike.
Fans… Fans are also actively influencing esports and clubs. Reddit, Twitter, social media communities – everyone is tracking feedback and keeping it in mind when making decisions. Suffice it to recall the recent scandal with Riot Games and the tournament operator BLAST, which entered into a partnership with the Saudi state project NEOM: the community actively pointed to the infringement of LGBT rights in the Emirates, which is why both companies ultimately refused sponsorship.
Pros of open ecosystems:
The global nature of esports… Open ecosystems inevitably entail not only the development of scenes in those countries where the game is popular, but also contribute to an increase in the number of international tournaments.
Inclusiveness… Open ecosystems provide more opportunities for young esports players, they have more chances to prove themselves and find an organization. Binding to a particular region becomes not so important – a conditional Bulgarian or Turkish, with due diligence, will be able to move to a team from America and perform successfully there. And don’t forget that if it weren’t for the open qualifiers at The International, OG would not have won the championship in 2018.
Competition… Competition also intensifies in open ecosystems, and this applies to absolutely everyone – from players to maintenance companies. Some championships can attract an audience due to a competent approach to organization (ESL), while others, even with not the very top production, can simply play a lot of money (WESG).
An open ecosystem is a factor of market growth… A consequence of the previous point: the more factors are involved in a particular discipline, the wider the market.
Cons of open ecosystems:
Publisher / developer dependency… Even the most open ecosystem cannot exist on its own – if only for the reason that only the developer can change / adapt / improve the game itself. Of course, the authors can outsource it, as Valve does with CS: GO in China (Perfect World deals with it in the Celestial Empire), but in the case of a shooter, this only applies to servers and anti-cheat – to update the map pool, introduce new weapons and somehow the Chinese company is not allowed to influence the mechanics of the game itself. Also, it looks like the same Valve does not approve bookmakers as sponsors of teams (at least in Dota), although the prohibitions are not officially in effect yet. Publishers’ whims like this can scare off other potential sponsors.
Lack of regulators… In open esports ecosystems, disputes and conflicts will inevitably arise, and there is no one to solve them yet. If there is FIFA in football, then there is no universally recognized regulator in esports. In Counter-Strike, you can remember ESIC – a commission whose decisions are recognized as mandatory by ESL, BLAST and WePlay! Esports. However, its regulations are only advisory in nature for other large TOs, including StarLadder, FACEIT and EPICENTER. In closed ecosystems, everything is much simpler in this regard – the decisions of the publisher / developer are mandatory for everyone. In many countries, there are eSports federations, but they do not have much influence on major market players – in short, there are no prospects for the emergence of a single regulator yet.
Development paths for open ecosystems:
Global Tournament Network… As the example of Counter-Strike proves, the most anticipated scenario for the development of an open ecosystem is the emergence of a large number of tournament operators who will compete for influence. At the same time, they will inevitably have to cooperate in order to at least coordinate the schedules of the championships between themselves and the teams.
Domination of one or more TO… Now this is exactly what Counter-Strike is heading towards. ESL is gaining more and more weight on the stage, while it is only opposed by Flashpoint – these tournament operators are fighting to attract the most top teams (and therefore the audience) to their championships. However, such a scenario does not exclude other companies like StarLadder from the system, but only relegates them to the second or third plan.
Open ecosystems are certainly a boon for esports, but apart from Valve, no one is ready to give competition exclusively to third parties. At the same time, the desire of developers to control everything on their own often turns into problems: a huge amount of money was invested in the Overwatch League, but the league is watched on average by a little more than 40 thousand people (one and a half times less than not the most top events in CS: GO), they leave it leading casters, and, according to rumors, the commission agent will be replaced for the second time – hardly because of the great success of the tournament. Open ecosystems do not allow the formation of “soap bubbles”, in which everything is decided by pure competition, from which everyone will benefit – from sponsors and cybersportsmen to spectators.