Electronic Sports Industry in China: An Overview 9811992878, 9789811992872

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Peng Duan · Xiaohui Wang · Allan Yijia Zhang · Bin Ji

Electronic Sports Industry in China An Overview

Electronic Sports Industry in China

Peng Duan · Xiaohui Wang · Allan Yijia Zhang · Bin Ji

Electronic Sports Industry in China An Overview This Book is the Output of the Grant Supported by TiMi E-sports, Tencent Interactive Entertainment Group.

Peng Duan Communication University of China Beijing, China

Xiaohui Wang Communication University of China Beijing, China

Allan Yijia Zhang Tencent Interactive Entertainment Group Shenzhen, China

Bin Ji Tencent Interactive Entertainment Group Shenzhen, China

ISBN 978-981-19-9287-2 ISBN 978-981-19-9288-9 (eBook) https://doi.org/10.1007/978-981-19-9288-9 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Foreword

Introduction to Electronic Sports Industry Textbook Electronic sports or E-sports is a digital entertainment activity that combines technologies, sports, culture and social and has unique commercial and user value. With its rapid rise in this century, E-sports now has developed into an emerging sector having huge growth potentials and innovation spaces. As its size continues scaling up and the connected effect gets expanded, China’s E-sports industry led the globe in the growth rate of 2020, its output totaling about RMB 75.198 billion and bringing new momentum for national economy. As a new cultural phenomenon, E-sports is adequately politically, economically, culturally and socially qualified for playing a role of information technologies to reparticipate in organising human social activities. The emergence and transmission of E-sports culture embody the richness of sub-cultural phenomena and significance of multi-cultural space and have a positive effect on improving people’s competitive spirit, intelligence, aesthetic taste, etc. However, during the COVID-19 pandemic, China’s E-sports industry was faced with many problems, such as lots of competitions suspended, management difficulty and brand devaluation, all causing impediment to its progress. Even so, Chinese Esports users are increasing, the user circle is extending, and the online market share is sharply raising, all of which lay a user foundation for the industry. Moreover, new technological advances like 5G, VR and AR provide much more opportunities for the innovation and progress of China’s E-sports industry. This book on one hand will describe a series of studies on development status-quo, characteristics and trends of China’s E-sports industry and analyse the key problems to help the industry avoid potential risks, seize development chances and promote industrial drivers. On the other hand, it will provide feasible plans and strategic suggestions for the high-quality innovation and development of the industry. In

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addition, this book aims to guide readers to think from many aspects, think across disciplines, improve their professional qualities and help readers gain necessary abilities to observe, judge, analyse and practise. As a result, this book can be not only used by colleges and universities as a fundamental textbook, but also used by E-sports-related researchers, as well as by E-sports enthusiasts as reference material. Beijing, China Beijing, China Shenzhen, China Shenzhen, China

Peng Duan Xiaohui Wang Allan Yijia Zhang Bin Ji

Preface

As the third-party statistics showed, the views of the “Honour of Kings” E-sports amounted to 73 billion in 2020 alone, which is a mind-boggling figure in every sense. I take pride in such a feat accomplished by the E-sports product itself. This figure also reminds me that apart from our team members, a remarkably sophisticated and efficient industry chain lies behind it. As the copyright owner of this E-sports, we know all too well that every decision we make and every tiny product change will permeate a broad spectrum of enterprises and practitioners in this chain. The figure of 73 billion also means that with the world’s population now hitting eight billion, our E-sports product is viewed approximately ten times per capita annually on a global scale. The content-based product not only aims for consumption but also acts as a carrier to convey our goodwill messages, which I hope can be heartening and morale-boosting to viewers, fitting seamlessly into Tencent’s unwavering philosophy of “Technology for social good”. Honour of Kings is not just a game— we have the social responsibility to pass on Chinese history to young people, seeing education as society’s responsibility. When making every decision, I must weigh various factors, considering a multitude of practitioners in the industry chain and a sea of users influenced by the content. I have witnessed the whole evolution of E-sports from mainframes, and PCs, to mobile devices that prevail today, which has been gradually recognised by and garnered the attention of mainstream society. In an era of mobile E-sports, trailblazed by the “Honour of Kings”, a complete series of spin-off tournaments has emerged, such as the Honour of Kings International Championship (KIC), the King Pro League (KPL), the KPL G-League (KGL) and the National Championship, enriched by college competitions and the world’s first Honour of King Woman Open. Events in other parts of the globe are also being incubated and inaugurated. Among them, the KPL, an international top-notch mobile E-sports icon, participates in the meteoric rise and boom of mobile E-sports and, more importantly, is the founder of this realm. And this constitutes merely a tiny fraction of TiMi E-sports’ wide range of sophisticated E-sports products, including Call of Duty: Mobile (CODM) and QQ Speed, with more products of different categories on the horizon. All this means that an

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organisation like TiMi E-sports must shoulder more responsibility in the industry’s service. As an emerging and burgeoning sports industry, TiMi E-sports is developing into a vast “super digital scenario” thanks to its technologically empowered extensibility and emotional bonds linked by sportsmanship, with more of its value and possibilities manifested in fuelling cultural exchange and economic growth. I hope the book, brimming with my observations, helps readers take a closer look at the E-sports industry. Last but not least, I express my special thanks to Prof. Peng Duan and his team at the State Key Laboratory of Media Convergence and Communication at the Communication University of China. Without their efforts, this book wouldn’t have been possible. We conducted thorough fieldwork, in-depth interviews and text analysis at a challenging time caused by the COVID-19 pandemic that interrupted healthy global communication. I firmly believe this book can be a landmark research output to present the vision of China’s E-sports industry. I hope the TiMi E-sports can continue strengthening our relationship with Prof. Peng Duan and his team and co-build Digital Creativity Institute.

Allan Yijia Zhang GM, Tencent Interactive Entertainment Group TiMi E-sports; GM, Honour of King Global E-sports Development Centre Shenzhen, China

Contents

1

Overview of E-sports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Explanation of E-sports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1 Definition of E-sports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.2 E-sports Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.3 E-sports Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Understanding of Related Concepts . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.1 Games and Online Games . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.2 E-sports and Online Games . . . . . . . . . . . . . . . . . . . . . . . . 1.2.3 E-sports and Athletic Sports . . . . . . . . . . . . . . . . . . . . . . . . 1.2.4 Overview of Mobile E-sports . . . . . . . . . . . . . . . . . . . . . . . 1.2.5 Game Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 1 1 8 15 18 18 19 20 22 24 26

2

Development History and Status-Quo of Global E-sports . . . . . . . . . . 2.1 Development Journey of Global E-sports Industry . . . . . . . . . . . . . 2.1.1 Budding Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 Growth Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.3 Maturation Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Development Status-Quo of Global E-sports Industry . . . . . . . . . . 2.2.1 Industry Scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.2 E-sports Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.3 E-sports Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.4 User Portrait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.5 Business Model (Diversified) . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27 27 29 32 34 36 37 38 40 41 43 46

3

Development Environment of China’s E-sports Industry . . . . . . . . . . 3.1 Economic Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Global Economic Development Situation . . . . . . . . . . . . . 3.1.2 China’s Economic Development . . . . . . . . . . . . . . . . . . . . 3.1.3 Rise of Virtual Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Social Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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3.2.1 3.2.2

Development of the Internet and Video Games . . . . . . . . High Acceptability Among Young Generations, Popularization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.3 Increased Social Acceptance, Listed as a National Athletic Sport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Policy Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Industrial Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2 Local Support (City Comparison) . . . . . . . . . . . . . . . . . . . 3.3.3 Regulatory Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.4 Industry Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Development of the E-sports Industry During Covid-19 Epidemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5

Development History and Status-Quo of China’s E-sports Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Development Overview of China’s E-sports Industry . . . . . . . . . . 4.1.1 Industrial Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.2 Development Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.3 Competitive Landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.4 Management Mode . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.5 Core Links . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Development Scale of China’s E-sports Industry . . . . . . . . . . . . . . 4.2.1 Market Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.2 Revenue Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Development Characteristics of China’s E-sports Industry . . . . . . 4.3.1 Sustained and Rapid Development, Great Potential for Industrial Progress . . . . . . . . . . . . . . . . . . . . . 4.3.2 Continuous Refinement of the Industry Chain, at the Early Stage of Industrial Development . . . . . . . . . . 4.3.3 Gradually Diversified Competitive Events, MOBA Becoming Mainstream . . . . . . . . . . . . . . . . . . . . . . 4.3.4 Innovative Development of 5G Technology, Promoting the Upgrading of the E-sports Industry . . . . . 4.4 User Characteristics of China’s E-sports Industry . . . . . . . . . . . . . 4.4.1 Age and Gender Distribution . . . . . . . . . . . . . . . . . . . . . . . 4.4.2 User Spending Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.3 Psychological Characteristics of User Behavior . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comparative Analysis of Global E-sports Industry . . . . . . . . . . . . . . . 5.1 Analysis on Business Models of the E-sports Industry . . . . . . . . . 5.1.1 Fundamental Theories of Business Models . . . . . . . . . . . 5.1.2 Comparison of Foreign Business Models . . . . . . . . . . . . . 5.1.3 Analysis on China’s Profit Models . . . . . . . . . . . . . . . . . . 5.1.4 Future Development Trend of Business Models . . . . . . .

50 51 52 53 53 54 54 67 68 73 75 75 75 82 86 92 93 98 98 99 101 101 102 102 103 104 104 105 106 108 109 109 109 110 114 115

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5.2

Analysis on Content and Genres of the E-sports Industry . . . . . . . 5.2.1 Comparative Analysis on E-sports Genres Between China and Europe and America . . . . . . . . . . . . . 5.2.2 Comparative Analysis on E-sports Genres Between China and Japan and South Korea . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Case Analysis on World’s Top E-sports Events . . . . . . . . . . . . . . . . . . . 6.1 Development Trend of world’s Top E-sports Events . . . . . . . . . . . 6.1.1 Operating Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.2 Profit Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Development Status and Model Analysis of the WCG (2000–2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 Development Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.2 Model Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Development Status and Model Analysis of the LOL World Championship Series (2011–2021) . . . . . . . . . . . . . . . . . . . . 6.3.1 Development Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Model Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Future Development Trend of E-sports Events . . . . . . . . . . . . . . . . 6.4.1 Professional Development . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2 League-Based Development . . . . . . . . . . . . . . . . . . . . . . . . 6.4.3 Commercialization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.4 Pan-Entertainment Development . . . . . . . . . . . . . . . . . . . . 6.4.5 Nation-Wide Popularization . . . . . . . . . . . . . . . . . . . . . . . . Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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6

7

Special Analysis on the Development of China’s E-sports Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 E-sports Live-Streaming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.1 Operation Mode and Development Status-Quo of E-sports Live-Streaming . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.2 Derivative Industries of E-sports Live-Streaming . . . . . . 7.1.3 Extended E-commerce Business . . . . . . . . . . . . . . . . . . . . 7.2 Shanghai Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.1 Regional Distribution and Development of China’s E-sports Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.2 Development Status-Quo and Characteristics of Shanghai E-sports Industry . . . . . . . . . . . . . . . . . . . . . . 7.2.3 Experience Summary and Success Reasons of Shanghai Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.4 City-Based Development of the E-sports Industry . . . . . 7.3 E-sport Talent Training in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.1 Practice History of E-sports Talent Training . . . . . . . . . . 7.3.2 Classification of Talent Cultivation . . . . . . . . . . . . . . . . . . 7.3.3 Policies for Talent Cultivation . . . . . . . . . . . . . . . . . . . . . .

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7.3.4

Overall Development Status-Quo of E-sports Talents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.5 Problems Existed in Talent Cultivation . . . . . . . . . . . . . . . 7.3.6 E-sports Talent Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

9

Problem Analysis on the Development of China’s E-sports Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Dominance by Leading Enterprises, Survival Difficulties in SMEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Core Technology Dependent on Foreign Countries, Inadequacy of Independent Innovation Ability . . . . . . . . . . . . . . . . 8.3 Lack of High-End Technology, a Serious Problem of Product Homogeneity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Inadequate Game Copyrights, Insufficient Awareness of Copyright Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Unbalanced Regional Development, Deficient Support of Local Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Talent Cultivation System to be Improved, Re-employment Channels to be Widened . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Countermeasures and Suggestions for the Development of China’s E-sports Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Industrial Development Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1.1 Possessing Independent Intellectual Property and Core Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1.2 Promoting the Application of 5G and VR Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Industrial Management Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.1 Focusing on the Content Development of E-sports Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.2 Expanding Social Values and Application Spaces . . . . . . 9.2.3 Talent Training and Employment Expansion . . . . . . . . . . 9.3 Industrial Marketing Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.1 Enhancing the Development of Local Cultural Products in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 Creating a New Combined Model of “E-sports + Scenarios” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 Suggestions for Industrial Policies . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.1 Increasing Policy Guidance, Changing the Public Opinion Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.2 Strengthening “Internal Cycle”, Helping SMEs . . . . . . . 9.4.3 Regional Characteristics and Coordinated Development of the E-sports Industry . . . . . . . . . . . . . . . .

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Contents

10 Innovation Characteristics and Development Trend of China’s E-sports Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Innovation Characteristics of China’s E-sports Industry . . . . . . . . 10.1.1 Industry Standards: Favorable Policies, Helping to Thrive the E-sports Industry . . . . . . . . . . . . . . . . . . . . . . 10.1.2 Game Products: Famous IP, Creating High-Quality Content Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1.3 Game Operation: Globalized, Home-Based, Interconnected Development . . . . . . . . . . . . . . . . . . . . . . . 10.1.4 Technological Innovation: Extensive Application of Intelligent Technology, Enriching Immersive Experiences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1.5 Content Production: Updating Scene Production, Meeting the Diverse Needs of Users . . . . . . . . . . . . . . . . . 10.1.6 Dissemination Platforms: Focusing on Events Copyright, Fighting for Copyright Values . . . . . . . . . . . . 10.1.7 Social Cognition: E-sports Culture Gradually Maturing, Improving Social Reputation . . . . . . . . . . . . . . 10.2 Development Trend of China’s E-sports Industry . . . . . . . . . . . . . . 10.2.1 E-sports Professionalization and Marketization . . . . . . . . 10.2.2 E-sports Entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.3 Mobile E-sports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.4 E-sports Nation-Wide Popularization . . . . . . . . . . . . . . . . 10.2.5 E-sports Virtualization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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220 221 222 222 224 224 226 227 229 229 231

Chapter 1

Overview of E-sports

Abstract This chapter will redefine the connotation of E-sports and the relationship between E-sports and athletic sports. we will also analyze the characteristics of different types of E-sports content and find the future direction of E-sports development by digging deeper into the extension of E-sports. Keywords E-sports · Modern athletic sports

1.1 Explanation of E-sports 1.1.1 Definition of E-sports Generally speaking, the electronic competition we are talking about means electronic games, and is also called electronic sports, short for E-sports [1]. When human society and sci-tech have been developed to a certain level, the public’s demand for spiritual entertainment and culture is accordingly changed, and that is where E-sports came in. As a historical product of a relatively developed society, E-sports have a more ambiguous boundary for it is affected by multiple factors, and its definition and research also involve many aspects. In today’s academia and market, there is still not a unified and universally applicable view formed on the definition that is characterized with diversity and individuation.

1.1.1.1

E-sports in the Context of Athletic Sports

On November 11, 2003, the launch ceremony for the interaction platform of China’s digital sports was taken place in the Great Hall of the People, with a focus on talking about how China should develop its E-sports towards a formal sport. He Huixian, vice-president of All-China Sports Federation and spokeswoman for General Administration of Sports of China (GAS) announced, “the GAS has officially approved E-sports as the 99th sport”, representing that E-sports was finally nationally recognized after so many years’ development. And this was the first time that E-sports were formally defined by the GAS. According to the formal definition, E-sports refers to © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_1

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1 Overview of E-sports

fighting video games for brain training conducted in an IT-based virtual environment by competition rules, with the information technology at the core, the software and hardware as the media. As can be seen from the above definition, the official concept given by the GAS is similar with that of other traditional sports. And that’s to say E-sports can not only play a part in training and improving game participants’ ability of thinking, reacting and coordinating, but also promote the all-round development of people [2]. Since then, the official government approval of the athletic nature of E-sports provides a strong theoretical basis for research on its definition from both theoretical and practical perspectives within the scope of athletic sports. The ceremony has also become a key node for research on China’s E-sports. In 2003, the official explanation of E-sports as an athletic sport recognized the existence of E-sports as a sport activity both on a national and theoretical study level. In the meantime, the year of 2003 became a key time node for theoretical research. Ever since, most of studies on E-sports were limited in the range of competitive sports, or usually started from the theory of taking it as a sport. It can be assumed that the scope of athletic sports has become an important limit for theoretical research on E-sports, and E-sports based on athletic sports has gradually occupied the high ground of theoretical studies and won more attention in the theoretical academia at home and abroad. In the Introduction to Electronic Sports (short for the Introduction) by Li Zonghao, Li Bai and Wang Jian, E-sports is known as IT-centered sports games played in a virtual environment in accordance with uniform competition rules and by means of various software and hardware as gaming tools or equipment, with the purpose of gaining good results. They can be used to exercise the ability of thinking, reacting and coordinating [3]. In the book, E-sports was classified as an athletic sport brought about by new technology (including scientific production technology and information exchange technology), and also was regarded by many researchers as an organic part of experiential sports, which is a popular topic. E-sports are a form of competitive activities conducted by electronic means. The other presentation form of competition is confrontation, which also is a basic characteristic of modern concept of sports competition. Many scholars’ support to assertions on E-sports being an athletic sport is mainly based on two points: electronic and compete/sports. Like general sports, E-sports are also defined in terms of its playing scope and conditions, and the word “electronic” tells all. For example, a basketball game must be held on a standard basketball court or at a basketball gym and a table tennis match requires a table and rackets. Similarly normal sports competition more or less rely on venues and specific conditions, so the word “electronic” determines E-sports games are conducted in a virtual environment based on electronic technology. Even though many E-sports tournaments like LOL Global Finals now can be seen on the spot, the playing field is still the virtual world built on electronic technology. Competition focuses on confrontation between two or more persons (things). For traditional sports competition, confrontation always occurs among human beings. For example, table tennis is a sport in which two players hit a lightweight ball

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while basketball and volleyball are played between two teams, each made of several members. From a macro perspective, such sports are performed by two sides, but at a micro level, the sports above can also be seen as confrontational relationship formed among multiple players. However, it should be noted that E-sports tends to form a competitive relationship at the scientific and technological level, resulting in weakening, even replacing human involvement, though it has the confrontational nature similar with traditional athletic sports. It is precisely the above difference in conceptual emphasis that made part of E-sports researchers disagree to discuss the concept and category of E-sports in the context of athletic sports. They stressed that the athletic nature truly is a new feature of E-sports, but should not be a key factor in determining its category. Besides E-sports greatly differs from conventionally-understood traditional competitive sports in the playing environment and other aspects. E-sports are skill competition focused on the technological level and played in a virtual world, and features randomness. That’s also the important reason for the presence of BUFFs and plug-ins. For example, in Honor of Kings published by Tencent E-sports, game participants are divided into two teams to fight; the playground is the Valley of Kings, a virtual environment constructed through internet IT such as digital programming; the environmental content such as Crystal Tower in the game is an IT product, and the skills heroes (the collective name for all characters in the game) used in battles are also based on IT. The confrontation occurs on the technological dimension. However general athletic sports emphasize the human-to-human technical or intellectual confrontation under the real environment, and its perceptibility is one of the major characteristics to distinguish it from E-sports. For traditional athletic boxing in our daily life, the confrontation between the players directly shows the human-to-human skill competition, which is very different from the above E-sports.

1.1.1.2

E-sports in the Context of Origination Theory

According to the origination theory, E-sports developed with the birth of video games. At this level, the nature of E-sports as a game is highlighted. Dating back to 1980s, Japanese Nintendo, a video game company welcomed a true master of game design, Satoru Iwata. During this period, Nintendo historically rolled out his own first generation of game machines, Family Computer, officially called Famicom and commonly known as “Hongbaiji”, literally translated in English as red and white machine for its appearance color by Chinese. Since then, a video game era raised the curtain. Once launched, Famicom was a great success. With more than 61 million units sold worldwide, it was once the best-selling gaming device in 1980s. Plus Super Famicom introduced in 1990, Famicom was regarded as a significant beginning in the era of video game. And Nintendo has gradually grown into the world’s most famous game manufacturer. To commemorate the 50th anniversary of the birth of the first computer, two man–machine wars (Deep Blue computer developed by IBM versus then world chess

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1 Overview of E-sports

championship Gary Kasparov) were hosted in 1996 and 1997 in Philadelphia and New York, respectively, ending in a tie (1–1). After one-year R&D, the Deep Blue computer was been greatly upgraded, and finally defeated the chess player and won the second war in 1997. At that time, the two man–machine chess games in last century sparked a lot of discussion all over the world, and the confrontation and competition between humans and machines ascended the history stage, so the two wars were considered as the start of video games by many researchers. Man–machine battles now cannot be categorized as traditional E-sports, but had laid foundation for E-sports development. Nowadays most of E-sports centers on video games (online games) and is a form of competition combined technology and culture. It can be seen that video games are based on electronic technology, and thus E-sports derived from video games can be inheritable and continuable. One of important study directions for E-sports researchers is on the official definition of E-sports, focusing on its non-sports characteristics and pointing out such studies cannot be fundamentally divorced from the nature of games and its purpose of getting physical and mental pleasure, and spiritual relaxation. And this, to some extent, is consistent with the ultimate aim of athletic sports. The concept says that gaming is a primitive spontaneous behavior that commonly exists in human beings and animals and aims for self-seeking, self-expression and self-attainment, so games are characterized with spontaneous self-satisfaction and realization. Similarly, E-sports fans participate in competition to meet their own intrinsic spiritual and entertainment needs, which is the continuation of the gaming nature of E-sports. Thus E-sports to some degree are classified as a game from the origin. Now it has become a tool for people to live, socialize, play and work, and human society has begun to adapt to its instrumental role. The game development is an evolution course of communication and demand from individuals to society, and the E-sports growth is a process from personal entertainment and spiritual needs to social interaction and work requirements, both sharing a similar trajectory. The ultimate goals for people to design, develop and play games are to have a happy time at both mental and physical levels in games, even to build up their bodies. Game developers try hard to satisfy players spiritually with reference to their moral preferences. E-sports, under the influence of needs for substances and spiritual entertainment, have gradually turned out to be a form of competitive sports. E-sports participants can achieve transcendence, complete changes and fight wars in games, meeting their needs that cannot be realized in real life, and in turn, the game results can affect participants’ mentality in some degree.

1.1.1.3

E-sports in the Context of Culture

A few decades ago, E-sports just started, but now it has become an indispensable social and cultural phenomenon and gradually penetrated into all aspects of people’s lives. Its derived definition at the level of conceptual phenomenon also has been an important research topic for scholars. In the definition of conceptual

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phenomena, the development environment and social conditions for E-sports are important references, and the culture-level theory is a crucial theoretical basis of the definition. From mouse and keyboards used throughout games to competition venues, as well as E-sports game spin-offs like players figures, E-sports has material and cultural basis in a theoretical sense, and slightly reflects the complex relations between people and society and nature. For discussions about the concept of E-sports in the context of culture, social relations are the key indicators. The survival and development of culture depend on the construction of steadily shaped social relations. The complex relations formed under the joint impact of human beings, society and nature in Esports are subordinate to social ones. From the above statement, it can be seen that such relations also are vital foundation for institutional and spiritual culture of E-sports. Its institutional culture has unique features. During a match or when entertaining, game players (E-sports competition participants) have to follow the policies and rules. For example the principles of fair play and anti-cheat, similar to what is emphasized in traditional sports, includes fair competition, positive attitude to match results, compliance with rules, personnel related to all recent events, etc.

Plug-in A “plug-in”, also called aided or third-party auxiliary software, is a cheating method used by E-sports players to illegally alter game data and further win victory. However, such victory is forbidden by rules, and what’s more plug-ins are very likely to bring great changes to internal programs and even rules of games, resulting in a low reference value of game results. Plug-ins undermines the fairness of games. The event organizers will, in real time, monitor all players’ behavior during the game. Once cheating is detected, the official will impose a proper penalty on the player involved, including banning his account. Other than the above principles of fair play and anti-cheat, the restrictions on young E-sports participants, operating rules of E-sports clubs and their members and codes of professional moral for E-sports players continuously introduced by the government and competent departments in recent years all can be placed under the category of the institutional culture of E-sports. Throughout its development history, there are still no common views on whether E-sports should be considered as a sport or an entertainment game, and various discussions emerge and disappear, and never stop. Some scholars put particular emphasis on the confrontational nature of E-sports and think it is a kind of sports, which happens to be consistent with the definition by the GAS, while the others highlighted its non-sports nature and believe it is essentially a game and also should be classified as a game. And its research should focus on the gaming nature, such as the basic qualification and elimination system.

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1 Overview of E-sports

In the first half year of 2021, the government published a series of policies on game addiction prevention. E-sports as a form of competition centered on video games are also limited by such policies. At the end of August, the rule of limiting the gaming time become stricter, stating all internet game provides can only provide one-hour gaming service for those under age 18 in the evening (8:00–9:00 p.m.) on Fridays, weekends and public holidays. This move was not only to regulate the growth of E-sports industry, but also to carry forward positive spiritual and cultural connotations transmitted to society from the industrial development. E-sports in a way closely relates to people’s feelings, thoughts, ideas, aesthetic taste, etc. and its spiritual culture transmitted is a cultural aggregation formed by the combination of many factors, so such spiritual culture somehow can be considered as the core of E-sports culture. For the discussions about E-sports culture, they should revolve around the spiritual culture and take into account the combined impact of competitive culture and other factors. To culturally define E-sports requires thinking over its material, institutional and spiritual characteristics.

1.1.1.4

E-sports: Modern Athletic Sports

In general, the interpretation on the concept of E-sports from the aspect of the conceptual classification or its origin, or at a cultural level require understanding that the current E-sports is stemmed from video games, but its nature of being a competitive sport is becoming more prominent as its main form is changing. On the basis of different disciplines and research methods, the concept of Esports shows an aspect of multi-angle integration. It is impossible to define and conceptualize E-sports just from a single angle because it is marked by a high degree of syncretism and pluralism, so we should combine social environment, technological advances, social mentality and other factors to better understand the concept. And debates on the concept are increasingly popular in today’s academia and the notion of being a modern sport under the combination of games and competition is gradually becoming a key direction of E-sports research. Although the academia still has a greater dispute on the definition of E-sports, Esports has already been clearly recognized by the government (official sports department). With the industrialization trends, E-sports have shifted from traditional to modern. In a broad sense, we see E-sports from the following perspectives. Generally speaking, traditional E-sports means man-to-man single-player fighting games conducted by uniform and clear rules of competition. They show consistency in many aspects including competition content and E-sports culture, and also feature continuity. However in the current discussions, we prefer to think the new modern Esports more often means man-to-man single-player fighting video games, taking the core content of games (such as Honor of Kings league, LOL classic battles, PUBG) as competition objects and conducted by uniform rules of competition on a specific gaming platform (Netease and Tencent are the two biggest game agents in China) [4].

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There are numerous types of video games in today’s global market. Usually, most of the games on the market can become a part of E-sports competition. The present Esports market is dominated by Korean games CrossFire and DungeonFighter, American games Defense of the Ancients (DOTA) and League of Legends, and Chinese games Honor of Kings and PUBG Mobile. The first-party E-sports league based on such online video games has become the core element of E-sports industry, and the content and quality of such league even play a decisive part in expanding the industry, which also is the reason that we cannot ignore the development of online video games for research on E-sports. The E-sports gaming platforms are now mainly based on internet technology, breaking the limitations of playing fields and locations in its early stage and making remote allied battles and real-time updates possible. We call such people who buy and use E-sports-related products and services E-sports users. Part of them just compete for fun, while another part take E-sports as a career, playing matches to win prize money and subsidies to make a living, which is an important hallmark of its rapid development. Just like traditional sports fans, E-sports fans are also influencing the development of the entire industry. The rapid growth of E-sports creates a huge demand for access. A group of people who are curious about E-sports competition and the peripheral industry gathered and formed a fan base. They are mainly interested in watching E-sports events and following news and trends, and usually like to visit E-sports BBS, news websites and official game pages. Moreover, for offline E-sports games, part of rich fans will also buy tickets and watch matches at the scene, but the vast majority of fans will prefer online viewing, which is also a key way for fans to directly contribute to its development. After the analysis on E-sports fan groups, it can be found that a large proportion is such E-sports users that directly take part in the game or has connection with the game publicity. These two groups (E-sports fans and users) overlap to some extent, but there are also a group of fans who only care about E-sports events and its development but don’t get involved.

The Nature of E-sports Being an Athletic Sport As time and social culture develop and evolve, the nature of E-sports being an athletic sport has been strengthened and highlighted, and it has gradually been becoming a focus area for social and academic discussions and research on the development of E-sports. Led by the GAS, the launch ceremony for the interaction platform of China’s digital sports was taken place in the Great Hall of the People On November 11, 2003. E-sports were officially listed as the 99th sport activity in the ceremony. This was a critical moment in the development history of China’s E-sports, marking it was recognized by the state. Its formal approval had a great effect on improving society’s attitude towards E-sports. Since then the GAS expressed its stance successively in 2008

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1 Overview of E-sports

and 2016, affirming the existence of E-sports as a sport at the level of national policy. On October 6, 2018, E-sports were discussed by the international sports community at the Olympism in Action Forum in Buenos Aires. The reason why it is frequently discussed from domestic to international is that the nature of E-sports as a modern sport is increasingly prominent. E-sports attracts and entertains the public in the form of competitive performances, forming a characteristic industry and developing quickly, and in essence, shares a certain degree of identity with sports competition. It can be known from the whole development process of E-sports from a game to a sport, some researchers think, that E-sports based on online games have to focus on real competition to move forward as a modern sport and achieve healthy and rapid growth. Due to strong cultural elements contained in E-sports, the industry as a whole is defined as a socio-economic and cultural phenomenon that emerges and develops around E-sports games, and is classified in the social cultural industry. In a narrow sense, the E-sports industry means various types of cultural production and operating activities with E-sports product creation as the core. In a broad sense, the industry has a wide range and means all products or services related to the cultural elements, which together with sports elements are enhanced. The cultural attachment is a major feature of the industry. From the origin of E-sports, games are an important source of its emergence and basic video games (more often referred to as “online video games”) are the heart. But as the industry flourishes, modern sports have been reshaped and E-sports are a derivative of games being placed in the framework of modern sports. The emergence and development of E-sports, in fact, can be somehow seen as the transition process from entertainment games to competitive sports. Its gaming nature is weakening but not disappearing, and embodies the continuity of E-sports. In these days the gaming nature has been gradually weakened. The E-sports industry grew out of E-sports tournaments is leading a rapid transformation of E-sports to athletic sports.

1.1.2 E-sports Characteristics E-sports originated from games and the essence of games failed to complete selfdecompostion of the gaming nature of E-sports throughout the whole development process. With the expansion and extension of E-sports concept, the external expression of the competitiveness has been highlighted, and the competitive nature after fused with athletic sports is also affecting the current form of E-sports as a modern athletic sport. In a nutshell, the dual nature of games and athletic sports is well mixed in E-sports. Broadly speaking, most of research and analyses suggest that the main

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characteristics of E-sports are in the following aspects: culture, virtuality, popularity and competitiveness.

1.1.2.1

Culture

The culture E-sports contained inherits from online game culture to some extent. The culture of online games is mainly reflected in the story-based textual accounts, diverse historical background and others. First of all, narrations of E-sports games based on online games use historical stories, myths and legends, folk tales and other well-known cultural topics as the background and plotlines to unfold the game. For one thing, this facilitates the dissemination and mass production of games. An adaption of exiting historical background now is a basic strategy adopted by many online game producers. In recent years, a game hit Wangzhe Rongyao, translated in English as Honor of Kings, similar with a PC game League of Legends (LOL) in mode and battle content, is a mobile MOBA developed by TiMi Studios and published by Tencent Games for the iOS and Android users in the Chinese market. The game was formally published on November 25, 2015 and the European and American versions were come to Nintendo Switch in 2018. It is a typical case presentation of E-sports culture, and its background and content settings have largely drawn on many histories and mythical tales in ancient China, creating a mysterious atmosphere. Among more than a hundred heroes on the game system, many come from Chinese historical allusions, myths and legends. Xiang Yu, one of the heroes, is stemmed from the Overlord of Western Chu, a historical figure of the same name who is the grandson of Xiang Yan, a famous military leader in the state of Chu during the Warring States Period. The character acts as Tank and Support roles in the game. The game characters take into account both requirements for competition and personalities of historical figures, such as self-righteousness, hubris, lack of wisdom, all of which are a direct expression of these heroes’ skills. Besides Xiang Yu, some of heroes like Cheng Yaojin and Xia Houdun are all taken from historical figures. For another thing, using stories users are familiar with as the game background can establish cultural connection between users and the game. The cultural deja vu at a technical level provides users a more immersive cultural experience. Sanguosha, translated in English as Legends of the Three Kingdoms popular among high school students is another kind of E-sports games and can be categorized as a card game. Hangzhou Bianfeng Networking Technology Co., Ltd. is responsible for its distribution in China. Set under the backdrop of the Three Kingdoms Period, this game provides that players can freely pick a famous character (i.e. a card) in the Three Kingdoms age for role-playing, wisely combine the unique skills behind the identities (non-specific characters with emotional coloring, such as loyal, rebel, loyalist and spy) represented by cards, and then properly play out different cards (basic type and trumps) to win victory for their clan (Fig. 1.1).

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1 Overview of E-sports

Fig. 1.1 An online version of legends of the three kingdoms

Historical connections don’t equal to that in the game. Perhaps toppling historical selection or endings is also possible, which realizes technological reproduction of culture. In the meantime, culture is reconstructed in the game. From the previous discussions and analyses about E-sports at a cultural level, it can be argued that E-sports in the cultural context is more in line with its instrumental role in coordinating social relations. Moreover the cultural characteristics of E-sports are also deeply reflected in the core spirit it conveys, from which you can get a glimpse of E-sports in the cultural context. Competition is the most direct way to show athletic E-sports, so E-sports also includes strong culture of competitive sports. For E-sports tournaments, many players are grouped to conduct team battles, so collaboration that can be interpreted as harmonious cooperation is indispensable among teammates, and even exists among rivals. In short, the branch concept of collaboration is largely exemplified in E-sports culture. Since E-sports activities now are mostly multi-player competition, it is necessary to reach competitive cooperation between opponents and teammates. Competitive sports aim to convey the cultural spirit of hard-working, harmony and joint progress. In these days, in addition to Esports participants, E-sports fans also contact each other through different channels, making E-sports become an electronic medium of people’s communication. As a result, a competition-centered community of E-sports culture is created [5]. There is uncertainty and unknown in the results of E-sports competition, same as traditional athletic contests. Victory is the most direct purpose of game participants. Players need to have a hard-fought competitive spirit to achieve their goals and better display their strengths. In comparison to traditional sports, E-sports is unique in that it is more about races in know-how and strategies instead of physical abilities and skills, and therefore participants must keep a fresh mind and stay highly focused. In other words,

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similar to traditional sports events, E-sports often need to be underpinned by a tenacious competitive spirit. Especially in the face of difficulties, such spirit can greatly motivate participants to move forward, and even sometimes can become a key to a game. The development of E-sports is a long and winding process, and the people and things involved in it explore each other, thus forming some common cultural characteristics. To be specific, the exploration of E-sports games is mainly divided into the competition among players and constant adjustment between players and games. When a player first comes into contact with an E-sports game, time is the biggest cost. After an adjustment period, players can adapt to the basic operations of the game and initially master its rules, further securing a certain winning rate. After all, the ultimate goal of E-sports games is to win. In the early days of a team, its members need an adjustment period to know each other’s strengths, weaknesses and regular game conventions for they are not familiar with each other. Therefore, before the official competition, each team requires an adjustment period to acquaint itself with all aspects from the game habits to personal role settings, to know its own characteristics and advantages, and to maximize its strength in formal games. There are often many different tactics for game battles, but players usually choose one of them to work on and practice, then apply it to actual combat, and finally win victory. The diversity and immaturity of games and their rules necessitate a period for players to get familiar with games and learn the rules, adapt to the rhythm and accumulate experience for subsequent matches. From pre-match preparation, in-game confrontation to post-match replay, the core competitive spirit of perseverance, collaboration and exploration is fully reflected throughout an E-sports race. In the cultural analysis of E-sports, the culture presented by the core video games is well inherited and continued, which is an important manifestation of the origin of E-sports. As time progresses, more and more E-sports games are starting to work hard at their self-contained culture through enrichening the cultural background and connotation, which also advance the cultural characteristics. Additionally as the nature of E-sports as an athletic sport is increasingly prominent, it is inevitable to consider the cultural presentation of athletics spirit in terms of discussing such cultural characteristics. Like traditional competitive sports, the cultural nature of E-sports is more manifested in the collaboration and struggle during the game. On the whole, such cultural nature combines the core content of above arguments, in which that of video games is continuable while the expression of competitive culture (spirit) of sports events in E-sports has gradually been highlighted with time progress and become the focus area for later scholars to study E-sports culture. Furthermore as time passes and E-sports industry booms, the latter has become more outstanding, and to some degree, the current cultural research of E-sports more starts from its competitive culture and spirit. As a result, it can be concluded from the above that the cultural nature of E-sports, we think, generally refers to the cultural characteristics and connotations conveyed in games.

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1 Overview of E-sports

Virtuality

Virtuality, separately construed as emptiness and simulation, is the opposite of reality and non-simulation. It is the biggest difference between E-sports and traditional sports. It is the biggest characteristic of online games and also a basic one of E-sports. Virtuality refers to things or ideas that people plan out according to people’s imaginations and do not necessarily exist in this objective world. Everything in Esports games such as characters, mountains and valleys all is simulated using data systems. For example, Hou Yi in Honor of Kings is a mythological figure during the period of ancient Chinese Five Emperors. Hou Yi in the game is a major archer, and his image is taken example by the myth “The Archer and the Sun”. Hou Yi, according to ancient Chinese mythical legend, shot down nine out of the ten suns in the sky to save people out of situations. He is inextricably linked with arrows, so the game sets arrows as his most commonly used weapon and his most conspicuous trait. His image design in the game also learns a little form his legendary description. The game provides some appearances or skills different from realities for its heroes to fit with the virtual game environment. For example, Sun Shangxiang’s attack power mainly relies on gear selection, dominated by critical damage and supplemented by attack speed with Rapid Boots used to increase the speed. Although no one can have such skills in real life, we can have a fun time in games through computer language settings, and that’s how a virtual world is constructed. Valley of Kings is one of the game maps. The specific map design refers to the actual environment (such as natural environment in Zhangjiajie), but the Crystal Tower doesn’t exist in real life. In the game, the Crystal Tower is a symbol of team vigor. The established rules of the game stipulate that once a team’s Crystal Tower is destroyed or crushed, the team fails the game. Such case can only be realized in a virtual environment built on digital technology. Other than the game and its environment, battles among different characters, damage and other controls completed with keyboards, mice and screen instructions all are virtual and are controlled by real persons, and no material harm or change is caused to real persons. By doing so, game players’ want for activities that cannot be implemented in real life is met without having to pay real price. That’s way a large number of people play this game. Given this, the game has a lot of appeal to game players. Battles among each hero in the game are in fact killing each other. After killed, a hero can come alive over a period of time. When his HP is reduced, he can be healed up by returning to the base. All these cannot be possible in real life. Only characters are “real” in a game world, and other information is hidden, unknowable or shown in a vague state. On the basis of a series of system settings and game rules, E-sports games provide a virtual environment made of digital technology for virtual combats. Rather than the possible effect of game results on reality, such as players getting rewards, the disappearance and death of game characters and things will not have any impact on real life. The virtuality of E-sports fulfills people’s desires that cannot be realized in real life and reaches the original purpose of E-sports games, namely entertainment.

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Metaverse The term metaverse was originally coined in Neal Stephenson’s 1992 science fiction novel Snow Crash, and means a parallel digital world that detached from the physical world but is always online and where humans can freely live in virtual characters. Immersive experience makes virtual reality much truer. With the rapid development of three-dimensional machine visual and sensing technology, the concept of metaverse has gradually penetrated into Esports growth in the trend of sci-tech convergence. Continuous breakthroughs in wearable AI and VR devices have laid a foundation for the application of metaverse in E-sports. To some extent, E-sports are a part of metaverse. In the virtual game world constructed by digital technology, players can survive, fight, socialize and even live in the role of virtual characters. The online digital virtual world and real world do not affect each other, and the former is getting close to the real world architecture to giver gamers an immersive experience. Conceivably, when the concept of metaverse is materialized, the real life will overlap or even interact with the digitally constructed virtual world. At that time, games will exist not only in the digitally constructed virtual world, but also in real life, or coexist in both states, and accordingly the game experience will be greatly improved. It’s important to note, however, that the collateral damage of games can also affect the real world. Therefore whether the concept of metaverse is suitable for the future development of E-sports remains to be further discussed, but it is foreseeable that as science and technology develop and progress fast, interaction techniques dominated by VR and AR technology are becoming the drivers for Esports growth, and to a large extent, affecting and guiding the development direction of the future E-sports industry.

1.1.2.3

Popularity

Different social levels can be exposed to slightly different culture, and it can be said that social stratification somehow leads to cultural classification. Generally speaking, culture can be divided into elite class and popular class, but many scholars prefer to classify E-sports culture as popular culture. Instead of ages, abilities and interests are the standard for E-sports tournaments to select its players, so people who are interested in and passionate about E-sports and its culture all can participate in the game. Different form traditional sports like basketball, football and gymnastics, Esports need participants to be skilled in a certain aspect, which greatly expands its audience circles, including the middle-aged and elderly and minors who have been an important group of E-sports.

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1 Overview of E-sports

Moreover, E-sports activities are typical indoor athletic ones and not limited by conditions like venue, weather and environment. Intellectual or coordinated battles are the main feature of E-sports. For individual E-sports fans, a computer or a mobile device can achieve direct participation in E-sports games, because many E-sports tournaments are conducted online. Many E-sports games now provide real-time calling service, which to the greatest extent, enables cross-team to keep remotely connected. Universal operating environment and wider coverage of users are the embodiment of the popularity of E-sports. However, such popularity also shows two sides. More and more primary and secondary school students are taking part in the general E-sports precisely because E-sports games have low demand for abilities, intelligence and others. After the study and analysis of recent E-sports news, it can be found that the age of E-sports players is decreasing, and even pupils and younger children are becoming the subject of the news.

Anti-addition Policies The state has released a number of anti-addiction policies to safeguard the psychological and physical health of young people and children and secure the sound development of the E-sports industry. The National Press and Publication Administration issued a notice to strictly manage online games and effectively prevent minors from becoming addicted to them. The notice says that the time spent on online games by minors should be strictly controlled, and all internet game provides can only provide one-hour gaming service for those under age 18 in the evening (8:00–9:00 p.m.) on Fridays, weekends and public holidays. We have to carefully implement relevant provisions, and reinforce supervision and guidance. Despite E-sports has been known by the mass, proper guidance must be given for its popularization to stimulate the healthy and rapid growth of E-sports industry. The popularity of E-sports also consists in the construction of a mediated and socialized competitive society. Nowadays, E-sports as a game, not only goes viral on social internet, creating many super-hot topics, and more importantly, it is becoming a social material or social means in our lives [6]. The same hobbies and common topics facilitate people’s social lives. The socialization of E-sports simplifies the logic of people getting along, and the E-sports social communication is based on the ranking and win or loss in games and is centered on social actions aimed at game victory.

1.1.2.4

Competitiveness

Competition is ability or skill contest. E-sports include two elements: electronics and sports. The former represents the media nature of games while the latter is an

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important manifestation of the athletic nature. Along with the development of games, the entertainment nature is fading away, and competition and win-lose idea decide the actions of game players. Replaced by the outcome of a game that has become a key influencing factor of players’ status, their mindset now is no longer a main measure during a game. The transition from entertainment to athletics is also a significant reason for E-sports games being officially recognized as a sport. E-sports athletes, what we call professional players, take E-sports as their career and work, and will improve personal game-playing abilities through lots of repetitive and innovative training. For part of such E-sports professionals, the prize money is their main source of living [7]. E-sports have uniform playing and competition rules, which clearly specifies the content and time of the game. Such rules are also the norm that all participants, organizers and other interested parties need to comply with, reflecting similar fairness in E-sports with traditional sports. For E-sports events, rules mean both restrictions and mandatory punishment. Once the rules are touched, the fairness of games is affected, so for the sake of fairness, the event organizer will properly adopt punitive measures, such as suspension and account banning in E-sports and cancellation of competition results in traditional sports, and even take legal actions for serious cases. Like traditional sports, E-sports are conducted under known and established rules of fairness. For the determination of results, applicable standards vary among games. Taking LOL as an example, both sides will set up their respective team according to the agreed rules before the game. Battles between teams are the core of games. During fighting, different roles have different responsibilities. Energy replenishment, game pause and other settings all have limitations by corresponding rules. Protecting your side’s Crystal Tower while destroying your enemy’s Tower will win the game. There are also more detailed limitations on MVP of rounds. Competitiveness is the most similar characteristic of E-sports to athletic sports, and also the reason for the quick shift of E-sports from a game to a sport. Now what we call E-sports is a branch of modern sports and is evolved from its competitiveness.

1.1.3 E-sports Classification There are now many E-sports games on the market and they can be roughly divided into entertainment and sport category by the entertaining and athletic elements they conveyed. As far as the science and application of classification, they also can be grouped in a different way. And that leads to a brief introduction to two classification methods of E-sports. First of all, E-sports can be split into virtualized and fictionalized ones. As the name implies, virtualization is the electronic (digital) presentation of concrete objects that already exist in real life with the help of digital media IT and internet technology. For example, eFootball PES and eKart Racing are the digital rendering of game projects based on prototypes that already exist in real life.

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1 Overview of E-sports

The concept of virtualization is mostly found in athletic E-sports games. eFootball PES born in 1996, is a series of football video games produced and developed by the Japanese famous gamemaker Konami. Its realistic game graphics and simple and convenient operation are the reasons why it attracts a large number of football fans. This game takes the football that people can access in their daily lives as the core, and through digital technology, realizes screen display, creating an electronic and digital sport. Konami also launched NBA Live, using digital virtual technology to digitalize NBA games on gaming screen. In the game, players can dynamically adjust their skill status according to their performance. There are quite many game modes, and lots of small games are provided for player to improve their playing levels. The biggest role of virtual games played is connecting the real life with virtual environment, which is precisely why such E-sports endure. However, fictionalized games refer to competitive events that don’t exist in reality and don’t have direct reference objects that can be found in real life before the emergence of E-sports. Such games as Counter-Strike (CS), Warcraft III, StarCraft, and LOL are fictionalized on the complete basis of various advanced information production technology and cannot be directly realized in real life. From the perspective of skill and intelligence contained in E-sports, it can be subdivided into skill games, intelligence games and combined games of both, which I’ll not labor the point [8]. In E-sports, physical elements play a little and even no part in competition. Information, virtualization and skills are the striking differences between E-sports and general sports. In addition, E-sports can be divided into fighting ones and casual ones, and the former is also called E-sports classics [9]. Such classics can be further separated into FPS games, fighting games, RTS games and sports games by their own characteristics, in which FPS games are more distinctive. Unlike previous games, the basic form of FPS E-sports takes the subjective perspective of game participants as the gaming view, which means that these participants prefer to enjoy a rich experience in an immersive manner, instead of macroscopically controlling virtual characters to play. The game screen displays the field of first-person view and FPS games feature strong sense of reality and great gaming experience. Wolfenstein series released by Muse Software in 1981 is honored as a layingfoundation work of FPS games, and to date, has been developed into the fifth generation and rolled out mobile versions. Overwatch is the most influential one among FPS games and was released in May 2016 and developed by Blizzard Entertainment, a famous game maker. Once launched, it swept the globe, and won the Best Game of 2016 Award and Best Ongoing Game of 2017 award. It features distinctive characters, gorgeous skills, excellent map layout and tactical design, all these making it the most popular FPS video game. As the name suggests, fighting games usually set more than two factions to battle against each other. The introduction of fighting skills is a bright point. Such games have obvious features of and are an important branch of action games. Fighting games began in 1980s, and the release of Kong Fu had a pioneering significance of

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such games. A lot of game skills and rules still have a great impact on today’s game forms. The King of Fighters series integrated some classical characters and features from several fighting games, including Fatal Fury, Art of Fighting and Psycho Soldier, and added original content and stories. With the easy operation and great combo attack, it is an indelible classic in the development history of fighting games. As the age advances, 3D and VR technology have been gradually used for Esports. With the strong sense of experience and high-end technology, fighting games have become an integral part of the 21th-century E-sports game industry. Real-time strategy games, short for RTS, unlike common turn-based ones, are conducted in real time. Players need to promptly adjust their tactics according to game developments and team characteristics to win the victory. Most of them often play as a general to deploy forces. StarCraft and Warcraft series are classics of RTS games. After 1994 saw an unprecedented success of Warcraft, its publisher Blizzard Entertainment on this basis released another RTS game StarCraft in 1998 and made a hit. StarCraft ranked 37th in Edge’s Top 100 Games and trended globally. Other than the above said two classification methods, E-sports can be categorized in a different manner by other standards, which will not be described here. The two methods are commonly used in academic research and applied practice research and analysis, and also slightly reflect the characteristics of E-sports (Fig. 1.2).

Virtualized e-sports

E.g. PES/Kart Racing/NBA Basketball

Fictionalized e-sports

E.g. Counter Strike/Warcraft III/StarCraft/LOL

Competitive features

First person shooter

Classification of e-sports

E.g. CrossFire, Crisis Action

Fighting game

E.g. KOF, Street Fighter

Realtime strategy game

E.g. LOL, PUBG.

Fighting e-sports (classics) Competitive forms

Recreational e-sports Sports game

E.g. NBA UVE, PES

.

Fig. 1.2 Classification of E-sports games. Note Classification by competitive features and forms

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1.2 Understanding of Related Concepts E-sports are both a product of the internet information age and a derivative of rapid technological development [10]. Generally, the core elements of E-sports-related industries are games and content, together with upstream and downstream hardware providers, game software developers, operators, network service providers and other related sectors, these all constitute the huge E-sports game industry. The current discussions about the concept of E-sports mainly pivot around an aggregation of various social, cultural and economic phenomena associated with E-sports. E-sports industry is an important kind of cultural industry. In a narrow sense, the industry is the E-sports creation industry within the core circle of Esports, including product content creation, scale production and event operation and management, and other activities. For example, developing an E-sports game involves multiple aspects, including game plot creation, screen production and animation. And E-sports tournaments also require specific dissemination and operation. In a broad sense, the E-sports industry, in addition to above-mentioned content, meanwhile includes cultural industry activities related to E-sports [11]. Industry researchers usually summarized E-sports industry as E-sports press and publishing industry, Esports film and television industry, E-sports network ecological industry, etc. In this case, cultural communication activities are officially incorporated into the E-sports industry. If the industry is argued on a larger scale, it is necessary to include all industries associated with it. This will greatly expand the E-sports industry without strong substantial connection, and therefore such connection can only be called the conceptual extension of the industry. According to The World and China: Development Report on Global E-sports Industry 2019 jointly published by Tencent E-sports, Penguin Intelligence and Journal of E-sports, it showed that the ecological scale of China’s E-sports industry reached RMB 13.8 billion with the users more than 350 million. The industry is becoming a key element of China’s economic and social development. As it thrives, the consequent peripheral entertainment industry, a new star is on the rise in China’s economic society, and cultural and recreational activities around E-sports live streaming and idols are gradually becoming an integral part of the life of people, especially E-sports fans.

1.2.1 Games and Online Games The game is one of the oldest, most common and extremely important activities in human history, and has been concerned and studied by many scholars from all aspects and angles. In the article “Related Concepts and Type Analysis of E-sports” published on Sports Culture Guide, He Wei at the GAS Press and Publicity Department pointed out that six essential characteristics of games are: voluntary acts of free participation, pursuit of fun, existence of goal and contest, existence of rule, time

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and space relatively isolated from reality, and common experience and community, which is also the key to distinguish games from other human activities. These six characteristics were concluded from the research of game views and ideas of some scholars, including Kant, Schiller and McLuhan since Plato. As a result, the game is defined as such activities in which people can freely and voluntarily participate, on a planned basis, to compete against each other and pursue goals with the principle purpose of pleasure. They are separated from daily life and enable participants to gain common experience and form a community [12], and in this context, LOL, DOTA and Honor of Kings all are within the scope of game discussion. Taking Honor of Kings as an example, game players all volunteer to download and enter contests. Capturing the enemy’s turret and destroying their Crystal Tower mean victory, which is the established playing rules. Such activities take place in a data-based virtual world and are isolated from real life. Game players are given common instructions or reach a consensus on the selection of easiest road towards success in actions, and even form professional teams and stand together to win the game. Therefore Honor of Kings is essentially a game. Video games are a branch of games and other than six essential characteristics, have their own unique ones: virtual environments, physical absence, and the application of artificial intelligence. The traditional CS game environment is a virtual one built by the system, and in-game characters adopt a first-person or third-person perspective to play, achieving physical absence, namely through the computer system changing mouse and keyboard operation into in-game shooting and other actions. Traditional CS is a typical video game. However, paintballing can only be regarded as a game, because it requires physical attendance, the game environment is there and AI plays a little role in it. It can thus be seen that video games has its own characteristic, though it is a kind of games. And E-sports we discussed are different from both video games and normal games. In general cases, we think E-sports are contained in video games.

1.2.2 E-sports and Online Games Broadly speaking, we believe E-sports are within the scope of online games, which is the established subordination between the two. In the modern sense, E-sports are a competitive form developed from online games. The latter lays the foundation for the formation of the former and the former is a kind of the latter, and both are video games. However, there are still big differences between the two (E-sports and online games). The former is a sufficient condition for the latter, while the latter is only a requisite for the former [4]. Quite different from online games in many aspects, E-sports are a new athletic form shaped by integrating many factors such as online games and competitive sports.

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1 Overview of E-sports

First of all, the GAS defined that E-sports is fighting video games for brain training conducted in an IT-based virtual environment by competition rules, with the information technology at the core, the software and hardware as the media. E-sports are in essence a competitive sport activity, so it has the generality of sports activities. However online games are mainly designed for cultural entertainment, and usually categorized as a cultural creative industry. According to the Framework of the Indicator System for Cultural and Related Industries, the cultural creative industry means an industrial system that takes the cultural sector dominated by press and publication, radio, film and TV, and culture and art as its core layer, the emerging cultural service sector represented by network, games, entertainment, economic agency, advertisement and exhibition as its peripheral layer, and the sector typified by the production and sale of cultural supplies and equipment, and other articles as its related layer. Online games value cultural artistry and spiritual pleasure, while E-sports emphasize the construction of adversarial and competitive relations. Online game players live in the virtually-constructed network environment, establish cyber social relations, follow the basic norms of the virtual world, and cover the shortage of real life. The fast growth of characters in virtual society and the rapid building of social relations can stimulate people’s minds, and even make them develop a dependency on games. Although E-sports are based on online games, they place more emphasis on jumping out of the game’s internal system to build up social and competitive relations in the real world. Confrontation and competition are its basic characteristics, and the use of skills is the key factor of competition. E-sports athletes will follow basic sports rules to work out hard and improve their competitiveness. Similar to traditional sports like table tennis, there are also uniform game rules in E-sports. In summary, online games are the establishment of virtual relationships, while E-sports are the building of athletic relationships in real society, making it essentially a sports activity. Although E-sports has a greater dependence on the Internet, E-sports activities like the annual LOL Global Finals can already be carried out in a LAN environment away from the Internet with the development of technology. At present, many Esports events are transmitted through electronic devices such as routers in a LAN, while online games can generally only be played in the mode of the Internet. Compared with online games, the industrialization of E-sports is more inclusive and pluralistic. After the GAS listed E-sports as an official sport activity, the industry was further advanced, which affirmed the existence of E-sports as a competitive sport.

1.2.3 E-sports and Athletic Sports Athletics literally means skill contest and is result-oriented, focuses on game outcomes, namely win or loss. It is also the nature of sports. The confrontational and competitive nature of E-sports events are the manifestation of their athletic nature. The most important goal of two game sides is to win the fierce fighting.

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The human-to-human competition is presented by the virtual characters in the game system, realizing the transformation of competition from spiritual to virtual, but the ultimate result (win or loss) directly affects real people rather than virtual characters in the game. And it can be known from the analysis of current E-sports games that game participants need to master certain rules and skills in fighting process, and sometimes have to challenge their own limits [13]. Due to the high requirement of E-sports for skills, it is necessary for game participants to spend time outside competition training and improve their athletic ability through a large number of scientific practices. With respect to competition rules, E-sports share some similarities with athletic sports. The basic characteristic of sports competition is unified and transparent rules of fairness. Such rules are also applicable to E-sports tournaments. Athletic sports are the competition of individual abilities and skills, and similarly, E-sports require participants to spend a lot of time and energy improving their level through training and gain greater advantages in games. For example, the game system of LOL Pro League first directly referred to that of NBA League, a big step close to athletic sports from E-sports. For sports competition, doping is not allowed because the use of drugs undermines the fairness of games. Likewise, a plug-in is a key unfair factor in E-sports events, and no formal events allow similar behavior to occur. According to research findings, E-sports can improve the fitness of human nervous system, and the human cerebral cortex is stimulated and nerves are activated [14]. From the view of the origin, both E-sports and athletic sports are two different competitive forms derived from games. Although the former is designed partly for entertainment, the purpose of the two is to cultivate and improve people’s abilities and qualities [15]. The IT-based E-sports are a new form of sports, combining the elements of traditional sports in terms of competitive mode, event operation and organization, and event dissemination. In other words, E-sports is a modern sport gradually developed from video games, and integrates the characteristics of modern sports while maintaining its owns. At this level, advancing digital technology has influenced the development of E-sports. Although E-sports shares great similarities with sports, the former still keeps its own characteristics in some respects. On the one hand, E-sports events is highly dependent on information technology for its assembly and development, while the general sports in life is the opposite, and even does not require information technology. On the other hand, unlike general athletic sports that have a high requirement of physical functions and skills for participants, E-sports is more about participants’ comprehensive abilities, including team coordination, physical fitness, intelligence and others. E-sports directly affects people’s way of thinking and living, while athletic sports have a more significant impact on human body functioning. In general, E-sports and athletic sports have similarities and differences, and also have their respective characteristics. As an important part of the show market of competitive sports, E-sports is gradually fitting into the role of athletic sports and entering today’s social life.

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1 Overview of E-sports

Throughout the development of E-sports and athletic sports, they share great similarities, especially at the cultural level, and both are the product of a certain development of society and culture. Because E-sports started later than athletic sports, it has a strong shadow of the latter in terms of event organization and structure, competition system, communication and watching modes. Nowadays, E-sports have been highly professionalized and commercialized. In spite of similar modes and forms, E-sports in many aspects have gone beyond the scope of athletic sports, forming a unique one in modern sports. Some research scholars classified E-sports in the intersection of modern sports and entertainment shows, calling it “a post-modern sport”, and decentralization, multi-orientation and borderless state are the biggest features of its fusion and development. To date, Esports, like athletic sports, has become an important part of social and economic life with its strong cultural and commercial values, and is gradually assuming the responsibility of creating and spreading social culture.

1.2.4 Overview of Mobile E-sports As time goes by, E-sports have become a main topic in people’s social activities and is an integral part of social and cultural life. In China, E-sports is treading from pupils to the elderly and is integrating with mainstream culture.

E-sports Development in this Age of Mobile Internet Recent years have seen the advent of mobile internet era, and phone-centered mobile terminals have become the key to market growth. On August 27, 2021, China Internet Network Information Center (CNNIC) issued the 48th China Statistical Report on Internet Development (short for the Report) in Beijing. The Report showed that as of June 2021, Chinese netizens reached 1.011 billion, an increase of 21.75 million from December 2020. With its penetration rate of 71.6%, the internet has become an integral part of people’s lives. The internet technological advances contribute to the progress of mobile terminals, in which phones are a typical case of such progress. According to the Report, Chinese mobile phone netizens totaled 1.007 billion by June 2021, a rise of 20.92 million from December 2020 and with the proportion of netizens using mobile phones hitting 99.6%. The scale of mobile phone netizens and overall internet users is comparable, which shows mobile phones have become a must-have gadget for Chinese internet users, and E-sports will certainly speed up its transition to mobile competition.

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The advent of mobile internet era has witnessed the beginning of shift from PCbased traditional E-sports to MT-centered mobile E-sports, and gradual mobile development in terms of game settings and event organization. At present, E-sports operators have slowly grasped the laws and tendencies of internet development, a more suitable growing trend that evolves into what we call mobile E-sports. Mobile E-sports are the product of the continuous development of mobile internet [16] and mobile smart terminals and are the outcome of the combination of traditional E-sports and mobile internet devices. Judging from the development history, mobile E-sports already existed in embryo ten years ago. In the World Cyber Games 2012, mobile games like Temple Run and Fruit Ninja were listed as a promotional item of E-sports tournaments. The promotion was the first attempt to fuse E-sports with mobile internet, but it failed to meet desired results due to inadequate popularization of mobile devices. Afterwards China Telecom in EFUN national mobile game tournament came up with the concept of “micro E-sports”, which is the predecessor of “mobile E-sports”, emphasizing the competitive transformation of mobile games. With the development of the times, the concept of “micro E-sports” had been slowly expanded from mobile competitive games to mobile E-sports, forming a mobile E-sports industry centered on new mobile E-sports games. The rapid development of IT contributed to the growth of E-sports. With the increasing variety of mobile games, the size of gamers showed a year-on-year rise trend, and the mobile E-sports market was accordingly expanded. At the same time, due to the huge bonus of live streaming, mobile E-sports culture is spread faster in society. At home, the GAS Sports Information Center worked with Datang Telecom to jointly host China Mobile E-sports Games, which is China’s first official mobile E-sports event. Globally, five new mobile game events respectively represented by PUBG Mobile, LOL Mobile, Clash Royale, Brawl Stars and Free Fire are on the rise. But after the analysis of the current mobile E-sports market, it can be seen that disadvantages and crises still exist. Firstly, the history of mobile E-sports is short and the industry lacks sound rules and regulations. The early mobile E-sports directly copied the system and model of traditional E-sports, which have certain limitations and cannot meet the development needs of the mobile E-sports industry. Secondly, the industry is short of core products, and only a few games such as Honor of Kings and PUBG Mobile Game are more popular. In comparison with traditional E-sports industry, it doesn’t have an advantage in this aspect. Although compared with traditional E-sports events, mobile E-sports still has a long way to go in the number of participants, the size of events, and organization and operation, it can be seen that it is becoming a key force in the development of E-sports industry. The power of mobile E-sports thereby cannot be ignored in such future development. And it should be also noted that it is necessary for E-sports operators and practitioners to make efforts for adjustment from many aspects, though the current E-sports has high commercial value with respect to its athletic nature, and huge development

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potentials. The importance attached only during development to the athletic nature of E-sports industry is in line with the requirements of the state for its healthy development. Otherwise, in the development model of excessive pursuit of commercial interests, it is difficult to achieve the real integration of E-sports and sports, and as a result, it is very likely that E-sports become gradually less related to sports.

1.2.5 Game Theory After decades of development of E-sports, its research is gradually deepening with the formation of the industry. Games play a significant part in practical and theoretical research on human social life, and are the core of E-sports industry, so game theory is also widely used in theoretical and practical research related to E-sports. Game theory derived from games is of great use to the research of competitive sports, and is meanwhile used in E-sports studies. Game theory, also called the science of strategy, is a theoretical approach to study competitive or competitory phenomena. The zero-sum game we know comes from the game theory. This theory is extensively used, and especially has better effect in solving problems in relation to competition, mathematics, and economy. What’s more, it is an important angle for modern mathematical and operational research. The word “game” is an important expression of the theory, and its Chinese counterpart characters “博弈” (bó yì) originated from ancient Chinese cheese and go, showing the importance of the theory to game research [17]. Game theory has existed in the long river of Chinese history for many years, and has always been an important theoretical approach for Chinese people to solve problems since ancient times. The Art of War, also called Sun Wu’s Military Theory written in the Spring and Autumn Period, is the earliest, extant and known military treatise in China and also the oldest military-related works in the world. Furthermore, it is more of military writing and can be counted as one of the earliest works about game theory. Game theory was originally used to study chess, bridge and gambling results. People’s understanding of game situation only stayed at the experiential level and didn’t be theoretically developed, and until the early twentieth century the theory was formally evolved as a discipline. In 1928, Von Neumann proved the basic principles of game theory, thus proclaiming its formal birth. As time passes, game theory has been applied to all aspects of scientific research and has become an important theory of game research. Game theory takes the interdependence and interaction among participants as the core, and focuses on the decisionmaking behavior of mutual influence. Consequently it depends heavily on combined action with multiple participants (decision-makers), and that’s why it is also called the science of strategy or the science of interactive strategy. E-sports emphasize the competitive confrontation between participants. Participants are an important factor of E-sports events, and the game cannot be played if either side leaves it. Their competitive behavior will intricately impact each other, both or all together determining the game result.

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Player, strategy and gain/loss are key elements of game theory. Such elements can also be found in the application of game theory to E-sports. A player is every participant who has decision-making power in a contest or a game. Gaming activities only with two players involved are called “two-player games” and with more than two players involved are called “multiplayer games”. E-sports have two opposing sides, each as a player to act on strategies. In general, E-sports are mostly two-player games and only a few are multiple games. Strategy refers to a plan that is a practical and complete course of action chosen by every player for a game. It is not designed for a specific stage, but to direct the whole action. A feasible course of action that a player maps out the whole picture from beginning to end is called a strategy of the player. When each player has a finite number of strategies, the game is said to be finite and otherwise infinite. For E-sports events, participants (teams) will determine a preliminary game plan before playing, and also will look at various situations. As the game continues, teams and participants will select and adjust their fighting tactics in real time to try their best to win the game. The result of a game is called gain/loss. The gain/loss of every player in a game is not only related to the strategies chosen by him, but also to the set of tactics taken by all players. Therefore, the gain/loss of every player is the result achieved under the influence of the set of tactics agreed by all players. Since the results of E-sports events are unpredictable, a team has to make adjustments in a game even though they have prepared perfect strategies in advance. Two or more sides check and affect each other in a game, and the ultimate win or loss is the result of the joint action of all sides.

Game Rules Game rules are of importance in game theory and games must be played under rules. Such rules are the settings of fundamental game conditions, including action modes, utility structure and information mastery, thereby with respect to a game to lay the foundation, determine its nature and affect its outcome. The rules are universal to all participants and to a certain extent, construct the subject of competition and the meaning of competitive behavior. The game rules and code of game system of E-sports can be understood as a kind of game principle. Every participant is required to follow established rules to play during the entire match, because rules are boundaries and games that break boundaries are not been allowed.

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References 1. Zonghao, Li, Wang Jian, and Li Bai. 2004. The Concept, Classification and Research on the Development History of E-sports. Journal of Tianjin University of Sport. 2. Tianhua, Song, and Luo Ping. 2006. Analysis on Similarities and Differences between E-sports and Athletic Sports. Journal of PLA Institute of Physical Education 3: 96. 3. Zonghao, Li., Li. Bai, and Wang Jian. 2005. Introduction to Electronic Sports, 7–8. Beijing: People’s Sports Publishing House of China. 4. Chen, Chen. 2015. Study on E-sports Status-Quo and Development in China. China University of Mining and Technology. 5. Xiaomeng, He., Xu. Yunjun, Tang Guoyong, et al. 2005. Discussion on E-sports Development and Strategies. Journal of Shaoyang University (Natural Science Edition) 3: 131–133. 6. Chen, Meng. 2018. Insight into Game Mediatization from the Perspective of Popular Mobile Games. Liaoning University. 7. Yuchao, Feng. 2003. Preliminary Discussion about E-sports Development. Zhejiang Sport Science 5: 49–52. 8. Zonghao, Li., Wang Jian, and Li. Bai. 2004. The Concept, Classification and Studies on its Development History of E-sports. Journal of Tianjin University of Sport 1: 1–3. 9. Huixian, He. 2004. Make Digital Interpretation of Sports More Wonderful: E-sports and its Development in China. Sports Culture Guide 8: 3–7. 10. Peiyi, He. 2013. Study on Status-Quo and Development of China’s E-sports Industry. Shanghai International Studies University. 11. Dong, Chen. 2015. Study on the Development of China’s E-sports Industry (1996–2015). Shandong University. 12. Wei, He. 2004. Related Concepts and Type Analysis of E-sports. Sports Culture Guide 5: 11–13. 13. Huibin, Wang. 2004. Several Thoughts on E-sports. Policy Research & Exploration 11: 86. 14. Yi, Wang. 2005. Discussion about the Concept and Functions of E-sports. Sports Mentorship 5: 57–58. 15. Tianhua, Song, and Luo Ping. 2006. Analysis on Similarities and Differences between E-sports and Athletic Sports. Journal of PLA Institute of Physical Education 3: 96–98. 16. Liang, Chen, and Yu. Wenqian. 2017. Study on Mobile E-sports Development. Sports Culture Guide 4: 26–31. 17. Hongchi, Wei. 2013. Game Theory and Language Game: a Comparison between Two Game Theories in International Relation Studies. Foreign Affairs Review (Journal of China Affairs University) 30 (1): 126–138.

Chapter 2

Development History and Status-Quo of Global E-sports

Abstract In this chapter, we will be familiar with the development history of the global E-sports industry based on specific application cases, understanding the current situation and characteristics of the global E-sports industry based on macro and micro perspectives through the study of some global E-sports event cases. Keywords Global E-sports industry · Status-quo of global E-sports industry

2.1 Development Journey of Global E-sports Industry Global E-sports from germination to flowering now already have two hundred years of development history, during which the E-sports industry has produced huge profits and values for worldwide countries. Historically, competitive games can be traced back to computer games and arcade games, both giving players strong fighting pleasure, Due to lack of direct incentives, there were a few players at the beginning, but it didn’t lower the competition degree. Later as more and more formal competitions were organized and carried out, game audiences were expanded and E-sports were gradually going mainstream. In the early eighteenth century Japanese game manufacturers started to independently develop home consoles, which was the opening shot in the history of console industry. Many brands like Nintendo sprang up and became the center of advancing the E-sports industry. The development of AI Famicom marked the initial formation of global e-sport. Since then major game manufacturers started to work on developing video games, and the E-sports industry embraced rapid growth. As time moves on, E-sports have been more important opportunities for large enterprises to flourish than just games. According to public data, the E-sports industry in South Korea has exceeded an annual output value of RMB 4 billion. In Japan, the share of E-sports value has outstripped auto industry and the gap is widening. Owing to its vigorous rise all over the world, the E-sports industry has become a vital part of global entertainment industry. After in the late twentieth century the E-sports industry was introduced in China and soared up, it had become a key link in the global landscape of E-sports industry, © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_2

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because the swift growth of global E-sports industry laid a solid foundation for the sudden rise in China. In the eighteenth century, the game industry just started. From infancy to now, the output value of E-sports industry has been increasing, and peripheral industries around E-sports have risen sharply. 1972 saw the first-ever well-known gaming tournament, where players gathered to compete in Spacewar! at Stanford University. In 1980, the game company Atari held the Space Invaders national championship, and welcomed more than 10,000 players to participate in. Afterwards similar events gradually increased, until in 1990s, competitive games were slowly formalized. The past three decades were a critical period for E-sports industrialization. It can be seen from a review of global E-sports industrialization that technological advancement and progress are key factors. As overall economic and social environment changes, the E-sports industry now embraces rare development opportunities but is faced with some challenges. In view of the characteristics of the industry and general rules of industrial life cycle, the development process of the industry in global terms can be roughly divided into three stages: budding, growth and maturation, which all have different development characteristics and focuses [2].The global E-sports industry was formed with the combination of regional industries in multiple countries and regions, including America, Korea, Japan and China. Although the industry in China started slightly later than that in other countries, its growth momentum didn’t underperform theirs (Fig. 2.1).

Budding stage

From the birth of video game to 1990s

From 1990s to 2010s Growth stage

From 2010s to now Maturation stage Fig. 2.1 Development journey of global E-sports industry (three stages)

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2.1.1 Budding Stage Globally, the budding stage of E-sports means the period from its birth in the twentieth century to the turn of the century. At this stage, screens were increasingly replaced with buttons and had become a main carrier of communication. Human cognition was also limited into screen-controllable areas, and the world entered a screen-dominated age. Screens redefined games. Unlike traditional games, people unshackled the limitation of places and interpersonal relationships, and they didn’t need to face each other to enjoy games. Games were gradually presented through screens and transitioned from consoles to PC terminals. E-sports were basically formed in this phase. Video games were born in the mid-twentieth century. The withdrawal of human bodies from games changed the public’s gaming habits and fully revolutionized the concept of games. Screens had become the key medium in the game process. Video games were the product of the transformation course from the industrial age to the information age. Innovation in technology and culture was an important driving force for the emergency and development of video games.

Fig. 2.2 The earliest sport game, aka the earliest video game with graphical display feature

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Video Games with Graphical Display In the early days of video games, their generations were differentiated by mainframe computing, graphics performance and storage medium. The industry generally regarded cathode-ray tube amusement devices (TV tubes) as the starting point for video games. Tennis for Two, created by William Higginbotham in 1958, was displayed on an oscilloscope and the world’s first computer game (aka video game) that features a graphical display. Two vertically-intersected straight lines and a glowing dot constituted all of the game, and players couldn’t even see the racket. The two opposing players needed to hit the “light ball” by knobs to keep the ball from landing. Although the patent fee for Tennis for Two was only 10 dollars, this game opened a road to screen-based games. And the subsequent Spacewar! pioneered the two-screen interaction (Fig. 2.2). Inspired by Tennis for Two, Spacewar! was considered as the first computer game in human history. Compared with today’s games, Spacewar! was colorless and soundless, and featured single scene and easy gameplay. It emerged as computers developed, and made computers be a tool for people’s entertainment. With groundbreaking design and revolutionary interaction function, it extended competition beyond human bodies and physical objects. Electronic confrontation meant digital presentation of human-to-human battles on game screens, and was the biggest feature of E-sports. As console games matured in 1970s, the size of users was getting bigger and part of manufacturers started to organize open game-centered tournaments. So far, video games entered public sphere from private life. With public sphere, established organization rules, confrontation and professional tools, the then video games had gotten a shape of E-sports. A four-player fighting game Pong born in 1980s to some extent strengthened the pursuit of confrontational and interactive elements in video games. In 1981 Atari organized and hosted the Space Invaders Championship (short for SIC), and had over 10,000 players competed together. And the typical form of E-sports events was shaping. However at that time, confrontation was the most representative characteristic of video game competition, though it didn’t have striking characteristics of sports events, until now the reasonableness of E-sports events as sports competition is still controversial.

Game Competition Database After the SIC, video game manufacturers increasingly started to pool the power of all players around the world to develop video game events into more standardized and organized ones, and peripheral business like game scoring sites and championships also emerged accordingly. In 1982 Twin Galaxies National

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Scoreboard created by Walter Day was made available to the public as a database of high score statistics, which enhanced the confrontational fun in banning video games. Like the game official, the database provided players scores and rankings to stimulate the desire of game participants for victory and high ranking, and facilitated the formation and growth of E-sports point races. To this day, Twin Galaxies has become the industry authority on gaming score statistics, and was one of the Top 50 Best Websites rated by American Time. In 1990s the game market enjoyed broad prospects and a large number of electronics manufacturer popped up. Among these companies, Japanese Nintendo was the most famous one and created a batch of games and characters, including Famicom and Mario. On January 5, 1986, E-sports events first started to be shown on Japanese TV, which was the debut of such events in public media (Fig. 2.3). From niche entertainment to popularity, games’ audience had skyrocketed, bringing enormous profits to manufacturers. Open E-sports tournaments had become an important marketing means for manufacturers. At that time, as PC technology was developed fast and internet technology was used, video game competition started to incorporate traditional digital elements, and had gradually transitioned from console games to PC-based games. In 1984 Summer Games, a PC game developed by Epyx sold more than 100,000 copies, hitting the sales record. And the sports competitions in real life were converted into game software. In the 1980s and 1990s, PC games were scaled up quickly, and companies specialized in game design mushroomed and rolled out a lot of wellknown PC games.

Fig. 2.3 Game characters released by Nintendo

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Technological change and integrated progress of video games were the common thread that ran through the stage of E-sports. The introduction of internet greatly expanded the growing space for games and also laid a foundation for the emergence and development of E-sports.

2.1.2 Growth Stage The innovation in computer technology let video games move a big step forward. The development of internet IT in the 21th century led the whole human society to fully enter the information age. In this phase, globalization was the general trend and connections among countries were strengthened. All parts of the entire society were closely linked, and game competitions were boomed in the tide of internet development and globalization. “Wars in a virtual world” were the initial form and beginning of E-sports. At this growth stage, E-sports began to fuse other game branches. A lot of battle-centered E-sports games prospered all over the world and attracted many worldwide players. In the late twentieth century, America and Europe held more E-sports events that featured fine classification, reasonable organization and larger scale. The entertainment function of fighting video games was slowly replaced by their commercial and competitive elements. In the meantime, such commercial elements were increased, and a group of people taking E-sports as their career, namely what we call E-sports quasi-pro player or E-sports practitioner started to appear. Many players committed themselves to playing professional E-sports to win prize money as a source of income. From virtual battlefield to competition and business social platforms, from games to sports, professional E-sports events had been changed in terms of forms at this growth stage. Generally, E-sports originated from Real-Time Strategy Games (short for RTS), and heroes were the mainstream and core of E-sports events. Romance of the Three Kingdoms was released by Koei in December 1985, and the company thus became one of the top game manufacturers.

Romance of the Three Kingdoms In the game, players cast as historical figures in the Three Kingdoms Period, such as Cao Cao, Liu Bei, Sun Jian and Yuan Shao, which were digitalized in games. Game participants can freely choose their own identities to compete in strategy games. For example they can lead thousands of horses and soldiers to take cities and seize territories, and even to govern states. The game’s plotline fully proceeded according to the history, and the individual will of game participants played a decisive role. Due to its targeted historical background, the game attracted a large number of players in China and

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Southeast Asia. Similarly Civilization was also a typical example of combining RTS games and history, and set a new bar for the development of resource gathering games in the future. From 1993 to 1995 Westwood Studios continued to publish Dune series and Command and Conquer, redefining PC games and making it a founder of modern fighting games. In 1991 Blizzard Entertainment was founded; in 1994 the company produced a world hit Warcraft; in 1996and 1997, it successively published Diablo series, cementing its position as the world’s top game manufacturer. In 1997 it specially set up an online server Battle.net, which was a hallmark event for the internet connection of video games, and also a key step towards the combination of video games and internet. In 1998 StarCraft came out and made a splash of RTS games all over the world, in which South Korea was the country where the users were the largest. In addition to upstream game production industry, the industry pattern centered on game operation was gradually showing its basic shapes, regional and worldwide professional league system became the beginning of E-sports. As RTS games thrived, multi-player online battle arenas (MOBA) were under development and became the footstone of E-sports growth. Blizzard Entertainment’s StarCraft and Warcraft provided a map editor for players to freely expand the game content, which was the important source of MOBA. Dota is one of the most familiar MOBAs for Chinese game users, and has also pushed the overall competitive strength of this game type to the top of the world. The birth of Dota opened a new stage of E-sports in global terms. Without the introduction of characters to FPS games, game participants experiencing wars and confrontations from a subjective perspective can have a stronger sense of reality and experience. Major manufacturers had made high-standard requirements for the enjoyment and sense of experience of shooter games in this phase. In 1996 ID Software issued a community edition of Quake, which was the first 3D real-time FPS game. In the next few years, Quake and the like were published one after another, and Quake-centered events were increased, which raised social attention and highlighted commercial values. CounterStrike (CS) as another FPS game, pushed E-sports onto a new stage. According to its founder, Jess Cliffe, the game was a team play, in which one team acted as terrorists, while another team was counterterrorism elites. Each team can use different weapons and equipment that have various functions. Each map has different goals: hostage rescue, assassination, bomb removal, run, etc. At the formation stage of E-sports, the world embraced three top tournaments WCG, CPL and ESWC. Besides small events and regional competitions including MLG all were important directions to develop E-sports.

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World Cyber Games Founded in 2000, World Cyber Games (WCG) is a global E-sports event hosted by International Cyber Marketing (ICM) to promote people’s communication, interaction and exchange in this internet age and create a harmonious and happy life with the aim of globally advancing E-sports. In 2019 the 14th WCG was taken place in Shaanxi Xi’an and our teams fighting on home soil eventually won four gold medals. Cyberathlete Professional League (CPL) founded in 1977 aims to make E-sports a real game. Electronic Sports World Convention (ESWC) from France is an international cultural event initiated by 11 members of the Security Council, including China, with more than 60 partners. WCG and ESPWC have been held since 2000, and both later became annual events, setting the general tone for the tournament structure for the next decade. In addition to the hosting of large events, E-sports further accelerated the integration of event hosting and TV broadcasting at this stage, and DirectTV published Competitive Gaming Series (CGS) in 2007. From the late 1990s to the 2010s, E-sports, on the basis of early embryo, developed a number of game categories, including RTS and FPS games, and the hosting mode of E-sports events was basically formed. E-sports had gradually changed from a simple confrontational game to an industrial form with typical athletic characteristics. At this time the E-sports industry was rapidly developed in South Korea, which was the key driving force for the formation of E-sports and the first to achieve E-sports professionalization. However, since the birth of video games, the related industries in Europe and America have always been well developed and long occupied the top pivotal position. As an emerging market in China, E-sports were primarily tapped into at the turn of the century. With the internet reform in Chinese society, China’s E-sports were gradually approaching to the world industry and had scored substantial results while maintaining its own characteristics.

2.1.3 Maturation Stage As time entered the second decade of the 21th century, the shadow of the internet information age had been imprinted in all aspects of life, and technological changes had brought about the energy innovation and explosion of mobile internet and social networks. In the next ten years, E-sports saw the most rapid growth. In November 2010 Dota 2 registered an official blog in China and drew the attention of fans all over the world. Dota 2, a MOBA game, was born with The International (abbreviated as TI). Other than TI, there were other authorized events of

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other levels to be hosted during the same period. TI spawned new global mechanism of E-sports that leads to higher-quality events. In 2014 CCTV and other official media outlets reported TI events, which showed that the atmosphere of E-sports had been created in Chinese society. Despite LOL was published as early as in 2009, its users started to obviously rise until 2011. So far it has always been taken the core position in the E-sports industry.

League of Legends League of Legends (LOL) is a MOBA fighting video game developed by American Riot Games, launches more than one hundred heroes combined history, legends and realities, and includes a simulation system that features rankings and runes. Unlike Dota, LOL introduces social elements into the game competition, and the mode of befriending and teaming up has become a huge basis for its huge audience. LOL pursues to advance the global E-sports and develop various events, including Development Leagues, World Championships, Mid-Season Invitational and All-Star Events. It has pioneered the game format of global competition and created its own unique culture, enabling to take a step forward to the professionalization of E-sports and to athletic sports from E-sports. In 2018 LOL was formally listed as an exhibition sport in Incheon Asian Games. As the core of E-sports in 2010s, LOL and Dota opened up a new chapter for the growth of E-sports. In 2015 Blizzard Entertainment released Heroes of the Storm, which had a certain influence in Europe and America, but wasn’t in vogue. However Hearthstone came out in 2014 was a success, and two years later, the official announced the game already had more than 50 million registered users in 2016. In 2016 Blizzard Entertainment published Overwatch with a new mode, and established a league mechanism closer to professional sports, which was similar to the competition system of NBA. Once launched, PUBG: Battle Royale as a later comer went viral. It broke seven Guinness World Records and won the G-STAR Grand Prize (President’s Award). In the game, players need to collect various resources on the map and fight other players in a shrinking safe area to survive to the end. In August 2017, the E-sports League (ESL) hosted the PUBG Invitational in Germany, and PUBG: Battle Royale debuted on the world stage as an international event. Since 2018, there have been more and more PUBG-centered competitions, but at the same time, the game audience has slightly reduced, because games are increasing both in type and number in the current E-sports market, which distracts the attention of gamers. It is valuable to discuss and study how E-sports games become characteristic and can meet the audience’s need for a long time under new situation. The development and dissemination of internet technology and culture have created a new landscape of the E-sports industry with strengths concentrated at the

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front and new forces introduced, and the territory of E-sports is constantly evolving. Over the past decade, the dominant position of the mobile internet in social life has been established and strengthened, and video games based on mobile internet devices have gradually become a part of the development of the E-sports industry that cannot be ignored. From 2014, mobile games witness a growth spurt. Honor of Kings, Onmyoji, Dreaming Back Three Kingdoms, FIFA Mobile and PUBG have become the backbone of the mobile game circle. In2016 the launch of Honor of Kings Pro League (KPL) embarked on the journey of E-sports. In 2018 LPL and KPL constituted a two-tier industry of Tencent E-sports, greatly affecting the ecological development of China’s E-sports industry. As the global mobile E-sports industry continues improving, discussions and controversies go along. The wave of mobile E-sports swept across the country, covering all age groups from pupils to the elderly, but the adverse impact of video games on pupils triggered discussions in social media. To this end, in July 2017, Tencent issued a rule of limiting gaming time to mainly constrain the minors under 12. In 2018, Honor of Kings started real-name verification work and upgraded anti-addiction measures again. In recent years, the integration of live-streaming platforms and vertical we-media has built a good infrastructure environment for the development of the E-sports industry, and game-streaming platforms represented by Huya Live have become an important guarantee to popularize E-sports. To this day, the E-sports industry chain has been formed, and each link from upstream game production, game events, player brokerage and operation, to downstream information dissemination platforms centered on E-sports, E-sports professionalization, commercialization, and popularization has become a trend and even reality.

2.2 Development Status-Quo of Global E-sports Industry In 2017, E-sports education was a hot spot; in the Asian Games Hangzhou 2022, Esports officially became one of the Games competition events, at which point E-sports had realized the transformation from industry to education, from games to sports. The intelligent age came, followed by the information age. The E-sports industry has to actively integrate new technology and trends to adapt to era development. From game production to event operation and promotion, both upstream and downstream chain of the E-sports industry have been extended and expanded step by step. 2016 was the first year of live webcasting in China, and since then the game live-streaming market had enlarged rapidly, becoming a key part of the downstream communication chain of E-sports events. The China’s E-sports industry had been affected by the global E-sports market to a certain extent. From a global aspect, this section will analyze and discuss the current development status-quo and characteristics of the E-sports industry, laying a foundation for the research of the growth of China’s E-sports industry.

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2.2.1 Industry Scale As the E-sports culture spread, the E-sports market will continue to scale up. At present, the global E-sports industry has presented a situation of tripartite confrontation among the United States, China, and South Korea, with other countries forging ahead to grab market shares. The report predicted that by 2021, China, in terms of both revenue and game user scale, will become the absolute kings in the global E-sports market (Fig. 2.4).

Research Report on the Global E-sports Market In recent years, the market research firm Newzoo annually releases a research reports on global E-sports market to predict its next year’s development. In March 2021, Newzoo published the 2021 Global E-sports and Live Streaming Market Report (hereinafter called the Report). As the title implies, it can be seen that E-sports live streaming has become an unstoppable trend. The Report forecast that the global E-sports market events is expected to rake in 1.1 billion dollars in 2021, and to exceed 1.6 billion dollars in 2024, with a compound annual growth rate of 11.1%. Sponsorship is the largest part of the revenue. Moreover, the data showed that in 2021, more than 75% of the E-sports market revenue (that is, $833.6 million) will come from media

Fig. 2.4 Revenue of global E-sports events from 2019–2024 (unit: $100 million)

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copyright and sponsorship, followed by media copyright, game manufacturer subsidies, merchandise and tickets, virtual goods, and finally live streaming, which is only 25 million dollars. It can be thus concluded that although Esports live streaming is hot, the core of the E-sports industry remains events, yet still it cannot be denied the role of such live streaming in E-sports culture dissemination.

Activision Blizzard Activision Blizzard, Inc., an American game developer, publisher, and distributor, was renamed in 2008 after the American video game publisher Activision, Inc. merged with Vivendi Games. In May 2021, it ranked 506th in the Forbes Global 2000 List 2021. Financial report data showed that in 2019, Activision Blizzard’s turnover was US$6.489 billion. In the latest stock market, its total market value exceeded US$60 billion. It now is the world’s largest game developer and publisher. The company has produced multiple globally popular E-sports games, such as Quake series, Warcraft series, StarCraft series, Hearthstone, and Overwatch, all of which are its representative works. Once released in 2016, Overwatch attracted the attention of a large number of game fans. In November 2017, Overwatch won the E-sports Game of the Year at 2017 British Golden Joystick Award, once again proving its great influence. KT Rolster, short for KT team, comes from a well-known E-sports club in South Korea, and also is one of the founding members of the South Korean LCK League. The team specializes in StarCraft and LOL, and has gained honors in many global E-sports competitions, including the LOL IEM Season 8 World Championship. In China, NetEase is the pioneer of E-sports and one of the most well-known game producers and operators. The famous mobile game Onmyoji is the company’s product. Most of NetEase’s games reflect Chinses traditional culture, and Dream Westward Journey series is a typical case. NetEase Games is also responsible for the agency and operation of games like Hearthstone and StarCraft II in China. NetEase nowadays has matured into one of the seven largest game companies in the world.

2.2.2 E-sports Events E-sports events refer to crowd activities that center on E-sports games and occur at once or on an irregular basis in a certain period of time. On the one hand, the organizer can gain some profits by holding E-sports competitions to meet the interests

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of sponsors; on the other hand, E-sports games also play a key role in spreading Esports culture and boosting the E-sports industry. E-sports events can be classified from multiple perspectives by many factors, including event time, venue, competition content and nature (Table 2.1). Generally speaking, E-sports events are mainly classified in a more intuitive manner, namely by the nature of the organizer. According to the nature of the organizer, E-sports events can be categorized as first-party events and third-party events. The first-party event, as the name suggests, are held by game developers as the host, while the third-party events are organized by a third party other than game developers, and appeared earlier. As video games such as StarCraft and CS were popularized, three major E-sports events, WCG (World Cyber Games), WEG (World E-sports Games) and ESWC (Esports World Cup) were born. It is precisely because of hosting these events that more and more people are beginning to know and pay attention to E-sports, and the public’s understanding of E-sports is imperceptibly deepening.

League of Legends World Championship After 2010, first-party events became the mainstream, occupying more than half of E-sports events. In 2011, the LOL World Championship and Dota 2 PIT Invitational were born, and in 2014 the WCE was settled in Yinchuan. In recent years, as the mobile internet advances, mobile E-sports events have also cropped in the E-sports market. The LOL World Championship is the grandest LOL game every year, and is reputed globally, standing for the highest level of the LOL events. So far, the LOL World Championship has been successfully held for 10 sessions.

Table 2.1 Classification of E-sports events (excerpted) [3] By items

By results

By items

Event time (frequency and number)

Regular E-sports events Venue One-off events

By results Outdoor Indoor

Competition items and Single events content Comprehensive events

Influence coverage International National Regional

Nature

Commercial Entertainment Public welfare

Duration

Short-term tournaments Long-term leagues

Participant

Audience-oriented Participation-oriented

Scale

Super-large Iconic Small

Professionalism

Professional Amateur

Organizer

First-party Third-party

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The participants are the top-level teams from all major competition zones, and only teams with excellent performance in professional leagues are eligible to participate each year. The Championship slot for each zone is based on its scale and gaming level. On January 8, 2021, the LOL tournament official announced that China’s Shenzhen will host the LOL World Championship. In 2021, the annual grand finale of the LOL event, namely the World Championship resumes to be physically held in cities. The vigorous development of E-sports events has attracted the attention of a large crowd of E-sports participants and fans. According to the report, the E-sports game audience will add up to 474 million in 2021, an expected increase of 8.7% from last year, and in 2024, this number will continue to grow to 577 million with a compound annual growth rate of 7.7%. The viewer of global game live-streaming will reach 728.8 million in 2021, a year-on-year increase of 10.0%.

2.2.3 E-sports Culture Although E-sports are formally classified as a sports event, the game core has not been changed with the official approval. Since the birth of video games, there have been mixed reviews and controversies. With the maturity of the E-sports industry, E-sports culture is gradually approaching and integrating with mainstream social culture to affect more people. E-sports culture first is competition, and game participants play games to satisfy their desire for confrontation and gain physical and mental pleasure. Next E-sports culture is the same culture about competitive spirits as all sports and the culture about professional players fighting and struggling in the arena, which is also the core of E-sports culture. China Youth Daily once reported: “The want to embark on a career in E-sports and take being a professional E-sports player as the life ambition and pursuit comes naturally and is very normal, so there is no need to regard it as a great scourge.” South Korea is the core area for the development of E-sports, and E-sports are growing into mainstream culture in South Korea. In South Korea, thousands of players watch and participate in games, and the performance of their gamers is even related to national pride. As early as 1999, South Korea established an E-sports industry centered on TV stations and operated by E-sports associations, with E-sports events as products. Esports was even credited as “one of the pillar industries in Korea.” Internet cafes are an important cradle of E-sports culture in South Korea, which enjoys the world’s fastest internet. The rapid development of network technology has laid the technical foundation for booming E-sports in South Korea.

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South Korea holds a relatively positive attitude towards E-sports games, and this means that Koreans are more accessible to E-sports, and at least they don’t resist them at the conceptual level. Furthermore, South Korea has a series of established trainee system as a guarantee to cultivate professional players. Cruel selection and elimination will urge players not to slack off in improving their skills. The combined effect of systems and concepts has created Korea’s unique E-sports culture. However, in Europe and America, as one of the important birthplaces of E-sports, E-sports culture cannot be seen as mainstream one. Unlike the Korea’s E-sports industry, which focuses on event operation and player packaging, the event organization of European and American E-sports mainly revolves around live games, and is more inclined to the pursuit of fairness and professionalism. Its main communication target is E-sports amateurs, so it is relatively difficult to spread E-sports and its events in a larger range and user groups. The dissemination of E-sports culture has rapidly advanced the E-sports industry, and the consumption of E-sports culture features interactivity, invisibility and freedom. To a certain extent, E-sports economy can be understood as the cultural economy born with E-sports culture. The development of the E-sports industry is also based on the perspective of cultural identity. In 2017, E-sports education became popular in China. E-sports moving from the market to education and how to regulate the market in the end are the research and exploration priorities of E-sports education.

2.2.4 User Portrait According to the Research Report on Operation Status and Strategic Consulting of China’s E-sports Industry from 2021–2027 released by Intelligence Research, the global netizens in 2020 had hit 4.945 billion, a year-on-year growth of 12.6% (Fig. 2.5). The number of global E-sports viewers is 495 million, accounting for 1/10 of global netizens. The chart shows that the number of global E-sports viewers is on the rise year by year, an increase of 11.7%. By 2023, it is predicted that the E-sports viewers will reach 646 million. Recent years have witnessed the vigorous growth of the E-sports industry. With the boom of mobile E-sports, females have increasingly begun to pay attention to and know E-sports. According to public statistics, the proportion of female E-sports users shows an upward trend year by year, and even goes up further. In addition, after observation and analysis of E-sports events and live-streaming on the current market, it can be known that from the arena, commentary to the audience, more and more females are participating in E-sports, and E-sports is now embracing female participants in a more open manner (Fig. 2.6). According to report data, there is an obvious contrast among the educational background of E-sports users in China. Users with high school degree and below, and college degree accounted for about 30% respectively, with bachelor degree came

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2 Development History and Status-Quo of Global E-sports Number of netizens (100 million)

Number of e-sports viewers (100 million)

Fig. 2.5 Number of global netizens and E-sports viewers from 2018–2020. Source Collected by Intelligence Research)

in at more than 30%, and with master’s, ph. D and above degree accounted for a small proportion. E-sports users with bachelor degree are the majority in China, and E-sports users are clearly and evenly distributed in terms of academic qualifications. And it can be seen from the analysis on the income level of E-sports users that there is no direct relationship between personal monthly income and participation (or no participation) in E-sports. Hobbies and interests of E-sports users are highly concentrated, and most people are obsessed in playing games, watching live streaming and viewing events. According to the report data from Intelligence Research, the average income of E-sports fans experienced a small decline in the past two years. The income of global E-sports fans in 2020 averaged 494 million dollars, an increase of 14 million dollars from 2019, but was far lower than 550 million dollars in 2018 (Fig. 2.7). The report also counts the proportion of E-sports users by different fields and countries. From the data in the Table 2.2, we can know that in 2020, the country with a relatively high proportion of specific game users is the United States, 54%; with a relatively high proportion of users being specific professional players is Thailand, 49.0%; and with a relatively high proportion of users joining a specific team is Vietnam, 35.0%. Southeast Asian countries came from behind and became the main area having a majority of E-sports users. E-sports are of gaming nature. In particular as the current core E-sports games set a low bar for intelligence and ability, more and more elderly people and lower-grade

2.2 Development Status-Quo of Global E-sports Industry

Male users

43

Female users

Fig. 2.6 Changing trend of gender ratio in E-sports users in China (Based on open data)

students have begun to take part in E-sports events, and E-sports have gradually shown a noticeable trend of popularization, which is the most prominent feature of E-sports compared to athletic sports.

2.2.5 Business Model (Diversified) So far, the E-sports industry are expanding, and has formed a three-tier (upstream, midstream and downstream), interconnected industrial chain. The upstream of the E-sports industry chain is mainly composed of game developers and operators. The sale of game agency rights, game props, and the provision of related E-sports services are the main sources of revenue for game manufacturers and operators in the upstream chain. Today, the development of client video games, such as LOL and Dota 2 is dominated by foreign countries. Tencent is the most successful game development and operator in China, and the Tencent Game Kingdom with Honor of Kings and PUBG: Exhilarating Battlefield as the core represents the highest operational standard of Chinese E-sports games. The midstream of the E-sports industry chain includes E-sports events and event executor clubs [2].In recent years, E-sports events have gradually scaled up. In 2022, E-sports will appear on the Asian Games Hangzhou as an official event. As the

44

2 Development History and Status-Quo of Global E-sports

Fig. 2.7 Average income of global E-sports fans in 2020 (unit: $100 million) Table 2.2 E-sports users’ percentage in major countries in 2020 -

U.S (%)

South Korea (%)

Vietnam (%)

Thailand (%)

Specific games 34.0

China (%)

54.0

23.0

41.0

42.0

Specific professional players

32.0

34.0

47.0

49.0

31.0

Specific teams

26.0

24.0

16.0

35.0

25.0

Specific anchors

25.0

36.0

26.0

53.0

38.0

Specific professional leagues

23.0

25.0

18.0

48.0

29.0

Games of a specific type

18.0

42.0

22.0

24.0

31.0

Specific livestreaming platforms

13.0

16.0

13.0

33.0

21.0

Specific consulting platforms

10.0

13.0

8.0

26.0

22.0

2.2 Development Status-Quo of Global E-sports Industry

45

integration of E-sports and entertainment content deepens, the celebrity endorsement, star players, internet influential anchors, etc. have brought huge traffic and fans to E-sports, becoming the main force to drive the development of E-sports. The downstream of the E-sports industry chain involves the dissemination and operation of E-sports content, game live-streaming and the operation of E-sports peripheral cultural products, in which the game live-streaming is a huge gap in the market that bears most of the economic transformation in the downstream industry chain. From a global perspective, there are certain differences in the economic concept of business models between Europe and America and South Korea. E-sports events in Europe and America center on live competitions and watching games at the scene, and are dominated by offline activities. This has a greater relationship with the idea of advocating freedom in Europe and America and their relatively loose working hours. In Europe and America, people have more time to engage in leisure activities, which lays an audience foundation for the extensive development of offline E-sports events. And in South Korea, E-sports are one of the pillar industries, and concentrate more on the role of TV media in E-sports event organization and cultural spread [4]. E-sports events and culture in Europe and America mainly target E-sports amateurs, so these countries have a higher pursuit of competition participation and experience feelings. In contrast, the event organizations and operators in Korean E-sports industry pay more attention to the promotion of contestants and events themselves, and don’t really care about the sense of participation of E-sports fans. In addition to competitions, Korean E-sports operators also value the dissemination of E-sports culture, which has a greater relationship with the health perception of E-sports in South Korea. What’s more, from the aspect of profitability, South Korea’s E-sports derivatives economy is greatly developed. In South Korea, the rebroadcasting and advertising of E-sports games is the main source of revenue. Its business model has great dependency on the attention to E-sports events and the sales of related derivatives such as E-sports souvenirs. However, in Europe and America, E-sports sponsors that mostly are electronic software and hardware manufacturers is the leading source of commercial competitions. This is because E-sports participants are an important source of customers for such manufacturers, and in turn, sponsors also hope to maximize the influence of its own products among professional users (such as gamers, etc.) through competitions. Practice Questions 1. How does China’s E-sports industry chain promote the overall development of the industry? 2. Which sectors are now included in the core links of China’s E-sports industry chain?

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2 Development History and Status-Quo of Global E-sports

References 1. Ao, Zhou, and Yu. Bin. 2012. A Discussion on the Origin and Concept of Electronic Sports. Modern Communication 6: 5–6. 2. Yanmiao, Dai. A Brief History of Electronic Sports. Shanghai People’s Publishing House, 201904.423. 3. Yi, Heng, and Qian Hao. 2008. Operation and Management of E-sports Events. Jiangsu People’s Publishing House. 4. Jie, Han. 2017. E-sports and Commercial Modes. Business Culture 20: 60–66.

Chapter 3

Development Environment of China’s E-sports Industry

Abstract From the end of the twentieth century to the present, China’s E-sports industry has experienced a tortuous and rapid development path. From the perspective of the development environment, the development of China’s E-sports industry is closely related to the economic, technological and social and cultural development at home and abroad over the years. At the same time, as an important part of the economic and social culture system, the development of E-sports industry also feeds China’s economic and social culture development to a large extent. Despite the fierce competition in the international market and the rapidly changing industrial environment, China’s E-sports industry has explored a development path that relies on local resources and independent innovation. Nowadays, China’s E-sports industry has gained a place in the global market. This chapter will elaborate on the current development environment of China’s E-sports industry, the local development characteristics of China’s E-sports industry, and compare the advantages and limitations of China’s E-sports industrial development. Keywords Development environment · China’s E-sports industry

3.1 Economic Environment 3.1.1 Global Economic Development Situation Since the 1990s, economic globalization based on the information revolution has dominated the world’s economic development, which has been divided into two roads: globalization and informatization. On the one hand, international economic organizations such as the IMF, the World Bank, the OECD, and various multinational companies have closely linked the global economy, as Xi Jinping pointed out in his keynote speech at the opening ceremony of World Economic Forum Annual Meeting 2017, “economic globalization resulted from growing social productivity, and is a natural outcome of scientific and technological progress” [1]. Economic globalization means building a global economic and trade network to realize the flow of commodities and capital and provide a strong impetus for the © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_3

47

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3 Development Environment of China’s E-sports Industry

growth of the world economy. Therefore every country and industry should go with the tide of globalization to comprehensively motivate the progress of technology and civilization and promote spiritual and cultural exchanges among people of all countries. However economic globalization also brings risks and volatility. Fluctuations in a country, region or field may trigger global economic turmoil. As shown in the Global Economic Prospects published by World Bank, the global economy experienced a historic shrinkage of -3.3% in 2020 as a result of the covid-19 pandemic [2]. On the other hand, informatization is one of the important signs of a country’s economic modernization. Data show that western developed countries have entered a fairly advanced stage of informatization, and social and economic development is increasingly dependent on information technology and the information industry. Many countries have formulated policies to support innovation and digital transformation, always encourage digital-oriented technological upgrading, and are committed to digital industrialization and industrial digitization. Since the twentyfirst century, the global development of the Internet has brought innovative growth in cloud computing, big data, and the IoT information technology. Global informatization is facing a major turning point. The intelligence-driven characteristics are further highlighted, and have gradually become the center of global informatization. In this context, the global economy has become more informatized and digitalized, and the intelligent information network has further connected global industries together. Based on the trend of world economic globalization and informatization, the E-sports industry has ushered in key opportunities. Economic globalization and informatization have laid the foundation for the global industrial layout and digital upgrade of the industry.

3.1.2 China’s Economic Development As shown in the “Statistical Communiqué of the People’s Republic of China on the 2020 National Economic and Social Development”, China’s annual GDP in 2020 was RMB 101.5986 trillion, an increase of 2.3% over the previous year, of which the added value of the tertiary industry was RMB 55.3977 trillion. In terms of national income and spending, the annual disposable income per capita was RMB 32,189, and the national consumer spending per capita was RMB 21,210 (Fig. 3.1). Data showed that China’s economy has returned to its pre-pandemic level in 2020. Under the premise of balancing pandemic control and social stability, China has ensured stability on six key fronts, including employment, finance, foreign trade, investment and expectations, and carried out the task of maintaining security in six key areas: job security, basic living needs, the operation of market entities, food and energy safety, the industrial chain and supply chain, the running of grassroot community. China’s economy has improved quarter by quarter and gradually returned to normal, and is the only one among major global economies that registered positive growth amid difficulties. In addition, 2020 witnessed a “complete victory” in the

3.1 Economic Environment

49

GDP

Year-on-year increase

Fig. 3.1 GDP and growth rate from 2016–2020

country’s fight against poverty and decisive accomplishments in building a moderately prosperous society in an all-round way, all of which have provided a good economic and social environment for people’s lives and industrial development.

3.1.3 Rise of Virtual Economy Over the past 20 years, “virtual economy” has become a buzzword in the global economic field. The rise and development of such economy has become a major opportunity for the growth of many new industries and new formats. Conceptually, the virtual economy refers to the economic activities of virtual capital, which are based on a financial system and related to the circular movement of the financial market, including financial industry, real estate industry, sports economy, gaming industry, collection industry, etc. From the perspective of the industry scale, the scale and growth rate of the worldwide virtual economy now have greatly exceeded that of the corresponding real economy. Especially since the 1980s, the world’s average economic growth rate was about 3%, but the annual increase of international capital flow was as high as 25%. By 2000, the amount of global virtual economy reached US$160 trillion, equivalent to about five times the total world GDP in the same period [3]. As the global investment further is scaled up

50

3 Development Environment of China’s E-sports Industry

and the network technology and electronic money is promoted, the virtual economy will continue being expanded. It is true that the rapid expansion of the virtual economy reflects the long-term development advantages and characteristics of the financial industry, but it also shows that the invested industries are in boom. For example, the digital economy and the sports industry have received attention and recognition from investors, and considerable capital flows to such industries. Similarly, the virtual economy has become an important part and key trend of China’s economy in the future. Research have found through modeling analysis that the current proportion of China’s virtual economy to the real economy is 23.2, far greater than the golden ratio of 16.7 [4]. Considering the virtual economy not only brings economic prosperity, but also contains the risk of “economic bubbles”, it is a key focus issue for China’s and world economy to reasonably plan and balance the development scale and proportion between real economy and virtual economy.

3.2 Social Environment 3.2.1 Development of the Internet and Video Games As the Internet is increasingly popularized and the scale of mobile internet users represented by mobile phone netizens is enlarged, it has laid a technical and audience foundation for the R&D and operation of video games, and the growth of E-sports and its derivative industries. Popular mobile games, live-streaming, short videos and other content in a new form help spread E-sports content, which is a typical example of the Internet and new media empowering the E-sports industry.

The 48th China Statistical Report on Internet Development by China Internet Network Information Center On August 27, 2021, China Internet Network Information Center (CNNIC) issued the 48th China Statistical Report on Internet Development (short for the Report) in Beijing. The Report showed that as of June 2021, Chinese netizens reached 1.011 billion, an increase of 21.75 million from December 2020 with the internet penetration rate of 71.6%, in which mobile netizens amounted 1.007 billion (a rise of 20.92 million over December 2020), accounting for 99.6%, basically flat with December 2020. A billion of internet users has formed the world’s largest, vibrant digital society, and the rapid popularization of mobile internet has provided new opportunities for new forms and drivers [5]. The wide coverage of the internet and mobile internet means that the network digital industry can pool sufficient consumer groups and spending potential.

3.2 Social Environment

51

According to 2020 China Game Industry Report, Chinese game users in 2020 had exceeded 660 million, and the actual sales revenue of the game market had raked in RMB 278.687 billion in 2020, an increase of 20.71% over the previous year, with the growth rate of 13.05 percentage points year-on-year. And it is expected that such revenue will continue to rise. For game market segments, both PC and webpage game market will continue shrinking, and the actual sales revenue and market share have experienced a significant decline, but the mobile game market has risen markedly. Mobile games have become the subject of China’s video game industry and are expected to achieve greater growth with technological upgrading and R&D of product diversification. Regarding the international trade of video games, 2020 saw further expansion of overseas game market. The actual sales revenue of overseas market in independently-developed games was US$15.450 billion, an increase of 33.25% from the previous year, with the growth rate of 12.3 percentage points year-on-year [6]. The increase in the market scale, user size and overseas revenue capacity of video games all has a positive effect on the professionalization and internationalization of China’s E-sports industry.

3.2.2 High Acceptability Among Young Generations, Popularization For one thing, Chinese game users continue to increase. In 2020, game users reached 665 million, an increase of 3.7% year-on-year, of which mobile game users accounted for 654 million, an increase of 4.84% year-on-year. For another, the natural relevance between games and E-sports determines that the E-sports user groups will be inevitably further expanded as game users multiply. Data shows that Chinese Esports game users have maintained steady growth, and reached 488 million in 2020, a year-on-year increase of 9.65%. From the aspect of gender and age structure of E-sports users, Chinese E-sports users are still predominantly male, and such users aged 19 to 21 and 22–24 account for more than half. Extensive exposure of young generations to E-sports will cultivate more professionals and users for the E-sports industry (Fig. 3.2). The above user structure shows that E-sports are now highly accepted by young people in China, and most of them are male users. However, in the long run, the age of mobile internet users shows a downward trend, and young and even young users are increasingly exposed to video games. Without considering negative effects such as game addiction, the young users of these video games will be potential users and players for the future China’s E-sports industry, and will accumulate more young users for the industry. In addition, as female players have an increased understanding of and participation in video games, the number of female E-sports users has grown. Thanks to the promotion of campus E-sports, women’s E-sports and other special activities, as well as the widespread dissemination of diversified E-sports derivatives, E-sports show a more obvious tendency to popularization. The age, gender and even

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3 Development Environment of China’s E-sports Industry

40 Male

Female

.

Fig. 3.2 Gender and age distribution of Chinese E-sports users in 2021 (Source iResearch in April 2021)

professional structure of E-sports users will be further optimized, and E-sports will go closer to the public.

3.2.3 Increased Social Acceptance, Listed as a National Athletic Sport In 2003, the GAS recognized E-sports as the 99th official sport activity, thus basically determining its development road to an athletic sport. Later in 2008, the GAS redefined E-sports as the country’s 78th sport activity and officially classified it within the scope of athletic sports. Judging from the above-mentioned national positioning and the supportive policies of the E-sports industry issued by various regional governments in recent years, the tolerance and cognitive acceptance of E-sports in Chinese society has increased significantly. Other than policy direction, the trend of E-sports industrialization has become the focus and research object of various commercial entities. The E-sports industry trends to cooperate with various industries from venues, hotels, daily necessities, film & television works, tourism, and catering to achieve cross-border integration and fully penetrate into the daily life of users. Such trend indicates that the Chinese society’s recognition of E-sports and the industry has increased, and more new forms of “E-sports + ” life will be created, allowing E-sports to be more closely linked with users’ lives, and further boosting the development and promotion of E-sports and the industry. Under the multiple effects of policies and social industrial entities, the public has gradually distinguished E-sports from video games, and more and more people have increasingly regarded E-sports as a sport activity and accepted the concept of

3.3 Policy Environment

53

E-sports industrialization. E-sports as a formal event in the Asian Games Hangzhou 2022 will definitely be given more attention, which will also provide power for the social development of E-sports and the industry.

3.3 Policy Environment 3.3.1 Industrial Policy The E-sports industry is included in the overall game industry and categorized under the cultural industry, and China regards E-sports as a sport in terms of its management. Since most of the current national policy opinions on the E-sports industry are contained in policy documents about both cultural and sports industry, the E-sports industry policy should be analyzed from two aspects: cultural industry policy and sports industry policy. In terms of cultural industry policy, the development of China’s cultural industry tends to adopt a “government-driven model”, and every development stage of cultural industry cannot be separated from policy-based drive and guidance. After 2000, China entered a period of policy-driven development of the cultural industry, and intensively promulgated multiple cultural industry policies. Since then the cultural industry began to form and gradually rose to a nationally important strategic position. The starting point was the document “Several Decisions on the Entry of the NonPublic Capital into the Cultural Industry” passed at the Fifth Plenary Session of the 15th CPC Central Committee in October 2000. Afterwards a series of policy documents, such as “Plan on Reinvigoration of the Cultural Industry”, “Decisions of the CPC Central Committee on Deepening the Reform of the Cultural System to Develop and Spread the Socialist Culture” and “Cultural Industry Promotion Law (Draft for Solicitation of Comments)” were successively published to encourage twowheel-driven promotion of the cultural industry both at supply and consumer side, and provide industrial guidance in promoting cultural security, letting culture go out, and building a modern cultural market system. Especially in the “Fourteenth FiveYear Plan for the Development of Cultural Industry” issued in May 2021, it clearly said “promoting the integrated development of E-sports and game and entertainment industry”, showing that E-sports are gradually moving closer to the core of the mass cultural industry, the trend of integrated development is more pronounced and a broad market space for the future development of the E-sports industry is created. In terms of sports industry policy, after being classified as a sports activity, Esports were guided by the sports industry policy, and its standardization has gradually improved. The General Office of the State Council took the lead in issuing the “Guiding Opinions on Advancing the Sports Industry” in March 2010. The subsequent release of a series of policy documents, including “Several Opinions on Advancing the Sports Industry and Promoting Sports Consumption”, “Guiding Opinions on Advancing the Sports, Fitness and Leisure Sector”, and “Measures for

54

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the Administration of Sports Standardization” provided guidance for the standardization, industrialization and entertainment of China’s sports, and played an important role in the expansion and structural optimization of China’s sports industry. Later, in July 2016, the Thirteenth Five-Year Plan for the Sports Industry Development” issued by the GAS pointed out that “focusing on ice and snow, mountain and outdoors, water, motor, aviation sports and E-sports guides the consumption-oriented development of fitness and leisure activities”, so the value of E-sports and other leisure activities in stimulating consumption and creating entertainment has received further attention.

3.3.2 Local Support (City Comparison) During the covid-19 pandemic, the E-sports industry has vigorously grown against trend, and its social and economic influence has drawn the government’s attention. Following Shanghai’s proposal to build a “global E-sports capital”, Beijing, Guangdong, Zhejiang and other cities have introduced relevant supportive policy with respect to E-sports supporting facilities, E-sports media construction, establishment of E-sports related enterprises, and E-sports talent training, to help boost the E-sports industry. According to this trend, China represented by first-tier and new first-tier cities have slowly realized the huge potential of E-sports culture and industry to empower cities, and they all have provided dividend policy for the E-sports industry (Table 3.1).

3.3.3 Regulatory Mechanisms The effective regulatory mechanisms of the E-sports industry can enhance the overall industrial level. Although China’s E-sports industry emerged late, the government, E-sports clubs, and relevant social institutions have always been working to find industrial supervisory policies suitable for Chinese context. Such policies related to E-sports are mainly reflected in regulation on internet, games and live streaming. 1. Internet regulation As China accessed to the international internet on a full-featured basis in 1994, internet regulation was introduced simultaneously. At this stage, the country had preliminarily developed the awareness of internet regulation, and had also put forward requirements for technical and content regulation, but such regulation mainly focused on the control of internet access channels, and had not yet touched the supervision of internet business, so this period was the enlightenment stage of internet regulation. A few years later, the Administrative Measures for Internet Information Services (Order No. 292 of the State Council) issued in 2000 marked that China’s internet regulation had entered a stage of systematization. In this phase, China set up a national information leading group and afterwards the group organized to build a team

Support Policies for Promoting the Development of the E-sports Industry in Jing’an District, Shanghai (For Trial Implementation)

Jing’an District Development & Reform Commission of Shanghai Municipality, Jing’an District Commerce Commission of Shanghai Municipality

Support the cluster development of the E-sports industry, help E-sports companies raise their original creativity, support the construction and operation of E-sports venues and the undertaking and participation of E-sports events, and connect with multi-level capital markets

Vigorously support the original production of E-sports, build an E-sports event system, strengthen the construction of E-sports media, optimize the carrier layout of the E-sports space, make the main body of the E-sports industry larger and stronger, construct an E-sports talent training system, and improve the development environment of the E-sports industry

Several Opinions on Accelerating the Healthy Development of the E-sports Industry in Shanghai

Publicity Department of CPC Shanghai Municipal Committee, Shanghai Municipal Administration of Culture and Tourism, Shanghai Administration of Sports

Core content Improve the original creativity of animations and games, deepen the public service of animations & games, and accelerate the construction of the global E-sports capital

Support policy

Organ

CPC Shanghai Municipal Committee, Several Opinions on Accelerating Shanghai Municipal People’s the Innovative Development of Government Cultural and Creative Industries in Shanghai

City

Shanghai

Table 3.1 Examples of local support policies for the E-sports industry in recent years Time

(continued)

01/24/2019

05/20/2019

12/12/2017

3.3 Policy Environment 55

Several Opinions on Accelerating the Innovative Development of Cultural and Creative Industries in Beijing

Several Opinions on Accelerating the Healthy Development of the Game Industry in Beijing

CPC Beijing Municipal Committee, Beijing Municipal People’s Government

Beijing Municipal Leading Group for Promoting the Construction of National Cultural Centers

Support policy

Organ

City

Beijing

Table 3.1 (continued) Time

Encourage high-quality creations, regulate game publishing, establish distribution platforms, strengthen scientific and technological support, stimulate innovative vitality, boost the construction of industrial parks, enhance research of game theories, make games go global, and build E-sports industry clusters

(continued)

12/24/2019

Explore the animation and game 06/21/2018 industry, enhance the competitiveness of the regional animation and game industry through building an animation platform, supporting excellent creative works, and exporting original game products, optimize the business environment of the animation and game industry, strengthen the content censorship of related publications and the platform operation and supervision, and promote the high-quality development of the game industry

Core content

56 3 Development Environment of China’s E-sports Industry

Guangdong province

City

Table 3.1 (continued) Time

Publicity Department of CPC Guangzhou Municipal Committee, Guangzhou Municipal Bureau of Culture, Radio, Film and Tourism

Guangzhou Municipal Three-Year Action Plan for Promoting the E-sports Industry

(continued)

On the basis of the international 08/30/2019 influence of the E-sports industry in Guangzhou, start from leading E-sports companies, high-quality E-sports game products, cutting-edge E-sports teams and E-sports events, provide first-class E-sports venues and integrated E-sports industrial parks and build up the National E-sports Industry Center by 202 l

The Twelfth Plenary Session of the Stick to innovation-driven development 12/28/2020 Twelfth Committee of Shijingshan and promote industrial transformation District, CPC Beijing Municipality and upgrade, and accelerate the construction of a high-tech economic structure

Shijingshan District, CPC Beijing Municipality

Core content

Support policy

Organ

3.3 Policy Environment 57

City

Table 3.1 (continued) Support policy Several Opinions on Accelerating the Innovative Development of Cultural and Creative Industries in Shenzhen

Implementation Opinions of Shenzhen Nanshan District on Supporting the Development of the E-sports Industry, Several Measures by Shenzhen Nanshan District for Supporting the Development of the E-sports Industry

Organ

Shenzhen Municipal Bureau of Culture, Radio, Film, Tourism and Sports

Nanshan District, Shenzhen

Time

(continued)

On the basis of goals to construct a top 01/05/2021 E-sports event venue, the headquarters base of China’s E-sports industry and Guangdong-Hong Kong-Macao E-sports industry center, provide policy guidance and financial support from the aspects of industrial brands, industrial subjects, industrial space, industrial talents, and industrial services

Support enterprises to participate in 04/26/2020 formulating cultural software standards and develop a batch of applications in the fields of digital content, animations & games, and mobile social network, optimize and upgrade commercial game engines, improve independent abilities of game R&D, as well as encourage and support green and healthy original game products and E-sports events with Chinese cultural characteristics and independent intellectual property rights, and support the development and export of boutique game derivatives and services

Core content

58 3 Development Environment of China’s E-sports Industry

Organ

Office of People’s Government of Zhongxian County

Taicang Municipal People’s Government

City

Chongqing

Jiangsu province

Table 3.1 (continued)

Several Policies on Promoting the Transformation, Upgrading, Innovation and Development of Modern Service Industry

Several Policies and Opinions of the Office of People’s Government of Zhongxian County on Advancing the Development of the E-sports Industry

Support policy

Time

Give priority to develop the E-sports industry. E-sports enterprises with tax amount paid of more than RMB 1 million shall be rewarded at 100% of their actual contributions to Taicang local in the first two years and 50% in the next three years

(continued)

06/10/2017

Mobilize various industrial resources in 12/18/2017 the county, and raise no less than RMB 1 billion for E-sports industry development. Start from introducing enterprise and intellectuals, and implement special policies to provide guarantee and support for the development of the county’s E-sports industry

Core content

3.3 Policy Environment 59

City

Table 3.1 (continued) Support policy Notice of Implementation Opinions of Suzhou Municipality on Accelerating the Healthy Development of the E-sports Industry

Organ

Office of Suzhou Municipal People’s Government

Time

(continued)

Focusing on the development ecology 01/20/2021 of the E-sports industry, we are committed to the interconnected development and brand development of regional E-sports industry, and working to strengthen regional market entities and industry carriers through a two-pronged approach, namely cultivation and introduction. Moreover, the document states work requirements for eight aspects, including increasing the R&D of game products, expanding the dissemination format of E-sports content, building a talent training system, and optimizing the industrial development environment, and also points out that the industrial value of the E-sports association and other industry associations should be further explored, and proper support should be provided for E-sports industry alliance and industry associations to build a public service platform

Core content

60 3 Development Environment of China’s E-sports Industry

Implementation Opinions of Xiacheng District People’s Government of Hangzhou Municipality on Building An E-sports Entertainment Town to Stimulate Business Cluster Development (For Trial Implementation) Several Opinions on Developing the E-sports, Culture, Sports, and Digital Entertainment Industry (For Trial Implementation)

Xiacheng District People’s Government of Hangzhou Municipality

Cluster District Management Committee of Wenzhou Zhenan Coastal Advanced Equipment Industry (Jingkai District, Oufei District)

Support policy

Organ

City

Zhejiang province

Table 3.1 (continued) 04/09/2018

Time

(continued)

Further strengthen the market-oriented 12/24/2019 characteristics of the E-sports industry, guide social capital organizations to set up a fund of no less than RMB 2 billion to develop E-sports, culture, sports and digital industry, support leading enterprises to grow bigger and stronger, and help the innovative development of SMEs. In addition, the Decision-making Committee of the Industrial Development Fund acts as a decision-maker to give industrial investment of up to RMB 50 million to related enterprises

A series of new policies, short for 16 Points for E-sports, completely cover both upstream and downstream of E-sports and digital entertainment industry chain, from house rent, lands and subsidies, industrial support, club settle-in, event subsidies to rewards for innovation R&D, and financial support is strong with remarkable effects

Core content

3.3 Policy Environment 61

Office of Chengdu Municipal People’s Implementation Opinions on Government Accelerating the Development of the E-sports + Industry

Support policy

Organ

City

Sichuan province

Table 3.1 (continued) Time

(continued)

Improve the industrial ecological 05/13/2020 construction, establish a multi-level event system, support the introduction of a batch of brand events, cultivate a number of independent IP events, strengthen carrier construction, perfect industrial carrier planning, build a number of professional large-scale E-sports venues with influences across the city and the region, set up a complete industry carrier system, actively promote integrated development, support “E-sports + cultural creation”, enhance the construction of talent teams, bring in versatile talents in the whole industrial chain from E-sports software R&D, event execution to activity operation, optimize the industrial development environment, and properly work on various aspects such as top-level design, policy system, operation guidance, industrial chain expansion, etc

Core content

62 3 Development Environment of China’s E-sports Industry

Implementation Opinions of Yinchuan Municipal People’s Government on Promoting the E-sports Industry

Yinchuan Municipal People’s Government

Management Committee of Xi’an Qujiang New District

Xi’an Several Policies of Management Committee of Xi’an Qujiang New District on Supporting the Development of the E-sports and Game Industry (For Trial Implementation)

Support policy

Organ

City

Ningxia

Table 3.1 (continued) 06/01/2017

Time

(continued)

Seize the opportunity to develop the 03/09/2020 E-sports industry, explore the industrial potential, strengthen policies, take the lead, organize events, and build parks to completely deepen the ecological, clustered, and high-end development of the E-sports industry and speed up the progress of the E-sports industry in Xi’an

Adhere to innovation leadership and innovation-driven development strategies, promote the digital and innovative development of the E-sports industry, build three bases, each for E-sports product R&D, hosting E-sports events and E-sports talent cultivation, and set up two platforms, each for the transaction and release of E-sports products and the E-sports industry service

Core content

3.3 Policy Environment 63

Organ

Department of Tourism, Culture, Radio, Television and Sports of Hainan Province

City

Hainan

Table 3.1 (continued) Six Special Policies of Hainan International E-sports Port

Support policy

Time

Hainan Resort Software Community 06/20/2019 plans to set up a special fund of RMB 1 billion for the E-sports industry, covering the entire industrial life cycle; formulate the “One Thousand Talents Plan” for Hainan E-sports market; increase subsidies and incentives for enterprises that have made outstanding contributions to local finance and taxation; simplify entry and exit formalities to facilitate the internationalization of the regional E-sports industry; simplify the competition approval process and optimize the industry development environment; explore other live-streaming channels outside the network

Core content

64 3 Development Environment of China’s E-sports Industry

3.3 Policy Environment

65

for the coordination of national network and information security. An increasingly improved internet regulatory institution system led China into a new stage of internet supervision. With the above-mentioned leading units as the core, China had basically established a regulatory system and constructed a supervision framework made of multiple layers (network, access, business and content), and focused on the media features of the network to strengthen content supervision. Since 2008, due to the influence of the reform on domestic super-ministry system, the national information leadership system had been slightly weakened, but the dominance of internet regulators had been improved. With the growth of internet industries and the high prosperity in internet-related businesses, new regulatory issues beyond the original scope of content regulation continued to spring up, and such regulation had entered a stage of adjustment and optimization. Issues such as unfair competition, e-commerce and online payment regulation, and network information leakage had been put on the regulatory agenda. In 2014, the country established the Central Network Security and Information Leading Group, and the authorization granted by the State Council to the Cyberspace Administration marked that China’s network regulation had entered a stage of restructuring and upgrading. This stage witnessed higher internet legislation, wider scope of application, deeper adjustment, and increasingly bigger and in-depth topics, which include network security, industrial development, platform responsibility, and business supervision. The gradual improvement of the internet regulation system had laid the foundation for E-sports supervision. The supervision policies at the level of technology, business and content set the macro direction for the formulation and adjustment of special regulatory policies for the E-sports industry. 2. Game regulation In 2009, the GAS Information Center was clearly identified as the competent authority in charge of E-sports, established the E-sports project department, and began to formally take over the management on E-sports activities. However, the regulation of E-sports and games at this stage was still relatively loose and rough. Since 2016, the government promulgated a series of E-sports-related policies and regulations. Such regulatory policies were mainly applicable for the operation and access of game products, operating standards, and youth protection. 2016 saw the release of Notice on the Administration of Mobile Game Publishing Services. Since then, the regulation on the game industry had been frequently strengthened. From stricter censorship of game content to the mandatory requirement for game license numbers, game regulation in terms of platform ports had also shifted from PC games to mobile games, and afterwards mobile games had gradually been standardized. For example, it is stipulated that enterprises operating and distributing mobile online games in China have to obtain the License for Network Culture Business; mobile games without the approval by the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) are not allowed to publish and operate online; users of mobile applications have to register with their real names.

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Meanwhile, a lot of relevant policies had been published to better protect teenagers and promote the healthy development of the game industry. And among them, anti-addiction was the priority. Each game manufacturer had also responded to national calls and starting from its game nature, and drawn up its own anti-addiction measures. In August 2021, the National Press and Publication Administration issued the Notice of Further Imposing Strict Administrative Measures to Prevent Minors from Becoming Addicted to Online Games. Stricter management measures against minors’ overuse of or even indulging in online games should be taken. The Notice says that all internet game providers can only provide one-hour gaming service for those under age 18 in the evening (8:00–9:00 p.m.) on Fridays, weekends and public holidays, and are not allowed in any form to provide gaming service to users who have not registered and logged in with their real names. In the short term, relevant game regulatory policies will affect game products mainly for teenagers, but in general, such policies are the “protective umbrella” for the healthy development of the game and E-sports industry, securing a lasting and healthy ecology of the industry. 3. Live-streaming regulation The censorship of internet audiovisual content in China began around 2007. Institutions represented by the SAPPRFT and the Cyberspace Administration have stipulated the operating licenses, content specifications, and service categories of internet audiovisual programs, and issued several regulatory policies, such as Provisions on the Administration of Internet Audio-Visual Program Service. However no regulatory policy special for internet live-streaming has been published in the short term. In recent years, E-sports live-streaming platforms have mushroomed, but their “barbaric growth” has also brought chaos to the industry. Problems such as low-quality live-streaming content, content copyright infringement and privacy leakage have seriously affected the industry environment. In recent years, China has reinforced the control of live streaming channels and platforms. Since 2016, the government has stipulated that live-streaming institutions without holding the Permit for the Broadcast of Audiovisual Programs via Information Networks are not allowed to carry out corresponding business. In 2016, the Cyberspace Administration issued the Provisions on the Administration of Internet Live-Streaming Services. Afterwards a series of heavy-handed policies were implemented. In April 2017, the Cyberspace Administration closed down 18 live-streaming platforms due to the dissemination of vulgar information. In May that year, the Ministry of Culture also shut down ten webcasting platforms. The National Anti-pornography and Anti-illegal Office also investigated above ten webcasting platforms because of spreading obscene pornographic information. By the end of 2017, the Cyberspace Administration, according to the law, shut off a total of 18 webcasting applications and 12 webcasting platforms, all containing illegal and offending content. Cleaning up the internet live-streaming industry aims to guard the content ecology and competition order of sports live-streaming. These regulations provide guidance for the operation and management of E-sports and related industries in terms of license, market access, user management, and rebroadcast specifications. Thanks to

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the gradual formulation of a series of regulatory policies for webcasting, Chinese webcasting market environment has been effectively improved, and the turbulent situation of barbaric growth has been curbed in time. But on the flip side, we should also be wary of the fact that there are still a part of webcasting platforms and live-streaming users skirting the law and exploit legal loopholes. Besides the characteristics of webcasting and the particularity of the industry, there is still a gap between the current webcasting supervision system and the establishment of a healthy development environment for the webcasting industry. In general, the regulatory mechanisms of China’s E-sports industry is not perfect, and compared with E-sports powerhouses like South Korea and the United States, there is still a certain gap in the regulatory fields of event management, investment operation, and industry education. Due to different context in various countries, full-fledged international E-sports regulatory organizations, institutions and regulations have not yet been formed. Each country still is at the stage dominated by domestic exploration. If they want to further expand the scale and influence of the E-sports industry, they should make more efforts on several aspects, including industrial standardization, fairness, and development, to formulate systematic and targeted policies.

3.3.4 Industry Standards China has made continuous efforts to improve the standards of the E-sports industry. Such standards can be summarized into three categories by the content emphasis. First of all, in terms of setting E-sports standards, as early as 2006, the All-China Sports Federation issued Measures for the Management of National E-sports Competition [7], Measures for the Management of National E-sports Referees [8], Measures for the Registration and Exchange of National E-sports Athletes [9], Measures for the Implementation of National E-sports Athlete Points System, and National E-sports Competition Rules [10]. Led by the Sports Union, this was the first time that China has introduced multiple standards and management measures for E-sports events at once to set industry standards for E-sports development. However on the whole, Chinese national-level trade unions are relatively lagging behind in the management on E-sports industry standards. To be specific, the normative programme failed to keep up with industry changes. Secondly, from the perspective of the self-developed standards by E-sports practitioner institutions, the leading companies in the industry have joined the team who formulate industrial standards independently. Among them, the Tencent E-sports Standard 2018 issued by Tencent in 2018 is a typical example. Tencent as the LPL event official took the initiative to develop the Standards and regulate the event in a detailed and comprehensive manner. The Standards have made clear provisions on various aspects, including team membership, salary and bonuses, team ownership and lineup rules, the independent right to determine player replacement, player equipment, venues, competition area layout and daily arrangements, league format

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and schedule, competition progress, game rules, player and coach behavior, and the spirit of rules. Finally, from the view of improving standards of the E-sports industry, the state and relevant practitioner institutions have continued to expand their attention to E-sports and related industries, and issued a series of normative documents pertaining to the E-sports talent training and E-sports career management. In April 2019, the Ministry of Human Resources and Social Security, the State Administration of Market Regulation, and the National Bureau of Statistics released 13 new occupations including E-sports operator and E-sports player to provide guidance for the improvement of the E-sports industry layout and E-sports professionalization. For many years, China has always been committed to promoting the standardization of domestic E-sports and the industry. In August 2020, the National E-sports Joint Conference was established, and in 2021, National Standard for Professional Skills of E-sports Players was released in 2021. The Standard describes occupational profiles, basic requirements, job requirements and weight table, and clearly defines the range of E-sports activities, job content, skill requirements and knowledge, etc., and it is another key achievement, marking China’s E-sports industry is moving towards standardization.

3.4 Development of the E-sports Industry During Covid-19 Epidemic In 2020, the covid-19 pandemic swept across the globe. In order to control the spread of the pandemic, all parts of the country have successively activated the firstlevel responses to major public health emergencies, and adopted multiple measures such as canceling public activities, delaying resumption of work, and quarantine control. Although the E-sports industry was affected by the pandemic and faced several industrial difficulties and challenges, it exploited its advantages as a digital sport to buck the trend and seized new opportunities in the digital cultural industry, consequently awakening the inherent vitality of industrialization and showing the infinite potential of the emerging sports industry in the future. The pandemic resulted in the failure of traditional sports events to be conducted offline on time. Most of them are postponed or even cancelled directly, causing huge economic losses and also affecting the commercial value and spending power of the industry. Similarly the E-sports industry has been affected to a certain extent. First, offline events have been halted across the board. For example, the LOL in China (LPL) and the Honor of Kings Pro League (KPL), two extremely large-scale E-sports events can usually attract hundreds of spectators to watch the game at the scene. However, the pandemic forced such offline events to be held online. To this end, the rules of the competition system, content output, and personnel arrangements have to be re-adjusted, and logistical guarantees like network speed, production and broadcasting technology have to be changed accordingly. Once problems occur in any link, they may undermine the fairness of competitions and the experience of the

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69

Fig. 3.3 Honor of kings KPL online watching

audience, further triggering chain reactions such as the decline in the popularity of competitions and the reduction of sponsorship by enterprises. Next, some E-sports teams have been distracted by the pandemic and have obtained poor final results due to the lack of professional guidance and training. If events are stagnated for a long time and related brand activities cannot be accordingly carried out, the entire industry will face multiple problems such as business defaults, sharp decline in revenue, loss of players, and club management difficulties, and the event brand will be inevitably depreciated, directly affecting the industry’s performance and the survival of related companies [11] (Fig. 3.3). However, compared with the complete suspension of the traditional culture and sports industry, in which large traditional sports events such as the FA Premier League, NBA, and UEFA Champions League have been successively cancelled, the E-sports industry still has shown its unparalleled advantages for all its events can be transferred to internet. After all, watching games online will not affect the experience too much; players do not need any physical contact; games occupy a relatively small space, and battles can be coordinated remotely, all of which make E-sports events quickly adapt to the new online operation mode, and rapidly advance on the new track. Chinese E-sports Users Increased Significantly During the Covid-19 Pandemic From a global perspective, according to Nielsen survey data, at least 20% of users in the European and American markets spent more time on video games and E-sports live-streaming during the pandemic. According to the Report on

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the Development of Global E-sports Industry 2020 jointly released by Penguin Intelligence, Tencent E-sports, Nielsen and the Global E-sports Federation (GEF), Chinese E-sports users had increased by about 26 million during the pandemic. The Report on China’s Game Industry 2020 jointly issued by the Game Publishing Committee of China Audio–video and Digital Publishing Association and Development Institute of China’s Game Industry showed that China’s E-sports market in 2020 had reached RMB 136.557 billion, a year-on-year increase of 44.16%. This was the first time that China surpassed North America and became the world’s largest E-sports market, accounting for the largest share of global revenue. Besides, data from the professional version of Tianyancha showed that in the first half of 2020, E-sports-related companies registered totaled 1,614, a year-on-year increase of 22%. Sina Technology reported that Tencent, as the leader of domestic game developers and operators, released its financial report for the first quarter of 2020 on May 13. The report revealed that Tencent’s gross revenue was RMB 108.065 billion, a year-on-year rise of 26%, in which online games accounted for RMB 37.298 billion, a year-on-year increase of 31%, with the average daily revenue of RMB 400 million. The inflow of huge cash is due to the expansion of E-sports users and the extension of the user circle during the pandemic. Because the covid-19 outbreak has hindered people from going out, most people choose to go online to pursue pleasure, and video games and E-sports consequently have become one of the most important entertainment activities. Among users, females and people over 45 years old accounted for more than their share in the overall E-sports users. People who watched E-sports events for the first time during the pandemic are new users, coming in at 7%, and they have a certain interest in E-sports. Since then, they have changed from E-sports knowers to E-sports viewers, and then entered the field of E-sports, achieving a high percentage of retention (Fig. 3.4). According to the data shown in the article Special Report on Fighting Against Covid-19 Crisis on China’s Mobile Internet in 2020 published by official QuestMobile account, mobile games independently developed by Tencent Games, such as Honor of Kings and Game for Peace have experienced a sharp increase in registered players during the pandemic (Fig. 3.5). It can be thus seen that the pandemic has facilitated the rapid development of game developers and operators at the upstream industry. Furthermore, the close-off management during the pandemic has allowed people to have a lot of free time, and many E-sports players have moved online due to the stagnation of offline businesses like competitions and brand activities. They have soon become E-sports anchors and attracted a large number of audiences. According to Gamma data, the market size of China’s E-sports live-streaming industry would grow at a rate of about 85%, approximately reaching RMB 14.7 billion in 2020 [12].

3.4 Development of the E-sports Industry During Covid-19 Epidemic

Before 2008

2008-2016

From 2017 to pre-pandemic in 2020

71

During the 2020 pandamic

.

Fig. 3.4 Time of E-sports users first watching games (Source Penguin research platform)

2019 Spring Festival

2020 Spring Festival

Fig. 3.5 Top 5 mobile apps with the longest screen time during the 2020 Spring Festival (unit: minutes) (Source QuestMobile TRUTH)

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3 Development Environment of China’s E-sports Industry Single day of a week

The first week (per capita)

Single day in the finals

The second week (per capita)

Fig. 3.6 Growth chart of audience traffic of LPL spring festival event 2020 (Source Sina Weibo)

On the basis of the April statements published on official DouYu website, audiences visiting the official live-streaming room of DouYu LPL event exceeded 15 million for the first time. According to the data released by the official Weibo account of the LPL events (as shown in Fig. 3.4), the peak concurrent users in a single day (PCU) and the average daily viewing time during the first week of the LPL Spring Season both increased by 70% over 2019, the average daily independent audiences during the second week increased by 30% over 2019, and the number of independent audiences in a single day in the finals increased by 40% over 2019 [13] (Fig. 3.6). In April 2020, the National Development and Reform Commission clarified the scope of new infrastructure. In this context, 5G network has scaled up its coverage and accelerated its building. The E-sports industry has also seized the opportunity to apply 5G technology to upgrade core industrial links, including live streaming, viewing experience and hardware equipment. In doing so, it provides impetus for the industrialization and large-scale development of TV stations, website broadcast and live-streaming platforms at the downstream industry. As E-sports users grow rapidly, many merchants have sniffed out new business opportunities. The lockdown measures during the pandemic and changes in interpersonal communication patterns have driven the development of many derivative industries and spin-offs, such as E-sports clothing, E-sports equipment, E-sports real estate and entertainment. As shown in the Survey Report on Game Industry during Covid-19 Containment Period released by Gamma Data, the revenue of the mobile game market from January to March 2020 hit a new high, surprisingly reaching RMB 55 billion, with a year-on-year increase of more than 49% and a substantial rise month-to-month. It is worth mentioning that due to the ample time during the containment period, E-sports sparring orders skyrocketed. E-sports sparring partners

References

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worked ten hours a day and earned RMB 8000–10,000 a month [14]. Since then, this job has truly entered the public eye. The pandemic has indeed caused some unfavorable effects on the E-sports industry, mainly in offline events, E-sports education and spin-offs. However 5G technologies has improved the viewing experience of the E-sports industry; the online operation has gradually matured; the scale of E-sports users has expanded; the user circle has been extended, and the E-sports brand culture has been widely spread. All of these have raised the value recognition of E-sports and derivative industries and also has helped E-sports become a new sport in the future. Practice Questions 1. What are the problems in the development of China’s E-sports industry? 2. Why it is urgent for the E-sports industry to enhance the awareness of copyright protection? 3. The development of global E-sports can be divided into three stages: budding, growth and maturation, but some researchers think the history of China’s Esports industry can be split into four stages. Please try to analyze the differences between the above two statements through looking up information. 4. What do you think is the most central one of the above-mentioned characteristics in the global E-sports development? 5. Try to analyze the business model of the E-sports industry with examples

References 1. Jinping, Xi. 2020. Jointly Shoulder Responsibility of Our Times, Promote Global Growth. Qiushi Newsletter 24: 4–13. 2. World Bank Group. 2021. A World Bank Group Flagship Report. Global Economic Prospects 6. https://openknowledge.worldbank.org/bitstream/handle/10986/35647/9781464816659.pdf. 3. Yanyan, Pan. 2012. Research on the Relation between Virtual Economy and Real Economy, 1–2. Master Dissertation, Sichuan University. 4. Weidao Risk Institute. 2018. Mongoose Report IV: A Study on the Golden Ratio of China’s Real Economy and Virtual Economy. Quoted from Zhu Xiaohuang “A Study on the Golden Ratio of China’s Real Economy and Virtual Economy”. https://mini.itunes123.com/a/201804 10115252471/2/. 5. China Internet Network Information Center. 2021. The 48th China Statistical Report on Internet Development. http://www.cnnic.net.cn/hlwfzyj/hlwxzbg/. 6. Game Publishing Committee of China Audio-Video and Digital Publishing Association (GPC). China Game Industry Research Institute, 2020 China Game Industry Report, 12/17/2020. http:// www.199it.com/archives/1174167.html. 7. The General Administration of Sports of China. 2006. Provisions on the Administration of National E-sports Competition (For Trial Implementation). http://www.ceg.net.cn/ceg2006/ 2006-09-27/933831.html. 8. The General Administration of Sports of China. 2006. Measures for the Management of National E-sports Referees (For Trial Implementation). http://www.ceg.net.cn/ceg2006/200609-27/933832.html.

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9. The General Administration of Sports of China. 2006. Measures for the Registration and Exchange of National E-sports Athletes (For Trial Implementation). http://www.ceg.net.cn/ ceg2006/2006-09-27/933841.html. 10. The General Administration of Sports of China. 2006. National E-sports Competition Rules. http://www.ceg.net.cn/ceg2006/2006-09-27/933839.html. 11. Journal of Shanghai Sports. 2020. China’s E-sports amid the Covid-19 Pandemic: Everyone Doesn’t Ever Stop [A Story about the Resumption of the Sports Industry], [EB/OL]. https:// mp.weixin.qq.com/s/v3UqjMWB-W0rT4o4VAmFkQ. 12. GAMMA Data, Survey Report on Game Industry During Covid-19 Containment Period. [EB/OL] http://www.joynews.cn/toutiao/202005/0832431.html. 13. Weibo, Sina. LOL Tournaments [EB/OL]. https://weibo.com/5756404150/J1iNZmzXS?type= comment#_rnd1590374434005. 14. CBN. Orders Doubled, More Than Ten Thousand Earned A Month, the Pandemic Fueled Esports Sparring Partners [EB/OL]. https://baijiahao.baidu.com/s?id=1662136635815087509& wfr=spider&for=pc.

Chapter 4

Development History and Status-Quo of China’s E-sports Industry

Abstract In this chapter, we will learn the development history of the China’s Esports industry based on the industry composition, development stage, competitive landscape and management mode. We will also understand the current situation and characteristics of the China’s E-sports industry based on macro and micro perspectives. Keywords China’s E-sports industry · Status-quo of China’s E-sports industry

4.1 Development Overview of China’s E-sports Industry 4.1.1 Industrial Composition China’s E-sports industry chain centers on E-sports events and contains various industrial forms (upstream, midstream and downstream) derived from the events. The upstream of the industry chain includes game development and operation; the midstream includes event operation, E-sports clubs (including team players), and Esports content production, and the downstream includes E-sports live streaming, Esports media outlets and other derivatives. The distribution and integration of various sectors in the chain have pushed the overall development of China’s E-sports industry and furthered the connection between the E-sports industry and other sectors, giving birth to derivative industries with enormous vitality and energy (see Fig. 4.1).

4.1.1.1

Upstream E-sports Industry

The upstream of the E-sports industry chain is on E-sports games and specifically includes game R&D and operation. In terms of game R&D, its core business is to develop game programs or software and hardware, and imposes requirements on art, literature, music, film and TV, and animation. The game R&D in China has experienced long-term changes in game carriers and styles. After the reform and opening up, China’s game industry witnessed the transition of various historical forms such as hourly rental of home © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_4

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Fig. 4.1 E-sports reality show

consoles, arcades and stand-alone games. As internet technology and equipment have progressed rapidly in the twenty-first century, especially in the past decade, online E-sports games have become the mainstream. Rich and diverse E-sports game products have laid the foundation for the development of the E-sports industry. In terms of game operation, its core purposes are, from the R&D and planning stage of game products, to attract, increase, retain and extend product users, stimulate players to continue understanding, updating and paying the game, through a variety of operating methods within products’ life cycle, thus increasing game revenue and derivative value. The E-sports game market in China involves IP holders, game developers, publishers, distributors and advertisers, and media outlets, among which game developers like Activision Blizzard (USA), VALVE (USA), SNK (JP), and Tencent Games (CN), and game operators like Tencent Games, NetEase Games, Perfect World, and Giant Network have dominated the market. However, according to the business practices of related companies, the distinction between game developers and operators is not absolute. Because game developers control the core property rights of games, some are also powerful game operators. It is very common that one company is engaged in multiple businesses. For example, Tencent Games, one of Tencent’s top four online platforms, has gradually formed an industrial development model that combines independent R&D and diversified, external cooperation. With a strong and sound industrial foundation, it has completed a professional layout and weaved numerous segments of online game market together, creating a product network covering all categories. As a result, it has grown into one of the world’s leading game developers and operators and the largest online game community in China, and has always committed to providing global players with

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various game products and services, such as casual games, MMOGs, medium-sized casual games, board games and battle platforms. As the upstream part of the E-sports industry, the advancement in the E-sports game industry has provided the E-sports industry with fundamental game products and the main source of IP, and has become an important front-end resource for the E-sports industry chain to be perfected and extended. The E-sports game industry and the E-sports industry have established achieved a “mutual feeding” relationship in some way. On the one hand, the continuous optimization and upgrading of E-sports games have well prepared for the latter, and in turn, the latter’s boom has brought greater market demand and development possibilities to the former.

4.1.1.2

Midstream E-sports Industry

The main part of the midstream of the E-sports industry chain is E-sports clubs and team players, E-sports events, E-sports content production, etc., in which E-sports events are the core link of China’s E-sports industry chain. First of all, E-sports clubs and team players are the main participants and performers of E-sports games and activities. The so-called professional E-sports club refers to the sports club of professional sports teams with corporate capacity, composed of professional E-sports players and qualified to participate in various professional E-sports tournaments at home and abroad. Judging from the subjects involved in daily operations, the E-sports club is mainly composed of investors, managers, team leaders, media officers and players. Investors are the club’s sponsors; managers are fully responsible for the operation and management of the club; team leaders are mainly responsible for team-related matters, including game participation, training, arrangement and logistics; media officers are mainly responsible for the promotion and cooperation with major E-sports media outlets, including marketing and business development, and players are the core of an E-sports club and focus on training and playing games [1]. Recent years have seen the enhanced control and support by the government for the E-sports industry, improved publics recognition on the industry, optimized development environment for the industry, and more participation and growth opportunities for E-sports clubs. Through sponsorship, signing with live-streaming platforms, monetizing traffic, producing and selling derivatives, and gainsharing of home games, domestic E-sports clubs have gained revenue and gradually expanded their influence. According to the relevant data of LeadLeo Research Institute, as of the end of 2019, there were more than 5000 E-sports clubs in China [2], among which WE (Shanghai Hohan Information Science & Technology Co., Ltd.), IG (Shanghai Aiji Information Technology Co., Ltd.), and LGD (Hangzhou Ai and Emperor Culture and Creative Co., Ltd.) are the main top club brands. Secondly, E-sports events are competitions in E-sports games and conducted in conformity with specific regulations and rules. Such events can connect multiple links in the E-sports industry chain together, and mobilize clubs and club alliances, team players, personnel and institutions in relation to the development and operation of

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E-sports games, event operation, planning and execution, and E-sports media, as well as activate the industry’s vitality. The smooth holding of events relies on operating. Conceptually, event operations are mainly for E-sports games and involve production and sales of related videos. Relevant business entities need to be responsible for the acceptance of game copyright authorization, negotiation and communication with participating clubs, event planning and materials, and venue operation and arrangement. It can be said that event operation is a key link to promote the large-scale and professional development of E-sports games. At present, top E-sports event operators and executors at home and abroad are mainly game developers, and other E-sports companies mostly provide integrated third-party services such as commercialization, artist brokerage, E-sports TV, and E-sports venue operation. Versus Programming Network (VSPN), Banana Culture Gaming and Media, IMBA TV, etc. have experienced fast growth in in E-sports event operation and execution in recent years. Finally, with respect to E-sports content production, the content can be divided into two types: E-sports one and related entertainment one, of which E-sports one is divided into event content and teaching content. Companies in charge of event content optimize E-sports-related audiovisual and image-text material through post processing to turn them into such content products that are popular among users. This type of content especially plays an important role in the cross-border dissemination of E-sports events. In addition, E-sports teaching content is also an important category of E-sports content output. With the rise and development of live-streaming platforms, online E-sports teaching has further enriched such teaching content.

E-sports Entertainment Content The entertainment part related to E-sports mainly means E-sports entertainment content launched by related companies. For example, KeaHoarl rolled out an E-sports reality show named Five Wolves of KeaHoarl for the first time in 2014. The show was more relaxed and funny than ordinary E-sports videos and had attracted a group of brand fans. It, to a certain extent had did work in brand promotion and popularization of industrial knowledge. It can be thus known that the E-sports content production is an important link for E-sports to enhance social recognition and influence. With diversified E-sports content and joint efforts of various media outlets and live-streaming platforms at the downstream of the industry chain, the communication capacity of content is enhanced to break the existing audience circle of E-sports and industrial influence.

4.1 Development Overview of China’s E-sports Industry

4.1.1.3

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Downstream E-sports Industry

The downstream of the E-sports industry chain is dominated by various media outlets and live-streaming platforms, which are responsible for content distribution and communication [3], an integral part of E-sports promotion and industrial operations. From the perspective of media service categories, E-sports media includes not only vertical media such as Sina E-sports, YY.COM, and Penguin E-sports, but also non-vertical media such as Sina Weibo, Tencent Entertainment, IFeng News, and Kuaishou Live. In recent years, mainstream media have frequently reported on related E-sports content. For example, in 2018, the official CCTV Weibo used to introduce E-sports knowledge to the public. This phenomenon not only proved the existing trend of E-sports popularization, but also was an effective drive for the further cross-industry penetration of E-sports. In terms of content forms, E-sports media can be divided into print media, TV media and network media. Increasingly rich E-sports media forms have provided more complete communication ecology for spreading and sharing E-sports content, and improved the dissemination efficiency and effectiveness of such content in terms of viewing value and experience feeling. However, although the birth of new media forms squeezed the living space of traditional ones, the influence of traditional media on the dissemination of E-sports content still exists. New and old media forms coexist, and are engaged in communication activities for differentiated audiences. Around 2014, live-streaming platforms were introduced into Chinese E-sports market. As technology like the superposition of live-streaming signals, video keying, VR/3D scenes develop, live-streaming platforms have become a dark horse of Esports media outlets, and E-sports live-streaming has become a popular content dissemination channel for E-sports users across the country. This channel has greatly affected the viewing experience of Chinese E-sports users and has played an important role in spreading E-sports content and improving the E-sports copyright market. According to the statistics from 2019 Gamma Data (CNG), the part generated by game live-streaming accounted for an important part of the overall revenue of China’s E-sports industry, coming in at 9.2% in 2019. The growth of the game live-streaming industry incubated a number of vertical live broadcast platforms and famous anchors. Huya Live, Douyu, Panda TV and other platforms leveraged the great momentum of the E-sports industry to fully explore their own advantages. For example, Huya adopted a technological research model (5G+Cloud+X) to gradually build a 5Gbased technology ecological environment and has become a leading enterprise in the field of E-sports live broadcast. In addition, medium and short video platforms such as TikTok, Kuaishou, and Bilibili have accelerated their market layout and improved E-sports related sectors, and have become a part of the E-sports media. The technical advantages of the E-sports live-streaming industry determine the rapid iteration within the industry. Major E-sports live broadcast platforms have been always actively updating and fiercely competing in products and functions. Since 2020, platforms such as Huya, Douyu, Penguin E-sports and BiliBili have added a replay feature for E-sports events, which has met the needs of live-streaming

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users to review classic moments of events and significantly enhanced users’ gamewatching experience. Other than such general functional optimizations, in 2021 Huya Live formally launched the Interactive Open Live Platform, which bases on seven core open features: interactive live games, loot drop in live-streaming room, live commerce, one-click teaming-up, one click to broadcast, game info panel and anchor clashes to bring a series of new customized live-streaming interactions to game manufacturers and studios. These new gameplay and functions not only raise the stickiness and attractiveness of the live broadcast platform to game manufacturers, anchors, and users, but also establish new links for game operations and help the platform achieve diversified revenue. Besides, multiple E-sports live-streaming platforms break through old interactive modes of sending bullet comments and giving rewards through integrating cloud gaming, live commerce and game advertisement and, so as to fully satisfy the viewing needs of users and deeply incorporate the game operation into users’ interactive behaviors during live streams. By doing so tightly binds entities such as platforms, game manufacturers, anchors and brand sponsors together, obtains more diversified e-commerce and advertising revenue, interesting interactive plays and meaningful content output, and creates a new growth pole of platform users.

4.1.1.4

E-sports Derivative Industries

With the improvement of living standards, the change of consumer thinking, and the upgrading of entertainment needs, E-sports users have begun to pursue higher-quality game-viewing experience and leisure and entertainment methods. In order to reach the needs of users, E-sports industry practitioners and investors keep trying to tap the underlying commercial value of E-sports events, and industry entities in the field of equipment manufacturing, real estate operations, theme tourism, data services, entertainment brokerage, and education and training have gotten on the board one after another. In this context, the derivative industries of E-sports were born and a variety of new formats of “E-sports+”, such as “E-sports + city/real estate” and “E-sports + pan-entertainment” were created. “E-sports + city” is one of the planned development directions for many important cities in China, and such plans involve urban real estate and cultural and entertainment infrastructure. Cities like Shanghai and Chengdu all have considered the local layout of the E-sports industry in their development plans for the next few years. These cities don’t ride the wave of E-sports blindly. The trend of guiding and supporting the E-sports industry has been frequently mentioned in government documents, such as the Opinions on Promoting the Transformation and Upgrading of the Cultural Entertainment Industry issued by the Ministry of Culture in 2016, in which clearly stated “supporting the introduction of regional, national and even international game and entertainment competitions to promote the industrial development”. Driven by related policies, the combination of E-sports and cities has fallen into place rapidly. “E-sports + real estate” has also become a popular investment direction in the eyes of entrepreneurs in the E-sports market and even practitioners

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in various industries. E-sports venues, E-sports centers, and E-sports industrial parks are flourishing everywhere. For example, Xi’an has established Qujiang E-sports Industrial Park, and major E-sports clubs have settled in their home cities. Tencent E-sports also came up with the “development plan for E-sports cities”. In addition, “E-sports + pan-entertainment” blends E-sports with athletic sports, culture and entertainment deeply. Because E-sports are characterized with distinct entertainment elements, their main audiences overlap to a large extent with these of pan-entertainment industry. Under this backdrop, a batch of E-sports panentertainment industry categories with content authorization as the core have been created and a number of “E-sports+” culture, entertainment and sports industries, such as literature, anime, film and television, fashion, etc. have been born. Cultural and Entertainment Products Related to E-sports have Received Wide Attention In terms of literature, in 2018, Kulou Jingling (literally translated as “skull elf” in English), a platinum writer at China Literature started to write League of Legends: My Time series, which is the first E-sports novel with authorization of the LOL official. Due to their innovation and originality, the book series taken as the official staple were promoted to the entire network platforms and received great social response. At the same time, a number of E-sports-centered web novels were adapted for film and television, and achieved success. From Go Go Squid! and The King’s Avatar in 2019 to You Are My Glory in 2021, such works all gained continuous attention. Generally, these novel-based film and TV works take E-sports as the heart of the story, and are struggle and love stories about E-sports practitioners and fans with star cast. This shows that E-sports and such pan-entertainment cultural products are strongly compatible and adaptable, and “E-sports + pan-entertainment” features strong vitality and industrial value. On the one hand, this kind of E-sports derivative industries can optimize the game-viewing experience and enrich the cultural and entertainment needs of users, thereby being widely welcomed by E-sports users and even the general public; on the other hand, such derivative industries, under the supervision, guidance, and support from the government and related authorities, may develop into an important part of regional cultural-related industries, and even become a new growth point for regional industrial transformation, presenting huge market prospects. On the whole, “E-sports+” brings huge opportunities for industrial growth.

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4.1.2 Development Stage China’s E-sports industry has experienced four stages: exploration period, development period, growth period and explosion period.

4.1.2.1

Exploration Period (2013–2017): China’s E-sports Industry Emerged Amid Controversies

In the 1970s, E-sports in European and American countries were game events spontaneously initiated by players, and the game guild was the embryonic form of modern E-sports clubs. E-sports in China started late and was mainly influenced by ethnic Chinese and overseas students in the late 1990s. In 1996, E-sports sprouted in China, and some foreign video games were brought into China by ethnic Chinese and Chinese overseas students. The built-in LAN battle function in E-sports games made China’s first generation of net surfers find the fun of competition. In 1997, a small number of players had established game organizations, and early E-sports teams had been accordingly formed. In 1998, there were some unofficial events appeared in China, but their scale was quite limited and far from to form an industry. The birth of a new industry often depends on the emergence of an iconic product [4]. In 1998, StarCraft: Brood War jointly produced and released by Blizzard Entertainment and Saffire Entertainment was introduced into China as a RTS game. It was reputed as an elaborate expansion pack and refreshed the then highest level of RTS games, because it added new game units, technology, maps, and background music, and adjusted the balance games. In 1999, Valve Software officially released the FPS game Counter-Strike. These two historically significant competitive games had an important impact on the first generation of Chinese E-sports users. Subsequently the first batch of E-sports games like CS had successively entered the Chinese market, opening the exploration period of China’s E-sports industry and quickly setting off the first wave of E-sports games in China. Since then, a number of third-party E-sports fighting platforms appeared in China, and E-sports games were increased accordingly. Domestic players copied foreign game guilds to spontaneously form teams or associations, and amateur players trended to transform to be professional. In 2003, the GAS recognized E-sports as the 99th official sport. This became a key opportunity for E-sports to achieve greater development in China, and also laid the foundation for the development and management of China’s E-sports as a sport. However, due to the close connection between E-sports and games and some negative cognition of games in China, E-sports in the country still have to move forward amid controversies.

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E-sports in China Moved Ahead Amid Controversies In 2004, the SAPPRFT issued the Notice on Prohibiting the Broadcasting of Computer Game Programmes (hereinafter called the Notice). The Notice gave all game programmes on satellite TVs and open-circuit channels a big blow, and the mature and influential E-sports World shown on the CCTV sports channel was also suspended. But in general, at this stage, E-sports in China started from scratch; the earliest batch of professional players begun to appear; regional E-sports clubs were primarily established; domestic Esports events were basically shaped. For example, in 2005 Li “Sky” Xiaofeng won the WCG Warcraft III championship. In 2007, Games TV cooperated with Gamefy channel to organize the comprehensive E-sports Game League (GLeague, National E-sports TV League) and so on. Although a sound E-sports industry chain failed to be formed, the exploration at this stage paved the way for the future development of China’s E-sports industry.

1. Development period (2008–2012): The transformation of game products to casual games In order to welcome the World Cyber Games 2009 (WCG), Chengdu officially relisted E-sports as a competition event at the 11th Sports Games in 2008. On December 29 that year, the GAS organized and combined existing sports events, and redefined E-sports as China’s 78th sport activity. So far, E-sports were formally included in the scope of athletic sports. In 2009, the GAS Information Center established the E-sports Department, showing that the country had made more efforts to guide and regulate the E-sports industry. However the internet economy was, after all, a novel industry at the beginning of the century, so when facing the new and complex internet business format, the domestic regulators still needed time to cultivate the awareness of supervisory services and improve supporting policies and facilities. There indeed existed loopholes in initial supervision and review by the government, but the main problems fell on unclear distribution of powers and responsibilities and cross-management among such management departments. As a result, E-sports entered a dilemma of suppression and support. In terms of game products, international popular games such as StarCraft II were landed in China. The share of online games in China’s E-sports product market was increased significantly. The previous generation of StarCraft, Warcraft, CS and other game products were gradually out of date, but the core position of RTS games in the original E-sports products were replaced by ARTS or MOBA and casual fighting ones, Casual E-sports game products like LOL and Dota 2 had grown into a cult in China. At that time, a group of excellent E-sports players emerged in China because casual E-sports games were highly ornamental and entertaining, and easy to play. For example, in 2012, the WE team won the first Chinese world championship of LOL at IPL5, and the team leader Misaya was even hailed as the world’s No. 1 Player. For

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a while, domestic E-sports users was energized, and E-sports and related industries were received a wider range of social attention. For E-sports events, the successful WGC 2009 convened at Chengdu marked an official debut of the world’s top E-sports events in China. During the same period, two online games CrossFire (CF) and Dungeon & Fighter (DNF), whose agent was China’s Tencent, were shortlisted for WCG competitions. In September 2011, another game League of Legends distributed and developed respectively by Tencent and American Riot Games was listed as an official game in WCG 2011, indicating that Chinese game agents had gradually adapted to the operating rules of international events and played an increasingly important role in large-scale competitions. With the concerted efforts of multiple industrial entities, including event planners and executors, game R&D operators, clubs and E-sports teams, China’s E-sports game products and events were thriving vigorously. In a nutshell, E-sports in China had developed at a relatively fast speed during this period. To be specific, E-sports events had gotten a lot of official support; the international influence of China’s E-sports had been substantially improved, and the R&D and agency capability of local E-sports game products had been enhanced. In addition, as media value and commercial effects of E-sports showed up, E-sports had attracted more vertical industry players to join, which laid the foundation for extending the E-sports industry chain and establishing the industrial ecology. 2. Growth period (2013–2017): In-depth extension of the E-sports industry chain Local governments taking the initiative to hold international E-sports events opened the third stage of E-sports development in China. In 2013, the GAS announced the formal establishment of the national E-sports team. Hosted by People’s Government of Yinchuan Municipality, the World Cyber Arena (WCA), the successor of the WCG that was cancelled in 2014, filled the corresponding gap. At the WCA finals held as scheduled in Ningxia Yinchuan in October, two top Chinese games, Cangqiongbian and Xiaobingbing Legend, were introduced to the international competition system for the first time. Since then, new Chinese E-sports clubs represented by EDG, Newbee, QG, etc. had appeared in various international events, and China’s E-sports industry had opened up a new situation. With the development of PC and mobile device technology, the country’s Esports had entered a period of rapid growth. The E-sports industry at this stage mainly focused on industrial policies to accelerate the layout and fast market entry of E-sports live streams.

E-sports Related Support Policies were Introduced China officially issued the Provisional Regulations on the Management of Esports Events in 2015, which was the first support policy and standard for the development of the E-sports industry at the official level. Subsequently, in the Thirteenth Five-Year Plan for the Development of the Sports Industry

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and the Development Plan by the Ministry of Culture for the Cultural Industry during the Thirteenth Five-Year Period, corresponding requirements for Esports development had been mentioned many times. And then, major vertical and integrated live-streaming platforms had stepped into the E-sports industry, and they not only enriched the E-sports industry chain and promoted Esports. Industrial forms like “E-sports + e-commerce”, “E-sports + KOL”, “E-sports + copyright operation” had extended the industry chain; the E-sports industry ecology built around E-sports events and E-sports stars had further been expanded both in depth and breadth, and the industrial forms associated with E-sports had become more diversified. As industrial players developed and the industrial operating system was improved, public opinions on E-sports had been changed, and the society’s demand for E-sports viewing and experience had increased. In the Notice of Completing the Declaration for Proposed Enrollment Major of Higher Vocational Schools in 2017 issued in 2016, E-sports and its management was included into supplementary majors of higher vocational schools. Domestic colleges and universities represented by Communication University of China began to pilot E-sports education. By doing so would reserve talents in technology R&D and operation and management for China’s E-sports industry, and lead the industry into a stage of explosive growth. 3. Explosion period (2018 to present): New ports and new technologies help develop the industry Thanks to the popularity of smartphones and the development and promotion of diversified E-sports devices, E-sports ushered in an era of multi-port prosperity for arcade, PC, and mobile terminals, providing conditions for product expansion and updates. A variety of game products have copied this way to expand access modes to multiple ports. For example, the hit game PUBG not only has a mobile version with multiple escape games, but also leads the trend of playing its computer version, successfully creating a linked multi-port game IP system. With the help of game products, E-sports have been in full swing. When local game manufacturers took the lead to improve the competition system, LPL has grown into one of the most successful E-sports events in China. Honor of Kings and CrossFire: King of Gun Battle represented by events such as KPL and CFM have rode the wave and become domestically leading and internationally renowned game brands with the combination of corresponding events. The Chinese E-sports club RNG team won the world championship of 2018 LOL Mid-Season Invitational (MSI). Since then, Chinese clubs have performed well in international arenas and won consecutive titles. This time had completely set off the carnival of E-sports fans across the country, and showed the approaching of explosive growth of China’s E-sports industry. With the prevailing of E-sports events and clubs, e-commerce brands such as Suning and JD, and traditional sponsor brands such as L’Oreal and Mercedes-Benz have begun to step into the field of E-sports. The business model of E-sports in China

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has gradually improved, and relevant policies and regulations and industry standards have been prepared for the benign development of the industry. In 2017, Tencent E-sports Standard 2018 released by Tencent E-sports made provisions on all aspects of E-sports from competition levels, competition system, referee rules, player rules, coaching rules, equipment standards and others. In 2018 LEC also published the plan for 2019 alliance reform. Although industrially recognized rules have not yet been formed in China, main players of the E-sports industry, on the basis of the mature models of the traditional sports industry, have actively clarified the rules, and a regulated China’s E-sports industry ecology is gestating. The Advantages of E-sports as a Digital Sport are Highlighted in the Context of the Covid-19 Pandemic Perfect World CEO Xiao Hong said at the Beijing International E-sports Innovation and Development Conference of the 2020 Beijing E-sports series of activities that technological innovation made “super-interactive” E-sports possible and has accelerated the migration of the E-sports industry to online and cross-industry ecological reproduction. Although E-sports events such as LPL and KPL have been moved online due to the pandemic, they have reduced losses to a large extent compared with traditional industries that lack online channels. In addition, in recent years, a series of popular E-sports film and television works and related derivatives, including Go Go Squid! and The King’s Avatar have set a model for the adaptation, popularization, commercialization and cross-industry cooperation of E-sports IP. In 2021, E-sports were written into the Fourteenth Five-Year Plan for the Development of Cultural Industry. With policies that encourage integrated development between E-sports and game and entertainment industry and in the market environment of diversified needs, China’s E-sports industry will definitely gain a broader, healthier development space.

4.1.3 Competitive Landscape The competition in China’s E-sports industry mainly exists among E-sports game manufacturers, E-sports clubs and regions. With the improvement of the E-sports industry chain, such competition also appears between E-sports live-streaming platforms and other E-sports derivatives and service providers.

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4.1.3.1

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Competitive Landscape of E-sports Games

The E-sports game industry is at the upstream of the E-sports industry chain, and is the most economically profitable part of the E-sports industry, because it controls popular derivative events and authorized game products. Data show that in 2018, China’s E-sports game market revenue reached RMB 82.41 billion, a year-on-year increase of 12.8%; in the first half of 2019, the number hit RMB 51.32 billion, a year-on-year increase of 22.8%, showing strong growth. The competition within the E-sports game industry can be divided into competition among different device types, different game categories, and different game manufacturers. First of all, E-sports games can be divided into two types: mobile games and client games by the types of devices games rely on. From 2015 to 2016, PC E-sports dominated the entire China’s E-sports industry. However, as the Internet developed and users’ surfing habits were changed, mobile E-sports rose rapidly and its market share increased, and mobiles games like Honor of Kings had grown into a cult. In 2018, the market share reached 54.5%, and the market size exceeded RMB 60 billion, outstripping the revenue of client E-sports games for the first time. In the first half of 2019, the market share had further raised to 62.0% [5]. It could be seen that the market scale of mobile E-sports games had been continuously expanded. With the improvement of mobile communication equipment and mobile internet technology, mobile E-sports games will embrace richer application scenarios and provide superior user experience. Consequently, the market share will further increase. Secondly, the popular types of E-sports games in China mainly include real-time strategy (RTS), action real-time strategy (MOBA), first-person shooter (FPS), and sports simulation and card games. Different game types vary with different features and place demand on players’ skills. The biggest highlight of FPS is the change of the player’s point of view. FPS games make full use of the screen as a medium for the player to interact with the game world, through building and shifting the point of view in the screen, in order to bring an immersive experience and strong visual impact for players. Such games are the best in all types to provide a real-time sense of identification and reality. RTS games emphasize real-time strategies, and place higher demand on players’ controls. While operating each combat unit efficiently, players have to think about strategies and play at high intensity. MOBA players are divided into two teams in the game, and the two teams compete with each other in scattered game maps. Due to no need to deploy organizational units such as buildings, resources, and training arms that are common in RTS games, MOBAs are easy to play. As non-professional players start to play games, MOBAs have become the leading category in the E-sports game market. Finally, the competition in the E-sports game industry is more reflected in the competition among major game companies (see Figs. 4.1, 4.2 and 4.3). For one thing, international game developers and operators have occupied an important position in China’s E-sports industry ecology. Foreign game tycoons such as Microsoft, Sony, Activision Blizzard, Nintendo, etc., utilize their strong patented technology reserves and game IP resources to cultivate a huge consumer group in China. For another, Chinese game R&D and operation companies have caught up. On the basis of China’s

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strong market, the consumer sector has grown rapidly, and Tencent and NetEase have held more events, while some enterprises like Giant Network and Hero Entertainment are mainly engaged in developing E-sports game. Moreover China’s E-sports industry is clearly partitioned by domestic E-sports companies. It can be found from the revenue data of game manufacturers in 2020 that Tencent and NetEase still accounted for more than half of the game industry, and the industry as a whole showed a “2+N” competition pattern (Fig. 4.4 and Table 4.1).

Competitive Landscape Among E-sports Clubs From the perspective of international environment, E-sports clubs have experienced a development process from individual players, game guilds to the formation of professional clubs. Chinese E-sports clubs have also grown out of nothing and developed into internationally influential ones from locally active organizations. Statistics showed that there are now more than 30 professional E-sports clubs in China. These clubs all have corporate legal personality and professional E-sports players, and participated in professional leagues at all levels for lucrative purpose. Some clubs and teams players have also taken part in international tournaments and won excellent results. Recent years have seen rapid progress of Chinese Esports clubs and rise of a group of outstanding E-sports players. These results can be down to two factors. For starter, the promotion of E-sports events at home and abroad has laid the foundation for the rise of local E-sports clubs in China. Several top E-sports clubs in China such as IG, LGD and RNG have ever won awards in

Fig. 4.2 Concept map of Qujiang E-sports industrial park

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Fig. 4.3 LOL player Misaya

2019 game business

2020 quarter game business

Fig. 4.4 Game business revenue of main listed companies in China

international competitions. This not only enhances the comprehensive influence of domestic clubs, but also contributes to building up a relatively diversified competitive landscape for China’s E-sports club industry. And then, the operation and reform on E-sports industry players have created conditions for the maturity of E-sports clubs.

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Table 4.1 List of main E-sports clubs in China Main E-sports clubs in China Founding time Main games Team World Elite

2005

LOL, COS

LGD Gaming

2009

Dota 2, LOL, Overwatch, Honor of Kings

Invictus Gaming

2011

LOL, Dota 2, CS:GO, Overwatch

Vici Gaming

2012

Dota 2, LOL, Overwatch, CS:GO

Royal Never Give Up

2012

LOL, Overwatch, Honor of Kings, Freestyle

QMG Gaming

2012

LOL, Overwatch, FIFA

EDward Gaming

2013

LOL, Hearthstone, Honor of Kings

Newbee Gaming

2014

Hearthstone, FIFA, Heroes of the Storm, LOL, Dota 2

QG Reapers

2015

LOL, Paladins, FIFA

At the end of April 2017, Riot Games and Tencent jointly announced that the LPL would carry out the format reform and adopt the home-and-away system. This move not only had generated huge commercial value, but also contributed to the intensive development of Chinese E-sports clubs. As far as the survival of E-sports clubs concerned, the income of professional E-sports clubs in China comes from sponsorship, clubs’ official live-streaming platforms, participating in commercial activities, peripheral product development, and gainsharing for various competitions. Among them, the part of clubs’ official livestreaming platforms and commercial promotion activities is the main source of operating income for Chinese professional E-sports clubs, accounting for about 50–70% of all. So far, compared with other professional clubs of traditional sports, there are few ways for E-sports clubs to profit. For the time being, only few leading Chinese clubs such as WE, EDG and OMG can obtain sponsorship from computer hardware manufacturers and live broadcast platforms, while other second- and thirdtier clubs can only get on with narrower revenue channels and greater pressure to survive. However, in the long run, after the E-sports industry enters a stage of mature industrialization, the profitability it can mobilize will be considerable.

4.1.3.2

Regional Competitive Landscape

In recent years, various provinces and cities in China have gradually noticed the huge development potential and comprehensive benefits of the E-sports industry, so they have accelerated the arrangement of related formats in the E-sports industry. At this point, the regional competition pattern of the domestic E-sports industry has been formed (Fig. 4.5).

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Nanjing Haikou Shenzhen Hangzhou Guangzhou Beijing Chongqing Suzhou Chengdu Shanghai

Fig. 4.5 Top 10 Chinese cities holding E-sports events in 2019

Shanghai Effect According to the distribution of the cities where Chinese TOP50 E-sports clubs are located in 2020, more than half of the TOP50 are densely seated in Shanghai with obvious agglomeration effect. And a few E-sports clubs are also settled in first-tier and new first-tier cities like Suzhou, Hangzhou and Shenzhen. Judging from the holding of E-sports events in recent years, it can be known from the 2019 China E-sports City Development Index jointly released by Huya Live and E-sports World, that in 2019 Shanghai held 76 E-sports events, followed by Chengdu, 13 events, and Suzhou adjoining Shanghai and Chongqing tied for third place, 11 events (see Figs. 4.2 and 4.3) [6]. It can be seen that Shanghai, as one of the most developed cities in E-sports and one of the most tolerant and creative cities in China, has a relatively high acceptance of E-sports, and its goal of building an E-sports capital attracts the arrival of a number of Esports clubs and E-sports activities. Therefore, Shanghai has become the most popular area in China’s E-sports industry. According to the Assessment Report on 2020 China s-sports City Development Index issued by China Audio–video and Digital Publishing Association (CADAP) at the Global E-sports Conference (Shanghai) in August 2021, the Report worked out a comprehensive ranking of E-sports city development index, on the basis of E-sports industry data, research data and public opinion data from July 1, 2020 to June 30, 2021. Shanghai ranked first with 78.7 points, followed by Beijing 70.9 points, and Guangzhou 69.7 points [7]. In addition, the Report showed that new first-tier cities such as Chengdu, Hangzhou and Nanjing are also among the top ten. The overall layout of the E-sports industry is relatively balanced among the top 10 cities, indicating that E-sports in all parts of the country are developing steadily.

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Apart from Shanghai’s leading position in the industry, E-sports are advancing in a balanced manner in other regions, but at the same time, we should be alert to potential problems such as homogenization.

4.1.4 Management Mode The management mode of E-sports is mainly reflected in the operation system, revenue model, and practitioner management of E-sports events. As for the management on E-sports events in China, an operating model has been basically formed, which takes national laws and regulations as a yardstick, the National E-sports Joint Conference as the management organization and structure, and various participants as main market entities. First in terms of the operating system, Chinese current E-sports events are presenting a trend of leagued development. For example, the LPL and NBA both adopt the combined management system of “leagues + clubs”, and game manufacturers are predominant in such system. Specifically the league management system employed by the LPL is composed of game manufacturers and clubs, while the counterpart adopted by the NBA only consists of clubs and the league itself due to the absence of the third party, game manufacturers. Next for revenue and distribution model, the LPL adopts a revenue sharing system. In other words, its game manufacturers and clubs will share part of their revenue with each other. Such part of revenue involves each party in the league and includes the income from the live-streaming platforms, the sponsorship commercialization, the sales of spin-offs, and team endorsements and commercial performances. Coincidentally the NBA also uses the same system with the LPL. This profit model can prevent popular teams from monopolizing and protect the living space and competitiveness of small and medium-sized teams. Clubs will also split a large part of the revenue to the bonus pool, 50% of which will be equally divided by 30 clubs in the league.

Minimum Pay System and Salary Cap System For the practitioner management, different sports leagues have their own way to allocate player salaries, and the minimum pay system and the salary cap system are two representative cases. Each team of the LPL event, in accordance with their team agreement, must pay its registered players the fixed minimum salary and its registered coaches the fixed pay. Other than the basic wage, the player group will be allocated 35% of the league’s total revenue. The NBA implements a salary cap system, which limits the maximum amount of wages that a team can pay its players. The salary cap of each team is the average number obtained by dividing 48% of the total revenue by the last-season number of NBA teams.

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This system not only safeguards the rights of players, but also can avoid the monopoly by teams [8]. Besides, the management of domestic E-sports also involves culture and education aspects. As for culture, the National Press and Publication Administration held the enterprise training meeting of accessing the anti-addiction and real-name authentication system for online games on February 25, 2021. At the meeting, all game companies were asked to complete the connection work of the anti-addiction system before May 31, 2021. Since June 1, those companies without access to anti-addiction system would cease operating. This move indicated that the country has enhanced the antiaddiction control on video games. In the future, the use of E-sports and game products by young people will be guided in an all-round and standard manner. As for education, recent years have witnessed the prominence of research and professional orientation of E-sports users, E-sports education in China has developed rapidly. In September 2016, the Ministry of Education added 13 majors, including E-sports and its management, which mainly focuses on game product development, IP event creation, professional team operations, etc. and aims to cultivate professional compound talents in E-sports education and training. In 2017, a group of colleges and universities represented by the Communication University of China set up a major in digital media art (digital entertainment) to train talents in game planning, E-sports operations and program production. These colleges and universities adding the E-sports major can alleviate the lack of professional talents in the future and further advance the industry, but the subsequent discipline standards, support of teaching materials, and discipline assessment still need to be further explored. It can be thus seen that the management on E-sports in China centers on event management and is gradually being incorporated into the sports management system. However, in terms of the complex participants and business relationships in the Esports industry chain, the existing management system and model are still not sound. A complete E-sports industry management system needs to absorb common opinions after discussions from the representatives of all parties, such as game manufacturers, clubs, players, educators, researchers, etc., so as to take into account the needs of industry standards and achieve the healthy and stable development of the E-sports industry.

4.1.5 Core Links With the continuous refinement of the E-sports industry chain and the maturity of China’s E-sports industry, the core links of the industry chain can be divided into three sections: game operation, event operation and media.

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Game Operation

In the E-sports industry chain, E-sports game operation is at the back end of game R&D and is a vital part of game advancement. By definition, game operation refers to the whole process that operators first introduce a game into the market, and run it to let users contact, understand and know actual online gameplay and finally become its loyal players. Game operators mean network companies that operate online games independently developed or with the authorization of other game developers, and provide value-added services and in-game ads for players by selling gaming time, game props or related services to earn profit [9]. At present, the game operation ecology in China presents a situation of tripartite confrontation among Tencent, NetEase and Perfect World. In addition, other game operators such as Shanda Group, The 9 Limited, Kingsoft, Sohu and Giant Network also play an important role in the corporate landscape of the E-sports industry. Such game operators need to adopt means such as activity planning, data analysis, channel management, media operation, marketing, event management, user management, and community management to attract new users, retain old users, and vitalize target services. Generally speaking, game operators mostly are game developers at the beginning. Later, because there are needs to update games and interact with users, these companies undertake operations and other business, and some even have expanded their business scope to provide game services. The important value of game operations can be explained from two aspects. The first is to monitor market and users in real time, increase user stickiness, and extend product life cycle. Because the game operation department has close contact with industry and product data, the front-line operational staff of game operators can obtain feedback from game players and data reports, find out the existing game problems in time, and can clearly understand the life cycle and competitiveness of products, so that they can develop a version plan to extend the product life cycle, can provide effective suggestions and guidance for games to continuously roll out new materials and new versions, and improve the version experience, and can solve user problems in a timely manner and keep users filling of anticipation. The second is to connect with relevant departments of the industry chain and strengthen communication between industry entities. In the Esports industry chain, game operations are at the back end of game R&D, connecting developers, channels, markets, and players. As an important link in joint communication, operation departments and staff need to actively communicate, coordinate and cooperate with multiple parties, effectively assuming the role of information communication. The last is to enrich the derivative activities and content of E-sports and increase game revenue. The operation department is a key to raising game revenue. Since it is responsible for event planning, channel management, media operations, and marketing, operations have an impact on the market influence and popularity of E-sports game products. An excellent operation plan can become a blessing for games and stimulate greater market value for game products. On the whole, the game operation, one of the core links of the E-sports industry, solves several problems like inadequate communication of information resources that are prone to occur in the long industrial chain of game R&D and promotion, event

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planning and execution, and derivative development, and realizes the integration of operations, thereby improving industrial revenue, reputation and capacity.

4.1.5.2

E-sports Events

E-sports events refer to crowd activities that center on E-sports games and occur at once or on an irregular basis in a certain period of time. At the turn of the century, some of E-sports events were successful and entered the public eye.

Top 3 World E-sports Events Cyberathlete Professional League (CPL), World Cyber Games (WCG), and Electronic Sport World Cup (ESWC) are called the world’s three major E-sports events. 2011 was a big year for the development of E-sports events in China and even in the world. The LOL World Championship and Dota 2 International tournament had been launched one after another. In 2014, People’s Government of Yinchuan Municipality and Yinchuan International Game Investment Co. Ltd. replaced WCG with World Cyber Arena (WCA). Since then WCA was permanently settled in Yinchuan, China. As far as China’s E-sports events are concerned, with policy support and the expansion of user scale, these favorable conditions help China’s E-sports events and industry develop healthily and maturely in a diversified environment. In recent years, E-sports event organizers in China mainly include VSPN, NEOTV, CGA, Imba and others. To date, China’s E-sports events can be predominantly divided into three categories. By the organizers and purposes, E-sports events can be classified as ones hosted by third parties, commercial ones led by brand owners, and ones held by game manufacturers. First of all, third-party events mainly refer to E-sports events sponsored by non-direct practitioner organizations and practitioners in the E-sports industry, as well as by enterprises. The former category includes, for example, the National Electronic Sports Tournament (NEST) convened by the Sports Information Center of the GAS, Pro Gamer League (PGL), and World Electronic Sports Games (WESG). The third-party events in China, especially those hosted by competent government departments, have formed a certain scale. Such events generally feature a large number of participants, a large scale, and a wide range of sponsorship types, and plus the different identities of the organizers, they often can gain wider social attention and even expand their circle of influence. Secondly, commercial events are mainly sponsored by enterprises, and often intended to gain greater exposure and commercial revenue effects. But they are not mature in China, and participants are mostly amateur players. And the competition item mainly chooses hit games, which are highly entertaining and less competitive. However, such commercial events play an

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important role in enhancing the participation of E-sports fans in E-sports events and improving the E-sports business ecological model. At last, events held by game manufacturers place the highest demand on professionalism and skills. Such events in China are mainly professional leagues and most of participants are professional players. The event operation is relatively mature, and the league system tends to be perfect with extensive influence. Since game manufacturers control the copyright of E-sports games, they hosting game events can not only effectively simplify copyright authorization and revenue gainsharing, but also make full use of the game users and creative resources they possess. In addition by doing so, they can collect and handle user feedback, and integrate events with game development and operation to maximize the integrated advantages of the Esports industry. As a large number of high-quality games emerge, especially when the original E-sports event pattern is hit by multiplayer online battle arenas (MOBA), it can be said that the rise of events hosted by game manufacturers comes natural. At present China has basically formed a tournament matrix dominated by three major leagues: King Pro League (KPL), League of Legends Pro League (LPL), and PUBG Champions League (PCL). The development history of China’s E-sports events and the current event landscape showed that China’s E-sports events have been developed on the basis of drawing lessons from international experience, and many events, to a certain extent, have taken examples from the system and processes of traditional athletic sports. Nowadays the system and norms of top E-sports events have basically taken shape in China. With further improvement of industry management and business models, China’s E-sports event industry will obtain a better development environment and unleash greater derivative value.

4.1.5.3

Media Channels

Media is a medium of information dissemination, and a tool, channel, carrier, intermediary or technical means of information exchange among people. For the Esports industry, E-sports media channels mainly include internet websites, mobile clients, WeChat official accounts, Weibo and other WeMedia platforms, so carriers that mostly report news and information about the E-sports industry are generally regarded as E-sports media. Chinese E-sports media has gone through the development stages of print media, radio and television, internet platforms, and live broadcast platforms. With the development of technologies such as smart phones and 5G networks in China, the live-streaming industry has increasingly become popular at home and gradually stepped into the E-sports industry. Since 2015, the E-sports live broadcast industry has experienced rapid progress, and E-sports live-streaming platforms have diversified. At present, such platforms are represented by Huya Live, Douyu Live, and Penguin E-sports and other professional ones.

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Huya Live Huya Live is an interactive Chinese live-streaming platform featured bullet comments and game streaming. It provides live broadcasts of popular games, E-sports events and game events, mobile games, etc., with a total of 200 million registered users. According to its Fourth Quarter and Full Year 2020 Financial Report released in March 2021, Huya raked in RMB 10.914 billion in total annual revenue in 2020, an increase of 30.3% over 2019; the monthly average active users of Huya Live app in the fourth quarter of 2020 reached 79.5 million, an increase of 29.1% over the same period in 2019. Its revenue in the fourth quarter of 2020 totaled RMB 2.99 billion, 21.2% higher than a year earlier, of which live-streaming part accounted for RMB 2.815 billion, grew by 20.0% from RMB 2.346 billion in 2019. As a well-known local listed live-streaming platform, Huya Live attaches great importance to E-sports viewing experience for audience and the organization and operation of events, and put efforts in purchasing domestic broadcast and exclusive broadcast rights for international events. For example, Huya were sensitive to Chinese audience’s attention to the LCK, the hot prospect for 2018 championship, and bought the exclusive rights to televise the LCK activity, making many LOL audiences become continuously active users of the platform. Furthermore, Huya has actively organized its own events, Huya Tianming Cup and Huya Courage Cup International, which are all influential and have increased the popularity and user stickiness of its platform. And multi-domain live broadcast platforms such as Kuaishou Live and Bilibili Live have also ventured into E-sports live-streaming industry, becoming an important part of E-sports media channels. For example, Kuaishou has accelerated its layout in recent years. In January 2020, it reached an official cooperation with Honor of Kings professional events and obtained the copyright to livestream the KPL events. In July that year, Tongjiabao E-sports Club founded by Mutong (translated as “shepherd boy in English”), a game livestreamer on Kuaishou, officially won a PEL (Peacekeeper Elite League) season 2 seat. After that, all PEL teams and players collectively settled in Kuaishou, which undoubtedly let Kuaishou game users and content ecology take a big step forward. In August, Kuaishou acquired the YTG team, upgraded the brand and renamed it KS.YTG team. Through strategic investment and content cooperation, Kuaishou made full use of its product advantages of “live + short video”, and scored many achievements in secondary creation of E-sports content and cross-circle dissemination of E-sports products. In this respect, diversified E-sports media outlets and the fierce competition in the industry have fully stimulated the creation and dissemination of E-sports content, and at the same time provide opportunities for derivative industries such as the copyright operation of E-sports content and the IP creation of E-sports brand.

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4.2 Development Scale of China’s E-sports Industry China has now become the world’s largest E-sports user market. Various statistical reports generally refer to those who watch E-sports games and live streams, play E-sports games, and service the E-sports industry as E-sports users (Fig. 4.6). As data shown in the Report on China’s Game Industry from Jan.–Jun. 2021 jointly released by the CADPA Game Publishing Committee and China Game Industry Research Institute, E-sports users in China from January to June 2021 reached 489 million, 1.13% higher than the previous year. The number of users kept growing, but the increment slowed down [10]. According to Newzoo’s Report on Global E-sports and Game Live-Streaming Market 2021, E-sports fans in China accounted for 92.8 million of the total worldwide 234 million, and China has become the region with the most core E-sports fans [11].

4.2.1 Market Size In recent years, under the backdrop of favorable policies, capital attention, and increased social recognition, China’s E-sports industry has entered a stage of explosive growth, and the industrial chain has improved and developed rapidly. Game R&D and operation at the upstream, derivative content production at the midstream, and content dissemination platforms at the downstream all have gradually matured, and the market scale has steadily expanded (Fig. 4.7).

Jan.-Jun. 2018

Jan.-Jun. 2019

Jan.-Jun. 2020

Size of e -sports users in China

Jan.-Jun. 2021

Growth rate

Fig. 4.6 Size and growth rate of E-sports users in China (Source Report on China’s Game Industry from Jan.–Jun. 2021)

4.2 Development Scale of China’s E-sports Industry

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Fig. 4.7 Market size and expectations of China’s E-sports industry from 2018–2022 (RMB 100 million) (Source iiMedia Research)

According to data from iiMedia Data Center in 2021, the scale of China’s Esports market in 2020 hit RMB 136.56 billion, and is expected to grow to RMB 184.33 billion by 2022, showing a trend of steady growth. With the introduction of a large number of policy support and capital forces, China’s E-sports industry will quicken its advance towards normalization and professionalization. The industry has a promising future. In the future, China will usher in the era of “E-sports for all”.

4.2.2 Revenue Size With the expansion of the E-sports market, the revenue and profitability of the Esports industry have attracted more attention. The global E-sports revenue was only 1.4 billion dollars in 2014 and exceeded 6 billion dollars in 2018, and is expected to reach 13 billion dollars in 2022 [12]. Now China’s E-sports market is mainly composed of three categories: game revenue, derivative revenue (live streams, clubs), and event revenue (tickets, spin-offs, and sponsorship). Among them, the first category is the main part of China’s E-sports industry revenue, but from the aspect of international market, China’s E-sports game industry still has a large gap in patent revenue with E-sports powerhouses such as the United States and South Korea. The second and third category are also the focus to be improved for the future development of China’s E-sports industry (Figs. 4.8 and 4.9). In terms of game revenue, public data from the CADPA Game Publishing Committee showed that the actual sales revenue of China’s E-sports game market has grown steadily since the first half of 2017, with the most rapid increase in the first

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Fig. 4.8 Revenue chart of global E-sports market from 2014–2022 (Source Open data)

Fig. 4.9 Summary of actual sales revenue of China’s E-sports fame market in the first half year from 2016–2021 (Source open data organized by the CADAP Game Publishing Committee)

4.3 Development Characteristics of China’s E-sports Industry

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2024 Estimated

2021 Estimated

2020

2019

Fig. 4.10 Revenue size and forecasts of global E-sports events from 2019–2024 (unit: $100 million) (Source Newzoo’s Report on Global E-sports and Game Live-Streaming Market 2021)

half of 2020. The actual sales in the first half of 2021 reached RMB 72.061 billion, rose by RMB 125 million (0.17%) over the same period in 2020. It indicated that the growth rate of E-sports game market has slowed down due to the epidemic, but compared with other industry categories, it has bucked the trend of the decline and has still shown strong performance in market revenue (Fig. 4.10). In terms of event revenue, Newzoo’s latest data shows that global E-sports revenue in 2021 will reach 1.084 billion dollars, of which China will become the world’s highest E-sports market with estimated revenue of 360 million dollars [13]. Plus due to the epidemic and in the context of varying degrees of shrinkage in the revenue of offline events and multiple E-sports activities, the revenue of live streams and virtual commodities has had significant growth, increased by 50.4% and 25.7%, respectively. It can be thus known that the profitability of online sectors of the E-sports industry features stronger anti-risk capacity and greater potential in the future.

4.3 Development Characteristics of China’s E-sports Industry 4.3.1 Sustained and Rapid Development, Great Potential for Industrial Progress User and market data showed that China’s E-sports industry is in a stage of rapid development. On the one hand, the core of the E-sports industry is split into the digital economy. Under the macroeconomic background of the rapid advances in the digital economy, China’s E-sports industry enjoys a good development environment.

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On the other hand, the E-sports industry is regarded as a part of the cultural industry, which as a sunrise sector, will empower the E-sports industry and related derivative formats. Additionally, with the support of policies and society, China’s E-sports industry has established a relatively sound industrial chain (upstream, midstream and downstream), and the E-sports industry ecology has further expanded. Pivoting around core links such as E-sports games, E-sports events, and E-sports media, a group of leading enterprises and high-quality industrial clusters have been founded. The future scale, driving force and potential of the E-sports industry are immeasurable.

4.3.2 Continuous Refinement of the Industry Chain, at the Early Stage of Industrial Development China’s E-sports industry chain continues to be refined, forming a relatively complete industry chain, the upstream of which is game R&D and operations, the midstream of which is event operations, E-sports clubs, and E-sports content production, and the downstream of which is E-sports media and E-sports live-streaming. And derivative businesses such as “E-sports+ ” real estate and film and television have further detailed the E-sports industry chain. Even so, China’s E-sports industry is still in its fledgeless stage. First, in terms of independent R&D and innovation capabilities, the upstream game R&D and operation of China’s E-sports industry is still at a relatively low level. E-sports related companies are short of independent R&D abilities and are at a distinct disadvantage in international competition for copyright and patents. Secondly, with respect to revenue, China’s E-sports industry is still in its infancy and needs to be transformed towards self-growth. Behind the ever-expanding market is huge industrial investment and profitability to be improved. Finally in respect of talent reserves, China’s E-sports industry still exists many problems and deficiencies, such as the increased demand for talents, scant of talents, serious loss of talents, and inadequate professionalization and systematization of E-sports education.

4.3.3 Gradually Diversified Competitive Events, MOBA Becoming Mainstream The diversity of E-sports events and the expansion of their influence symbolize the rapid development of China’s E-sports industry. E-sports events are generally carried out in the form of leagues. Currently active events in China mainly include Dota 2 International Invitational, League of Legends Pro League, League of Legends World Championship, Overwatch League, Honor of Kings Pro League, Honor of Kings World Champion Cup, and Peace Elite Pro League, PUBG Global Championship.

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E-sports Event Category E-sports events are categorized by different competition games. Main E-sports games are now mainly divided into FPS (first-person shooting), RTS (real-time strategy), SPG (traditional sports game), and FTG (fighting game), MOBA (multiplayer online battel arena), and CCG (collectible card game), among which the MOBA is the mainstream of current E-sports games, because it features high fairness, easy operation, fast single-game rhythm, and strong diversity.

4.3.4 Innovative Development of 5G Technology, Promoting the Upgrading of the E-sports Industry The commercial use of 5G technology in 2019 marked China’s official entry into the 5G commercial era, and also brought huge development opportunities for China’s industrial economy, especially the digital economy industry. For E-sports games and game users, 5G technology means faster network speed and wider coverage. The application of new technologies not only reduces the cost of R&D and operation of the E-sports industry, improves the efficiency of event production, but also meets the diversified needs of various game viewers and game players through providing more comprehensive and immersive game content. For E-sports events and media broadcasts, the advantages of 5G technology are in ultrahigh speed and ultra-low latency, thereby realizing an all-round upgrade of experience in viewing E-sports event. Nationwide E-sports, entire network interconnection, complete integration of virtuality and reality will be in the near future. In addition, the progress of 5G technology creates opportunities for the growth of mobile E-sports games and users in China. Other than setting the stage for professional players, 5G also provides the possibility for ordinary players to enjoy E-sports. The expansion of E-sports users and consumers will bring derivative effects to the industry, and provide positive stimuli for from the R&D and distribution of games by game manufacturers, the ticketing, copyright, and sponsorship of events, to the production and sales of E-sports peripherals.

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4.4 User Characteristics of China’s E-sports Industry 4.4.1 Age and Gender Distribution The above data show that young male users are the majority, while female E-sports players are to be expanded. Data in 2020 show that Chinese E-sports users are still dominated by men, accounting for 64% (women for 36%), and user ages are concentrated between 19 and 22, coming in at 39.7% (Fig. 4.11). With the development of mobile E-sports, the improvement of the E-sports system and the increase in social cognition of E-sports, more and more female users start to touch and pay attention to the field of E-sports. E-sports games have become one of the entertainment choices of many female users. The proportion of female user groups will continue to show an upward trend in the next few years. Apart from E-sports games and events, some excellent E-sports players are packaged as stars with commercial and traffic value. And even more, there are related derivative film and TV dramas that invite popular stars with huge fan bases to popularize E-sports. Under multiple opportunities, the fan economy has found an entry point in the field of E-sports. Many fan groups who are not original E-sports users have begun to know and pay attention to E-sports. These users not only deeply participate in the consumption of E-sports content, and are likely to become E-sports players and consumers of other products. This tendency undoubtedly catalyzed the change in the age-sex ratio of the E-sports industry.

≤18 19-21 22-24 25-30 31-39 ≥40 Male

Female

Fig. 4.11 Gender and age distribution of Chinese E-sports users in 2021 (Source iResearch in April 2021)

4.4 User Characteristics of China’s E-sports Industry

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4.4.2 User Spending Power On the one hand, middle-income E-sports users account for a relatively high proportion. In 2020, Chinese E-sports users (except no-income groups like students) with personal monthly income between RMB 5000 and 8000 accounted for the highest proportion, reaching 29.2%. On the other hand, the income structure of the middle income level determines the expenditure structure of the middle consumption level. E-sports users with personal monthly spending between RMB 1000 and 3000 took up the highest proportion, reaching 43.5%. It can be known from the age structure of Chinese E-sports users that the current income level of these users needs to be further raised. This is a good opportunity for the E-sports industry (Figs. 4.12 and 4.13). The income structure and consumption level of E-sports users reflect to a certain extent their spending in E-sports. With extensive education in intellectual property, the ideas of paying for knowledge and entertainment are accepted by more Chinese consumers, and E-sports users are more inclined to pay for game software and hardware, game content, and other derivative products. Statistics showed that more than

RMB 1,000

RMB 500-1,000

RMB 300-500

RMB 100-300

RMB 1-100

Zero

Three-month spending in mobile games by Chinese users in 2020

Three-month spending in client games by Chinese users in 2020

Fig. 4.13 Three-month game spending of Chinese E-sports users in 2020 (Source iResearch)

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90% of E-sports users in China have paid for games in the quarter before the survey date, and the number of PC game users who paid more than RMB 300 is significantly higher than that of mobile game users. Other than game payment, Chinese E-sports users also pay for E-sports live streams, events, peripheral products, and among others.

4.4.3 Psychological Characteristics of User Behavior 4.4.3.1

Psychological Characteristics of User Behavior

The E-sports user preference chart shows their habits for online film and television, short videos, social media, etc. They prefer to play E-sports games, watch game live-streaming and E-sports events, indicating that entertainment activities directly related to E-sports games have the strongest attraction to them. And a large number of E-sports users like watching movies, TV series, variety shows, short videos, web novels, animations and animes and other E-sports derivative works, indicating such E-sports-based adaptations are popular among E-sports users and have huge development space. In addition, some E-sports users prefer to play other non-competitive games and surf social media such as Weibo and WeChat, indicating their behavioral preferences for online social interaction (Fig. 4.14). On the whole, live streaming and short videos are the favorite online entertainment of by E-sports users in recent years.

Playing e-sports game Watching e-sports game live-streaming Watching e-sports events Watching films/drama series/variety shows Watching short videos Playing non-competitive games Surfing WeChat or Weibo Reading web novels Watching animations or animes

Fig. 4.14 Online preferences of Chinese E-sports users in 2020 (Source iResearch)

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Huya Live and Short Videos Increased Significantly in Revenue In Huya’s case, it totally earned RMB 2.99 billion in the fourth quarter of 2020, of which live-streaming revenue was RMB 2.815 billion, grew by 20.0% from RMB 2.346 billion in 2019. This was mainly owing to the rise in its paying users and their average spending. The significantly-increased spending power and acceptance of users to paid games and content have scale up the revenue of E-sports and related industries, and are a good opportunity for the E-sports industrialization. For short videos, a survey showed that in 2020, more than 70% of Chinese E-sports users watched E-sports short videos, and the most viewed videos were divided into game teaching, event highlights, and livestreamers’ daily life. The above interests and behavioral preferences indicate that Chinese E-sports users are increasingly leaning towards digital leisure activities, and are deeply involved in digital entertainment and new social media. Chinese E-sports users have been used watching live-streaming and short videos and paying for online digital content, which is consistent with the trend of expanding demand for the “otaku economy” in the post-pandemic era.

4.4.3.2

Psychological Characteristics of User Behavior

Judging from the age structure of E-sports users in China, young users are predominant. Considering the age and gender characteristics of Chinese E-sports users, it is preliminarily concluded that they generally have high emotional identification, highly willing to consume and share, happy to break boundaries, possess E-sports social genes, and like to pursue excitement. For young users, they are rich in imagination and creativity, are more sensitive to consumer fashion, like to pursue trendy and novel content and products, have a higher degree of acceptance and tolerance for new things, and may buy something impulsively or emotionally. For male users, competitive games are more attractive to them. In recent years, female users also have the consumer demand to accept and pursue competitive excitement. Referencing these psychological characteristics and needs is a necessary prerequisite for the relevant entities of the E-sports industry to optimize their products, content and services. For example, in combination with young users’ sensitivity to novelty and fashion, E-sports industry practitioners should improve their innovation level and cultural connotation from the perspective of industry and operation.

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Moreover in recent years, female users have been among the consumer army of Esports products and services, so game developers should take more into account the playing habits and psychological positioning of female players; operators should also provide marketing points that are more in line with women’s emotional consumption views. On the basis of psychological characteristics like users’ strong willingness to share, relevant entities should pay more attention to the linkage and interoperability between game products or services and national social sharing platforms, and make more efforts to facilitate and beautify cross-platform sharing of audiovisual content. Practice Questions 1. How to understand the professionalization and marketization of China’s E-sports industry? 2. How will technology empower the development of the E-sports industry?

References 1. Shengjie, He. 2019. Countermeasures to Develop China’s E-sports Clubs in the Context of Live-Streaming. Research Report on Strait Creative Economy 13: 143. 2. Axin, Ma. 2020. A Brief Report on China’s E-sports Clubs 2020. June 2020. https://pdf.dfcfw. com/pdf/H3_AP202012221442602675_1.pdf?1608633435000.pdf 3. Hypercompetitive Education, Tencent E-sports. 2019. An Introduction to E-sports Industry. Higher Education Press, pp. 56. 4. Hypercompetitive Education, Tencent E-sports. 2019. An Introduction to E-sports Industry. Higher Education Press, pp. 21. 5. Forward Economist. 2019. Analysis on Market Status-Quo and Competitive Landscape of China’s E-sports Game Industry 2019. 31 October 2019. https://baijiahao.baidu.com/s?id=164 8877261841118228&wfr=spider&for=pc 6. Huya Live, E-sports World. 2020. 2019 China E-sports City Development Index. February 2020. https://baijiahao.baidu.com/s?id=1704416492949221096&wfr=spider&for=pc 7. Assessment Report on 2020 China E-sports City Development Index. 2021. China Audio-video and Digital Publishing Association. August 2021. https://new.qq.com/omn/20210802/202108 02A0CV3200.html 8. Ying, Liu, Gu Yuhe. National E-sports Team on the Horizon: Unclear Industry Rules and Lack of Talents Being the Pain Point. Sina Finance. http://chinasportslaw.com/newsitem/278237997 9. Hengyi Culture. 2018. Analysis on E-sports Industry. Jiangsu People’s Publishing House, 68. 10. Report on China’s Game Industry from Jan.–Jun. 2021. 2021. China Audio-video and Digital Publishing Association. 29 July 2021. https://baijiahao.baidu.com/s?id=170659813394787 0355&wfr=spider&for=pc 11. Penguin Intelligence, Tencent E-sports. 2021. Development Report on China’s E-sports Industry (2021 Version). 16 June 2021. https://baijiahao.baidu.com/s?id=170417562013932 5406&wfr=spider&for=pc 12. Analysis on Revenue Scale and Development Trend of China’s E-sports Industry in 2019. 27 November 2019. https://www.chyxx.com/industry/201911/810217.html 13. Newzoo. 2021. Report on Global E-sports and Game Live-Streaming Market 2021. https:// max.book118.com/html/2021/0412/7113013045003114.shtm

Chapter 5

Comparative Analysis of Global E-sports Industry

Abstract According to the characteristics of the E-sports industry itself and the general rules of the industry life cycle, its development in the global context can be roughly divided into three stages: the budding stage, the growth stage, and the maturity stage, each of which has different development characteristics and focuses. In this chapter, we will analyze the development history of global E-sports industry based on specific cases, analyzing and comparing the current situation and characteristics of E-sports industry development in different countries around the world. Keywords Global E-sports industry · Business model · E-sports

5.1 Analysis on Business Models of the E-sports Industry 5.1.1 Fundamental Theories of Business Models Business models are also known as operating models. At present, there are different opinions on the definition of business models. Some scholars have defined the business model from the perspective of the profit model, and think that the former model is highly consistent with corporate profit model at the connotative level. The business model is a description and summary of earning profit in the process of business operation and management. Jing Linbo believed that the business model is a strategic portfolio, and such portfolio is established by a company engaged in a certain field to meet the needs of target customers and reach profit goals. Stewart and Zhao pointed out that the business model refers to approaches adopted by a company to generate revenue in the entire process of operation and management and to maintain the maximum profit flow on the basis of benign operations. Afuah et al. stated that the business model is a process during which a company creates much more value than its industry rivals and further earn excess profits in the international market competition by taking reasonable business and development strategies. Dubosson et al. thought that the essence of marketing model is profit acquisition. Business operations have to specially establish a corporate management structure and build a customer and service product network to secure stable and sustainable customer © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_5

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relationship management, ultimately creating and marketing value and providing service for value creation. Now the research on business models mainly includes the three-element theory, four-element theory and nine-element theory. Hamel pioneered a four-component model to analyze the basic connotation of the business model. His model is mode of four components (core strategy, strategic resource, customer interface, value Internet), three bridge components (configuration, consumer benefits, company frontiers) that link these four elements together, and four supporting factors (efficiency, uniqueness, fit, profit boosters). The four-component model mainly aims to provide guidance for companies to innovate in business models. This theory has also had great impacts on later business scholars. Oster-Walder proposed a nine-element model to analyze business models. The analysis model includes core competitiveness, value configuration, value propositions, distribution channels, customer segments, key partners, key customers, cost structure, and corporate models.

5.1.2 Comparison of Foreign Business Models 5.1.2.1

Business Models of European and American E-sports

The business model of European and American E-sports has nearly had a 40-year development history, so it is the most typical one. 1. Social background European and American countries are more diverse in culture, and their people pursue freedom of personality and prefer to find their own life value through experiencing, so compared with Asians, their population is highly mobile. Besides because these countries have developed economically, their people live a high-standard life and have much more spare time to cultivate interests. In this way, Europeans and Americans can devote themselves more to E-sports competitions in various regions and pay a low price. In addition because European and American society is very concerned about E-sports events, American colleges and universities also regard E-sports as a school or group sports activity. Plus the U.S. government has also listed the professional identity of E-sports athletes in the immigration qualifications. All these has improved the enthusiasm and value of European and American participating in E-sports, and further scaled up the development of E-sports in Europe and the United States. 2. User maintenance E-sports companies in Europe and the United States uphold the principle of respecting players’ right to interact well with audiences, and maintain long-term good relationships with customers. On the basis of the relatively sound E-sports infrastructure and stable social environmental in Europe and the United States, most of their participants are E-sports amateurs, and their E-sports competitions also value fairness and

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professionalism. These countries have continued to improve the comfort and experience of watching live games in the competition field. With the energetic development of mobile technology and the continuous improvement of mobile devices, the European and American E-sports industry has also paid more attention to mobile device users. 3. Industrial structure Europe and the United States have constructed a relatively mature industrial system covering the entire industry chain of E-sports. First of all, the European and American E-sports industry has controlled the core E-sports resources, namely game patents and intellectual properties, so that they can create huge commercial value by means of game authorization and IP charges. Secondly, E-sports events in these countries mostly are live competitions (CPL, ESWC), and broadcasted on TV and emerging live broadcast platforms to deepen multi-level and multi-dimensional cooperation. For example, cooperation with TV stations for professional game live-streaming and broadcast, with Twitch for network broadcast, and with computer software and hardware manufacturers, well-known clubs and game developers, all are intended to produce diversified operation modes of E-sports events. 4. Profit models In terms of the cost of E-sports in Europe and the United States, it is mainly for product R&D and event operation. As professional competitions increase, participating players expand both in the number and scope, and the prize money is accordingly raised. In terms of revenue, it mainly comes from game licensing, knowledge payment, competition funds, sponsorship, etc. E-sports events in these countries control core resources such as game patents and intellectual properties and a large number of paid knowledge services, and have a relatively perfect management model. These countries have made profits in both midstream and upstream of the E-sports industry like professional E-sports events. They have set a high bar for game professionalism and fairness, and regarded the operation and management of large-scale competitions as an important service. In the United States, main E-sports sponsors are mostly computer hardware and software manufacturers. They fund competitions to increase the awareness of their products in various fields and their share in the high-end online game product market. Consequently they will pay more attention to the influence of competitions on heavy users and high-end consumers, thus enabling the European and American E-sports industry secure sustained benefits (Fig. 5.1).

5.1.2.2

Business Models of Korean E-sports

As a globally-recognized E-sports power, South Korea has excellent media coverage and professional 24 h TV channels for E-sports. South Korea has had a 25 years history of the E-sports industry and is one of the countries with relatively welldeveloped E-sports industry in the world. The industry can bring South Korea 1 billion dollars in economic returns and has formed a relatively sound business model.

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Industrial value circle

Government support Led by the market

Focus on events Game development Dominated by live competitions

Amateurs

Market sharing of peripheral enterprises (hardware manufacturers) Fig. 5.1 Unitary driving force of business model for the European and American E-sports industry [1]

1. Social background South Korean society advocates E-sports, making E-sports ascended as a national sport. As a result, its professional E-sports players as E-sports stars are as popular as athletic sports stars and entertainment celebrities, and they can realize their own value and are economically improved through playing games to win the prize money. The public also actively cooperate with the government. Holding large-scale events can increase the national acceptance and love of E-sports, thereby allowing a wider range of groups to enter the ranks of E-sports players. The South Korea’s government strongly supports E-sports and provides various resources for it, such as establishing favorable policies, providing resources, creating a cultural and social environment suitable for its development, and even has set up a dedicated department in charge of game management. All these moves aim to help create a good development ecosystem and achieve mutually beneficial and stable coexistence among the E-sports industry, the government, E-sports manufacturers, professional E-sports players, club members, and E-sports amateurs. 2. Event holding At present, the E-sports revenue in South Korea mainly comes from holding events by the Korea E-sports Association, the President’s Cup, National Amateur E-sports Conference, and the Korean E-sports Paralympic Games. These events can drive the development of South Korea’s E-sports industry from ticket selling, E-sports equipment, sponsorship, and sales of peripheral products and derivative products, among others. The state promotes E-sports and enhances its influence and commercial value mainly through television media.

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The South Korea’s Government Strongly Supports E-sports Competitions South Korea holds a supportive attitude towards various E-sports events, including the WCG (World Cyber Games) and Intel Extreme Masters (IEM) established in 2007. Among them, the WCG is known as the “E-sports Olympics”, and thanks to the support of the SK government, it has funded by a large number of sponsors. The first game day on October 7, 2000 welcomed a total of 174 professional E-sports players participated from 17 countries, with the prize money adding up to 20,000 dollars. In 1999, OGN, an independent South Korean television channel that specializes in broadcasting video game-related content was established. Since then South Korea had a media platform for game dissemination. At the same time, the professional career path also changed the predicament of commercial promotion and publicity of E-sports games in the past. Through the OGN platform, E-sports events had received a lot of financial support from sponsors, been conducted in large venues and had top players participated, thereby presenting high-level and highly enjoyable events and advancing E-sports in South Korea. In addition, the development of various E-sports events gave rise to several new professions and industries like E-sports game live commentary, and created new online E-sports economy. South Korea will make more efforts for the industrialization and platformization of E-sports in the future, with a view to continuously expanding the scale and value of the E-sports industry. 3. Industrial structure South Korea’s E-sports industry has a unique industrial system and operation model. It develops a creative and stable economic ecosystem from the cooperation among the government guidance, the market, professional players, and corresponding manufacturers. South Korea’s E-sports industry chain is in essence an embedded model of mutual cooperation and interdependence, and each participant in the industry system is indispensable. In the early stage of the E-sports industry, it was mainly advanced by the government, and the government provided full support, including related resources and environment. After got a foothold, it was taken over by the market to achieve systematical and deep development. 4. Profit models In terms of the cost of E-sports in South Korea, it is mainly for prize money for players and event operation. However its income mainly comes from the sponsorship of events-related sponsors, advertisements, sales of peripheral products, as well as event earnings. It lays emphasis on the promotion of events and the packaging of players, and relies on the attention of competitions and the sale of derivative products such as E-sports food. E-sports in South Korea counts on a small number of star-level professional players to add value to the industry and are extensively publicized through multiple channels such as the WCG, national and local competitions, TV broadcasts, and network live-streaming platforms. Sponsors are motivated

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Industrial value circle Led by the government

Large-scale competitions

Pushed by the market

Professionalization Live-streaming and live competition

Nation-wide popularization

Event-related revenue, industry-derived income

Fig. 5.2 Binary driving force of business model for South Korea’s E-sports industry [2]

to seek business opportunities with reference to the audience ratings of events, and provide financial support, so that the entire industry’s profit model forms a healthy development trend (Fig. 5.2).

5.1.3 Analysis on China’s Profit Models The profit models of E-sports events in China are mainly divided into media advertising, corporate and brand sponsorship, and E-sports user spending in experience. The organizer guides E-sports-related applications to complete traffic monetization by launching more wonderful competition content. The more E-sports applications organizers invite, the more they can get investment from sponsors, advertisers, etc. As the influence of the E-sports market amplifies, based on E-sports applications, the technology of monetizing user traffic for large-scale events still has huge potential for exploration (Fig. 5.3). E-sports users

Event live-streaming Content creation Media consumption Media advertisement

IP purchase

E-sports events Ticket purchase Brand sponsorship

Sponsor/advertiser

Fig. 5.3 E-sports users (Source Mob Data)

E-sports derivatives Peripheral consumption Co-branding

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5.1.4 Future Development Trend of Business Models With the continuous improvement of the influence of the E-sports industry, the new format of “E-sports + IP” emerges, and the innovative integration between the industry and other cultural industries continues to be deepened. At the UP2018 Tencent Neo-Culture Creativity Eco-Conference in April, Tencent put forward the concept of “neo-culture creativity” that is about promoting the mutual empowerment between cultural value and product value through a wider connection of content, in order to achieve higher efficiency for the development of digital culture products and the construction of intellectual properties.

High-quality Cross-border Cooperation Cases The cross-border cooperation in E-sports and IP has fueled the E-sports industry to continuously extend beyond the field. There are a series of high-quality cross-border cooperation outcomes. Specifically in respect to the combination between E-sports and film and television, several E-sports drama series like The King’s Avatar and Go Go Squid! have attracted much attention. In 2019, Go Go Squid! was viewed over 8.9 billion times over the whole internet. In terms of the combination between E-sports and cultural tourism, the LOL-themed campus E-sports village fused E-sports culture with traditional ethnic culture to upgrade traditional ancient villages, and used AR technology to provide tourists with richer tourism experience. The village aims to not only inherit and spread traditional culture, but also empower local cultural tourism and tap a new marketing model of E-sports and cultural tourism. As to the combination of E-sports and cultural creativity, Louis Vuitton launched a series of products cobranded with the LOL, completing a cross-dimensional cooperation between competition and modern fashion. In addition, E-sports games based on Chinese culture have been gradually recognized by domestic and foreign markets, and some high-quality ones have helped disseminate and carry forward traditional Chinese culture around the world. China’s E-sports industry enjoys natural advantages in licensing cooperation. How to deeply integrate with different industries to raise the commercial value of E-sports has increasingly become the focus of the industry. And the adaptation of E-sports is the future development trend of the industry, thereby constantly advancing E-sports commercialization.

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5.2 Analysis on Content and Genres of the E-sports Industry PC game events with a complete ecosystem are predominant among the current popular online E-sports, but mobile E-sports also are on the rise. E-sports have a wide variety of hot PC games, and the event system is relatively sound. Several games like Dota 2, LOL and Hearthstone have gained good results and unanimous praise because they started early in China. As to the mobile E-sports market, although it is still in the initial stage with a small number of mobile games, its development momentum is strong.

5.2.1 Comparative Analysis on E-sports Genres Between China and Europe and America In 1972, the first video game tournament was held at Stanford University, when video games had existed for nearly half a century, but they actually prospered after the advent of network technology in the early 1990s. The Nintendo World Championships toured around the United States in 1990 and 1994. And the Professional Gamers League (PGL) began in 1997, with StarCraft as their first-ever tournament, which got a total of more than 12 billion dollars from Microsoft, AMD, Nvidia and other companies. Today, the revenue of North American E-sports market was about RMB 257.5 million, and it was expected to hit RMB 300 million in 2021. Due to its strong commercial atmosphere and mature market mechanism, the United States has become a high ground in the world’s E-sports market [3]. Compared with European and American countries, the E-sports industry in Asian regions has huge space for development though it is still in its infancy. It is known through questionnaire surveys that Asian respondents usually watch online game live-streaming by average gamers, but seldom go to the scene to appreciate large Esports competitions. In contrast with the proficiency in holing international E-sports events by European and American countries, E-sports events in Asia still face many infrastructure problems.

5.2.2 Comparative Analysis on E-sports Genres Between China and Japan and South Korea E-sports in South Korea have its unique development history. Since the European financial crisis in 1997, South Korea’s economy had suffered a huge blow. Due to the long-term macroeconomic downturn and low employment rates, a large number of young people had been idle at home, so online games had naturally become a way for them to kill their leisure time and relieve work pressure. In 1998, Blizzard

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Entertainment just released StarCraft. Under the push of the company and in the historical context, StarCraft was quickly in vogue, and local TV stations also reported relevant news and rolled out variety shows in time, turning more people into the game player. At that time, South Korea also formulated a strategy of building a culture-based nation, and believed that the E-sports industry was one of the ways out of the economic dilemma. However the extremely hot StarCraft encountered greater challenges from 2009 to 2010. In 2009, news media reported a scandal of manipulating the game results, and 11 professional players were alleged to maneuver the game scores to make huge profits on a gambling website, resulting in sharp decline in players’ confidence to E-sports events. The new game LOL released in 2009 seized the opportunity and become the latest darling of South Korean E-sports. The game encourages players to engage in 5v5 multiplayer team competitions. It is easy to get started and difficult to level up, which well carries forward the style of StartCraft: Brood War. At the iPark Mall in Yongsan District, Seoul, the LOL tournaments were held every week. Riot Games specially opened an office in Seoul to promote the game in South Korea. In 2012, StarCraft was completely surpassed by the LOL [4]. In 2021, South Korea’s Ministry of Culture, Sports and Tourism and the Korea E-sports Association jointly released the selection results of South Korean E-sports games, which is PUBG Mobile and A3: Still Alive (hereinafter called A3 mobile game) were selected as an official electronic sport. According to the results, PUBG Mobile had directly become a special one while being chosen as an e-sport. In comparison, Brawl Stars was promoted to be a special e-sport in 2021, though it was downgraded as a general one last year (Table 5.1).

Table 5.1 Formal E-sports events in South Korea E-sports game category

E-sports game name

Formal games (12)

LOL

Special games (5)

Normal games (7)

Remark

Riot Games

PUBG

PUBG

FIFA QL4

SK NEXON

PUBG Mobile

PUBG

Newly promoted

Brawl Stars

Supercell

Level changes (general to special)

DungeonFighter

SK NEXON

Sudden Attack

SK NEXON

Popkart

SK NEXON

Audition

Hanbitsoft

eFootball PES 2021

UNIANA

Clash Royale

Supercell

A3: StillAlive

Netmarble

Level changes (show to general)

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Practice Questions 1. How to exploit the advantages of China’s local culture in the development of the E-sports industry? 2. How should China cultivate innovative game talents?

References 1. E-sports Business Models. Wuhan University Publishing House, 29. 2. E-sports Business Models. Wuhan University Publishing House, 31. 3. Renqi, Chang, and Xue Jianxin. 2020. The Development and Enlightenment of the E-sports Industry in the United States and South Korea. Journal of Sports Adult Education 36 (2): 56–59. 4. Hanshihao. From StarCraft to League of Legends: A History of E-sports in Korea [EB/OL]. http://news.17173.com/content/2015-10-23/20151023115333494.shtml

Chapter 6

Case Analysis on World’s Top E-sports Events

Abstract E-sports events are the core elements of the midstream segment of the E-sports system. In the midstream of the E-sports system, a huge tournament system has been developed, and various game tournaments have basically completed the coverage from low-level tournaments with high frequency and low threshold to global top-level events with high money-sucking ability and attraction. The excellent World’s Top E-sports Events system can feed the game content and develop a specific game culture environment with a large number of fans. This chapter will analyze the system contents of the most representative LOL and WCG world-class E-sports events and their profit models. Keyword World’s top E-sports events · WCG · LOL

6.1 Development Trend of World’s Top E-sports Events E-sports events are the mainstay of the E-sports industry ecosystem. The E-sports industry chain is divided into content licensing at the upstream, E-sports events at the midstream, and information content dissemination at the downstream. E-sports events are the core of the overall E-sports ecosystem. Well-organized E-sports events can enrich game content, and E-sports cultural transmission and their derivative products all center on such events. From the perspective of commercialized E-sports, E-sports aim to create economic benefits, rather than just about competitions. E-sports events are an important cornerstone of E-sports. The exponential growth of such events can not only directly expand the scale of the E-sports market, but also explore the possibility of commercializing E-sports through various channels, so as to speed up efforts to upgrade the E-sports market.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_6

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6.1.1 Operating Market Globally, the United States, EU states and Taiwan, China are now the country where the E-sports business industry is well developed. The CPL (Cyberathlete Professional League) in the US is an important driving force for E-sports, and is listed as the world’s top three E-sports events alongside the WCG in South Korea and the ESWC (E-sports World Cup) in Russia. Although the WCG was stopped in 2014, it is still of great use for learning and reference. E-sports events in Europe and the US are generally centered on live competitions and backed with TV streaming. Considering the mainstream customers of European and American E-sports are a wide range of E-sports amateurs, the event operation highly values the fairness and professionalism of on-site games and the professional level of game management, so as to increase the comfort and the sense of experience during games. In terms of event organization and operators, South Korean E-sports pays special attention to advertising events and creating personal images of E-sports athletes, namely to developing the attention economy of the E-sports industry. The purpose of E-sports events in South Korea is to amplify the international reputation of the events and increase their acceptability among the mass media audience. In addition to the inherent charm of the events, it is also necessary to further enhance the national pride of South Koreans with social and cultural efforts. Game streaming is one of the important parts in the process of commercializing E-sports competitions. The E-sports event industry now is still in the input stage. There are few ways for competitions to directly generate profits, and selling the broadcasting rights is one of monetization methods, so that by doing so can not only create income for E-sports events, but also enhance their social influence and be reached out to more users. However, opinions nowadays have been highly polarized on the live broadcast licensing of international E-sports events. Those that can be recognized by live-streaming platforms, get high certification fees, or charges a high price are mostly popular online game competitions with high recognition. The worldfamous E-sports games such as the LOL and Overwatch have gained more than hundreds of billions of dollars in game licensing every year. In contrast, most games still have made limited benefits from broadcasting rights.

6.1.2 Profit Models Electronic sports, as the name implies, contains two special attributes. One is the ecommerce (internet) attribute, which corresponds to paying for the content of online games, and other newer payment modes through online live-streaming websites and platforms. The other is competition attribute, compared with traditional athletic sports, including revenue models in fields such as matches and club operations.

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Monetization of E-sports Commodities The monetization of E-sports commodities is mainly divided into the total revenue of E-sports online games, E-sports derivative products, and E-sports events. As to the respective total revenue, that of E-sports online games refers to the amount of online gaming consumption (that is, the total spending amount by users on online games); that of E-sports derivatives comes from E-sports clubs and players, live-streaming websites and platforms and streamers, etc.; that of E-sports events mainly comes from the sales of tickets and other products, sponsorship and advertisements. According to CNG’s 2018 Electronic Competitive Industry Report, sponsors are an important means of generating revenue for E-sports events. In the early days of the booming development of E-sports competitions, sponsors didn’t always pay attention to E-sports events, and instead they focused on the hardware, technology and equipment related to the events such as peripherals and displays. Later E-sports chair and other product extension and brand providers had also become important sponsors of E-sports events. As the E-sports industry flourishes and E-sports events are increasingly improved, traditional industries such as FMCG and auto parts have also begun to become important sponsors of E-sports events. FMCG and automobile brands are important sponsors for traditional Chinese enterprises. Over the years, these brands have heavily invested in marketing and advertisement, and provided more sponsorship for E-sports events than for peripherals, hardware and software, etc. According to the distribution of sponsorship for international E-sports events in the past two years, sponsorship from traditional Chinese applications represented by FMCG, the automotive industry, and mobile phones has exceeded that from hardware, devices and peripherals providers. The changes in sponsors also indicated that the commercial value of international E-sports events is increasingly recognized. With the development of international E-sports competitions, they will be further recognized, and is expected to gain more sponsorship. Apart from the income of broadcast authorization and sponsorship, international E-sports events also can make profits from other aspects such as selling tickets. Compared to the limited ticket revenue, the E-sports gambling market has higher potential to grow. Considering traditional cultural sports are inextricably intertwined with gambling for a long run, most foreign gambling companies will set betting odds before major traditional sports meetings (e.g. the World Cup and the Olympics). Whenever international E-sports events are taken place, major foreign gambling institutions will set their betting odds. In the light of data from relevant agencies, the E-sports gambling have surpassed golf and rugby in terms of transaction value, and have become the world’s 7th largest sports betting business.

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6.2 Development Status and Model Analysis of the WCG (2000–2010) 6.2.1 Development Status The World Cyber Games, abbreviated as WCG, was founded in 2000. It was operated by South Korean company International Cyber Marketing Corp. and sponsored by Samsung, Microsoft, and SmileGate, among others. The WCG has become one of the most influential international E-sports events in the world. It has played a pivotal role in publicizing and promoting E-sports around the world and securing the healthy and rapid development of the global E-sports industry.

Development History of the World Cyber Games The World E-sports Competition was established in 2000, and held their first main event in 2001. Like the Olympic Games, the WCG also built an athlete’s village, and since 2004, it was hosted in different city every year. The WCG, one of large-scale international E-sports events, attracts more than ten thousand participants every year and gathers game players from all over the world to share this stage. All participating countries/regions will carry out their own group preliminaries and select the most outstanding athletes to compete for their countries. In 2009, more than 600 athletes competed in Chengdu, China. In 2010, it was held in Los Angeles, California. Later in 2011 and 2012, it was in Busan, South Korea and Kunshan, China, respectively. On December 1, 2013, at the Kunshan International Convention and Exhibition Center, TH000 ordered a must of soldiers to drown the Tree of Life owned by Moon a South Korean Night Elf player at the Echo Isles, costing the “fifth race” the opportunity for the last WCG championship. Over the past 14 years, the WCG, a commonshared aspiration of several generations, had gone through ups and downs, and finally was shut down, bidding farewell to its own journey.

6.2.2 Model Analysis The total income of E-sports events comes from virtual tickets, network advertising copyrights, online game publishing, online live streaming, and athlete brokerage and sponsorship. But the revenue of a majority of Chinese E-sports events around domestic and foreign E-sports games is generally from the capital transmission from sponsors and live broadcasting copyrights of online games. It is unwise for events to only rely on one or two deep-pocketed sponsors to provide funds, because once

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the sponsor suddenly cancels the money, events will be in danger of suspension. The WCG was cancelled in 2014, mainly due to the disinvestment of its sponsor Samsung. As the information age advanced, E-sports also changed rapidly and were highly dependent on the sponsorship and management of developers, so it was always second to the WCG organized by manufacturers. In an official email on February 5, 2014, the then WCG CEO Brad Lee stated the WCG Committee “will not organize tournaments and events”. Since then, the famous classic E-sports event was ultimately ended for a time. It was not until March 29, 2017 that SmileGate, an online video game developer, announced that it had officially obtained the WCG trademark license from Samsung, and it would reorganize the event independently in the future. On September 14, 2018, the World Cyber Games 2019 was announced to be held in Xi’an, China from July 18 to 21, 2019. The WCG 2020 would be renamed WCG 2020 CONNECTED. Amid the covid19 pandemic, part of matches will be conducted online as scheduled, and all event activities, including official game competitions Warcraft III: Reforged, CrossFire, FIFA Online IV, and Honor of Kings would be streamed live, in order to protect the physical and mental health and personal safety of players and fans. At the same time, the WCG 2020 CONNECTED would be broadcasted live on more than ten platforms around the world, including YouTube, Twitch, South Korea’s Afreeca TV, China’s Douyu, Penguin E-sports, Huya Live, Bilibili, Kuaishou, Southeast Asia ASTRO, and Russia’s GG.

6.3 Development Status and Model Analysis of the LOL World Championship Series (2011–2021) 6.3.1 Development Status As shown in iResearch’s user survey statistics, the LOL is one of the most popular games in the current sports industry market, accounting for a large share of existing online games, and its highest-level competitions now are the S-Tier tournaments organized by Riot China. According to the CNG’s 2018 Electronic Competitive Industry Report (Games), the data analysis results showed the LOL was currently one of the hottest E-sports games, and was the one with the most complete competition system in the world, including global tournaments, local pro leagues, collegial event series and a more diversified professional E-sports system. Taking the LPL in China as an example, the LOL competition ecology, with the LPL as the core, made of the LDL (formerly LSPL), Demacia Cup, and Tencent Games Arena Hero of Cities, among others had gone through several years of detail improvement and format optimization, and now has been completely improved in all aspects like the total quantity, grading and structure of competitions (Fig. 6.1).

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6 Case Analysis on World’s Top E-sports Events ● LOL World Championship ● LOL MSI ●LOL Pro League (LPL)

● LOL All-Star

●LOL Development League (LDL) ● LOL Demacia Cup ●Tencent Games Arena Hero of Cities

World-class system

● National Collegial Championship ● Cybercafe Champions League

Pro system

Amateur system

Fig. 6.1 Development status. Source CNG

6.3.2 Model Analysis As a phenomenal MOBA game, the LOL pioneered the league competition system and home and away system. The LOL was introduced into China in 2011. Starting from the first LPL in 2013, the domestic LOL competitions started to gradually act in line with foreign tournaments. After several years of development, the LOL now has a relatively sound and complete competition system both at home and abroad. The League of Legends World Championship, commonly abbreviated as Worlds is hosted by Riot Games and is an annual grandest competitive event with the greatest honor, the maximum value, and the highest level and popularity. It is held from October to November every year and is mainly divided into preliminaries, group matches and playoffs. The tournament format is a round robin type and single elimination system (Table 6.1). For the development status-quo of the LOL World Championship (every season), it features a format dominated by leagues and supplemented with cup tournaments. It took Riot Group (LOL developer) five years to set up professional competition systems all over the world, including the OGN/LCK, LPL, LCS, EU LCS, GPL, LMS and CBLOL, and supplemented with twice a year tournaments (MSI and season grand finals) and an All-Star game. As a result, professional matches cropped up all over the world, and its far-reaching influence endured.

Prize money

$98,500

$2,000,000

$2,050,000

Participant (country/region)

USA, Germany, Philippines, Signore, Canada, France, Belgium, China, Finland, Poland, Spain

China, South Korea, USA, Vietnam, Russia, Taiwan (China), Canada, Germany, Denmark, Spain, Armenia, Belgium, France, Hongkong, UK, Venezuela

South Korea, USA, China, Lithuania, Philippines, Taiwan (China), Russia, Canada, Estonia, France, Hongkong, Spain, Bulgaria, Denmark, Finland Germany, Netherlands, Norway

Year

2011

2012

2013

63

31

28

Number of games

07/03–10/04/2013

07/26–10/13/2021

04/02–06/20/2011

Duration

Table 6.1 Summary of the LOL world championship (every season) from 2011–2021

Los Angeles, USA

Los Angeles, USA

Jönköping, Sweden

Venue

14

12

8

Number of teams

/

/

/

(continued)

Viewers and viewing time

6.3 Development Status and Model Analysis of the LOL World … 125

Participant (country/region)

China, South Korea, Taiwan (China), USA, Brazil, Denmark, Germany, Turkey, Netherlands, Canada, Finland, Norway, Spain, Sweden, UK

South Korea, China, Taiwan (China), USA, Thailand, Brazil, Denmark, France, Canada, Spain, Sweden, Germany, Hongkong, Netherlands, Romania, UK

South Korea, Taiwan (China), China, Denmark, USA, Brazil, Canada, Ukraine, Hongkong, Poland, Russia, Croatia, Greece, Romania, Signore, Slovenia, Spain

Year

2014

2015

2016

Table 6.1 (continued)

$5,070,000

$2,130,000

$2,130,000

Prize money

77

/

/

Number of games

08/27–10/29/2016

08/14–10/31/2015

08/13–10/19/2014

Duration

16

16

Number of teams

San Francisco, Chicago, 16 New York, Los Angeles

Paris, London, Brussel, Berlin

Taipei, China, Signore, Pusan, Seoul (first took place in Asia)

Venue

(continued)

Peak viewers: 1,620,065, average viewers: 671,311, viewing time: 22,936,435 min, broadcast time: 34 h

/

/

Viewers and viewing time

126 6 Case Analysis on World’s Top E-sports Events

Participant (country/region)

South Korea, China, Taiwan (China), Vietnam, Denmark, Brazil, UAS, Australia, Argentina, Canada, Chile, Hongkong, Japan, Turkey, France, Mexico, Ukraine, UK, Armenia, Croatia, Germany, Latvia, New Zealand, Peru, Russia, Signore, Spain, Sweden, Uruguay

South Korea, Taiwan (China), China, USA, Vietnam, Australia, Brazil, Denmark, Thailand, Chile, Japan, Peru, Poland, Russia, Turkey, Argentina, Canada, France, Sweden, Ukraine, Armenia, Belgium, Bulgaria, Columbia, Croatia, Hongkong, Italy, New Zealand, Portugal, Venezuela

Year

2017

2018

Table 6.1 (continued)

$6,450,000

$4,596,591

Prize money

119

119

Number of games

10/01–11/03/2018

08/26–11/04/2017

Duration 24

Number of teams

Seoul, Busan, Gwangju, 24 Inchon

Wuhan, Guangzhou, Shanghai, Beijing

Venue

(continued)

Peak viewers: 2,050,475, average viewers: 651,178, viewing time: 82,428,261 min, broadcast time: 127 h

Peak viewers: 2,102,206, average viewers: 572,944, viewing time: 73,623,301 min, broadcast time: 129 h

Viewers and viewing time

6.3 Development Status and Model Analysis of the LOL World … 127

$2,225,000

$2,225,000

South Korea, China, Taiwan (China), Denmark, Poland, Russia, Sweden, Argentina, Australia, Germany, Japan, USA, Canada, Czech Republic, Hongkong, Slovenia, Turkey, White Russia, Belgium, Bulgaria, Chile, Croatia, France, Italy, Mexico, New Zealand, Romania, Vietnam

To be determined

2020

2021

$2,225,000

South Korea, Taiwan (China), Vietnam, China, USA, Denmark, Australia, Brazil, Canada, Hongkong, Japan, Russia, Thailand, Belgium, Bulgaria, Chile, Slovenia, Turkey, Armenia, Croatia, Czech Republic, Germany, Hungary, Mexico, Norway, Peru, Poland, Romania, Sweden, Uruguay

2019

Prize money

Participant (country/region)

Year

Table 6.1 (continued)

To be determined

114

120

Number of games

To be determined

10/02–11/10/2019

10/02–11/10/2019

Duration

Shenzhen, Shanghai

Shanghai

Berlin, Madrid, Paris

Venue

To be determined

22

24

Number of teams

/

Peak viewers: 3,882,252, average viewers: 1,113,702, viewing time: 139,862,355 min, broadcast time: 126 h

Peak viewers: 3,985,787, average viewers: 651,178, viewing time: 82,428,261 min, broadcast time: 127 h

Viewers and viewing time

128 6 Case Analysis on World’s Top E-sports Events

6.3 Development Status and Model Analysis of the LOL World …

129

LPL Spring Season Taking China region as an example, the LPL Spring Season usually lasts from the beginning of January to the end of April, and takes four days every month. Gamers can arrange their time according to the competition schedule. After the close of the Spring Season in early May, Riot Group then organizes a global competition (MSI), and invites the LOL champion teams from the five major regions and the IWCQ winners to compete together, fully stirring the passion of LOL game players all over the world. After that, game players can continue to watch summer games from the end of May to the end of August, and the game format is the same as the Spring Season. Early September welcomes the China regional qualifiers for LOL Season Grand Finals, which as the top-notch tournaments, is hosted at the end of September and October and is an annual visual feast for world-wide LOL gamers. Later at the end of November, the Demacia Cup Finals are held offline to enhance the cultural exchanges between the LSPL and LPL teams. In addition at the end of December, the LOL AllStar, the most valued year-end LOL events is taken place. Gamers choose the five most popular players in their region to represent them and compete with other regional teams. E-sports events have injected new vitality into this ten-year-old game. As the grandest annual event of the LOL, the World Championship also is the most glorious, the most valuable, the highest-level, and the most prestigious one among all LOL competitions. The 2017 Season World Championship was held in China and was a great event for China’s E-sports industry in 2017. During the period, the Baidu Index for the keyword “League of Legends” exceeded the highest value of the year. The LOL World Championship ranked the 5th place among 2017 Top 10 Grand Games in China released by Titan Sports, and was the only international E-sports event on the list. In 2018, the LOL competitions in China region had covered all global tournaments. Major competitions had attracted batch after batch of new game players, rejuvenating the LOL. Over the past two years, the LOL user retention rate had continued to rise, and the LOL leagues featured extensive scale, wide dissemination, and nationwide coverage. Although game players in first- and second-tier cities had a higher preference for the LOL, the proportion of user groups in markets in lower-tier cities cannot be underestimated. Male players were overwhelmingly dominant in the user groups, and were represented by undergraduates aged from 18–24. And the influence of the LOL E-sports events also played a huge role. In addition, the LOL based on professional competitions and had gradually embarked on the exploration of the corporate ecosystem. The LOL had the most professional events. Professional players quickly gained a large number of fans due to their superb competitive skills showed in games, and content creation was a secondary creation based on the competition content and players’ experience to

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retain fans. The expanded scale of fans had brought endless imagination space to the monetization of user traffic.

6.4 Future Development Trend of E-sports Events 6.4.1 Professional Development The E-sports industry has experienced rapid development since 2014. The inflow of a large amount of capital has greatly enriched E-sports products, and the per capita income of all links in the industry chain has increasingly risen. According to data released by the SAPPRFT, China’s E-sports market would reach more than RMB 27 billion by 2015, and overtake the American market to become the world’s largest E-sports trading market. To be specific, the revenue of E-sports online games totaled RMB 26.91 billion, increased by 13% year on year; the revenue of E-sports events amounted about RMB 310 million, grew 43% year on year; the revenue of E-sports derivative industry hit RMB 2.07 billion, higher than 137% year on year. Therefore the E-sports market as a whole may reach RMB 50 billion in the future. As shown in the Operation Report on E-sports Game Competitions in China issued by XinSanban Think Tank, due to the emergence of various MOBAs and the innovation and remake of old competition types of online games around 2010, highquality E-sports online games sprung up in a short period of time. At that time, thirdparty events faded away. The vacancies of a large number of new E-sports players also urgently needed to be filled. Because online game manufacturers possessed a great deal of game copyrights and users, they had unique resource advantages in organizing E-sports events, and thus the first-party E-sports events came in. At this stage, international E-sports events had increased rapidly, and the first-party events had overtaken the third-party games in quantity, scale and influence. The world’s top 3 largest E-sports events had gradually transformed from the third-party games to the first-party games. Afterwards various events were increasingly frequently convened, and data analytics platforms studied a large number of event information and invented a competition classification system. There was a wealth of match experience gained, a series of brand values built and a basket of more professional preparations and plans for events. What’s more, the rapid growth of information technology had also promoted the professionalization of streaming E-sports games live.

6.4.2 League-Based Development The E-sports industry is constantly approaching to traditional sports, and E-sports event will tend to be conducted in the form of more mature league-based games. The

6.4 Future Development Trend of E-sports Events

131

league-based games mean that the financial risk that clubs undertake due to relegation will be minimized indefinitely, so that clubs with risks reduced will also try many things in competitions to enhance the playability and fun of games. Moreover the league-based E-sports events will save some games that have already slipped into recession. For example, after Overwatch adopts a league-based competition system, its followers have exceeded 800,000 and raised the activation rate in internet cafes. It can be said that league-based games will be a major trend in the development of E-sports events. The home-and-away system and league-based events the LOL adopts announced the advent of an era of league-based E-sports, but the problems faced by it are much more complicated than many industry insiders think. The bidding of preliminary venue construction, discussions on the operation models of local clubs, training on relevant personnel echelon, allocation of local media outlets and PR resources, operation and management on local fans, staff and materials guarantee for event organization and live-streaming, etc., any of which involves the offline implementation are all a test for the resource scheduling and utilization capabilities of league-based E-sports.

6.4.3 Commercialization According to the White Paper on Sports Startup 2016, in the fifteen months from January 2015 to March 2016, the E-sports field completed 34 financings aggregating RMB 3.58 billion, second only to sports media in scale. The input of massive funds had not only enhanced the attractiveness of the E-sports industry, but also brought tremendous momentum to the formation of the industrial ecosystem. According to the Operation Report on E-sports Game Competitions in China published by XinSanban Think Tank, from 2013 to 2015, the total amount of domestic sizeable E-sports competitions increased by 85% and there were more organizers with a rise of 50%. Similarly the competition reward was also raised by nearly RMB 500 million in 2016, greatly overstepping the reward quota for the first half of last year. The prize pool and viewers of some E-sports games like Dota 2 TI 2016 with over 100-billion-dollar prize money had surpassed traditional small-medium-scale Chinese sports such as basketball and billiards. It surpasses traditional small and medium-sized sports such as basketball and billiards. For example, the Knockout Stage for LOL Season 2015 had an average of 36 million viewers, far more than the average of 19.94 million viewers for the NBA Knockout Stage broadcast on ABC channel in the United States that year. The number of professional E-sports players in China had steadily increased from 2015–2018. In 2015, the figure was 648, and the number of gold medals topped the world. The scale of Chinese E-sports users would exceed 120 million in 2015, and expand to 280 million in 2018 as expected, with a CAGR of less than 30%. As the business model was improved, advertising sponsors were also ready to provide more financial support for younger and better E-sports users. Additionally

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the peripheral environment and fan economy of E-sports games had promoted their profitability.

6.4.4 Pan-Entertainment Development Chinese young user populations of E-sports events highly overlap with that of the entertainment industry, slowly showing a integration trend. The two sectors are taking advantage of each other to expand the target user groups and further amplify their influence. The cooperative model of “E-sports + celebrity players, web dramas, big movies, animations, animes, and music” has emerged. For example there are various entertainment programs like E-sports-themed reality shows and some shows with E-sports celebrities starring, and entertainment stars participate in E-sports live-streaming or endorsement competitions and live performances.

6.4.5 Nation-Wide Popularization Because E-sports are inseparably related with online games, they are less recognized by society for a long time. Under the circumstance when E-sports are ambiguously defined, many people think that E-sports are just playing games, and it is hard for E-sports events to build a standard and authoritative image. In the past more than ten years, the great glories brought by E-sports events to the country enabled its people to realize that they should show the same respect to Esports as to traditional athletic sports, and that’s why people was attaching increasing importance to E-sports. Chinese Players had Repeatedly Scored Good Results in International E-sports Events As Chinese players had achieved excellent performance in global E-sports events, China’s global influence on E-sports would also increase day by day. For example, Li Xiaofeng (SKY) won two World Cyber Arena (WCA) championships in a row. The Chinese teams IG (Invictus Gaming), Newbee, and Wings won the title of the second, fourth and sixth Dota 2 TI successively, making more and more people begun to accept E-sports. In addition, the number of online game players in China had reached an unprecedented level, and the prevalence of online games had allowed more people to clearly understand the difference between E-sports and ordinary online games, and finally recognize E-sports events in a more open and inclusive manner [1] (Fig. 6.2).

Reference

133

Fig. 6.2 Team wings won the TI6 championship

The variety of E-sports games and the cross-terminal diversification of viewing channels would lead E-sports games to enter the public domain. Traditional E-sports activities were showing a development trend of networking and lower thresholds for use, and the emergence of mobile E-sports had also lowered the bar for the public to watch and participate in competitions. Nowadays, as online live-streaming platforms became more and more abundant, it was increasingly easy to watch events through mobile terminals. The gradual application of TV sets would attract more E-sports audiences in the future, thereby realizing the nation-wide popularization of E-sports games. Practice Questions 1. Do you think if it is necessary for China to vigorously develop E-sports events? 2. Do you think how can E-sports events contribute to the industry development? 3. Do you think what are the problems of hosting E-sports events for China?

Reference 1. Xiatong, Zheng, and Gao Chongyue. 2018. Discussions on the Development Strategies of China’s E-sports Events through the SWOT Analysis Framework. Contemporary Sports Technology 8 (10): 183–184.

Chapter 7

Special Analysis on the Development of China’s E-sports Industry

Abstract At present, China’s E-sports industry has gained a place in the global market, so profoundly grasping the current development environment of China’s Esports industry and figuring out the local development characteristics of the E-sports industry is an important part of our continuous exploration of the future development path of China’s E-sports industry. This chapter will elaborate on the development overview of China’s E-sports industry in terms of its local environment, development issues, paths and trends. Keywords China’s E-sports Industry · Localization

7.1 E-sports Live-Streaming 7.1.1 Operation Mode and Development Status-Quo of E-sports Live-Streaming 7.1.1.1

Operation Mode

iResearch’s Research Report on China’s Game Live Streaming Industry 2020 showed that in 2019, the live streaming revenue was still the most important part of total operating income of domestic independent video games and video live streaming platforms, accounting for 93.5%. As 2020 witnessed the rise and rapid development of emerging services such as cloud games and live commerce, the revenue sources of video game live-streaming platforms would be further diversified, while the proportion of total revenue from live streaming services would gradually decrease. In order to satisfy users’ interactive experience of E-sports, live-streaming platforms have increasingly adopted various forms combined with cloud playing, live commerce, and game promotion, breaking through traditional interactive methods like sending bullet comments and rewarding to expand the operation modes of E-sports live broadcast. A. Huya Live Focus on E-sports-related content and expand upstream and downstream business © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_7

135

136

7 Special Analysis on the Development of China’s E-sports Industry Agency of game distribution Self-owned events at all levels, etc. Content production

Interaction, check-in, support, etc. Huya Kungfu Carnival

Livestreaming+

Cultural education: Intangible cultural heritage, voluntary teaching, etc. Public welfare: Poverty alleviation, environmental protection, etc.

Huya Live business layout

Offline activities

Derivative content

Derivative event programs like commentaries Entertainment programs like movies and TV series, and food shows

Fig. 7.1 Huya Live business layouts

Compared with Bilibili and Kuaishou, among other companies, the advantages of live-streaming platforms like Huya, Douyu are a wide range of audience and a high reach rate. And traditional live-streaming platforms are focusing on their conditions, namely enriching the content of E-sports games and using new technologies to improve users’ viewing experience, ultimately raising their competitiveness. Speaking specifically of Huya, it has ventured into entertainment event programs and expanded services to the upstream and downstream of the industry chain, while keeping developing E-sports content and broadening the E-sports game market. The enriched content of E-sports live-streaming platforms has generated more growth points, thereby enhancing their value in an all-round way (Fig. 7.1). In March 2021, Huya formally launched a series of innovative ways to interact with live-streaming rooms, including seven core open features: interactive live games, loot drop in live-streaming rooms, live commerce, one-click teaming-up, one click to broadcast, game message panel and anchor clashes to continuously enhance users’ immersive streaming experience. Among the seven core open service technical capabilities, interactive live games refer to that live viewers can directly affect the development of events in online games through sending bullet comments and rewarding. It has now been piloted with Wangxiang Shanhai (“妄想山海”, literally translated as “Delusional Mountain and Sea” in English). Live commerce aims to drive the sales of virtual props, coins, etc. of online games through interactive plays with the game host. Huya Live conducted a live marketing activity for the popular mobile game CFM on March 23, 2021. All manufacturers and workshops, through the open platform, could freely set instant preview of props and monitor the data in real time to accurately track the brand effect. One-click teaming-up feature for live streaming at the client side and one-click broadcast feature of online games enable the integration of live watching and game playing, and the seamless conversion between users and

7.1 E-sports Live-Streaming

137

online game anchors. To be specific, these two features simplify the process from watching live broadcast to opening online games, and also provide space for a new pool of game anchor and the output of more P/UGC. Two features—game message panel and anchor crashes are intended to match Huya live broadcast players and users with the social atmosphere of E-sports accurately. Using these two features, users can view various game data in real time during live streaming, and also can know such data when Huya anchors in the same online game enables the split-screen function, thereby improving user’s browsing experience and making the live program funnier. In addition, Huya Live had successfully added an interactive service feature of “loot drop in live-streaming rooms” to the Game for Peace. The feature has become a new type of immersive live-streaming interactive gameplay, which incorporates a large amount of players and live-streaming information. Regardless of player’s game streaming, in-game killing or bullet-comments bombing and gift craze in live broadcast rooms, all can instantly trigger the drop of player-specific props provided by the manufacturer to the audience [1]. B. Bilibili Live: Take copyrights as its key, develop live-streaming business Kuaishou, Bilibili and other players are mainly engaged in buying copyrights to expand their own live-streaming business. At the end of 2019, the exclusive broadcast rights of the LOL World Championship in China cost Bilibili RMB 800 million for three years. This move was a key point for it to develop its live-streaming market. As to the live-streaming industry, in 2020 Bilibili had arranged the market in all aspects from main anchors, content ecology to policy support. According to the 2020 fourthquarter financial report, Bilibili’s total revenue from the value-added service industry like live-streaming was raised by 118% year on year, and was the growing-fastest sector, other than the advertising service. And there also was a significant increase in the number of viewers during major events (Fig. 7.2).

7.1.1.2

Development Status-Quo

iResearch’s Research Report on China’s Game Live Streaming Industry 2020 showed that the development of video game live streaming in China can be mainly divided into four stages. The first stage was before 2013 when the live-streaming industry was in its infancy. At that time a large number of E-sports players had a demand for video game live streaming, so video websites accordingly began to establish their own live streaming systems. The second was a growth stage from 2013 to 2014 when the live streaming subsystems of each network platform operated independently and became the initial live streaming platforms. The third stage was from 2015 to 2018 when the internet industry market experienced explosive development. As mobile E-sports emerged, the trading market of video game live streaming was driven to develop rapidly. Tencent had taken a stake in Douyu and Huya, and increased its investment in the construction of live streaming platforms for dominant online games. Huya had also been successfully listed. The fourth stage has been a mature development period since 2019. With the listing of Douyu, platform companies such as Bilibili, Kuaishou,

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7 Special Analysis on the Development of China’s E-sports Industry

Game business: RMB 1.13 billion Increased by 30%

Advertisement: RMB 720 million Increased by 149%

Live-streaming & other services: RMB 1.25 billion

value-added

Increased by 118%

Increased by 168% E-commerce & other businesses: RMB 740 million

Fig. 7.2 Bilibili’s revenue structure and business share of fourth quarter 2020

Xigua Video, and Kugou Live have made more investment in the video game live streaming industry. So far such live streaming industry has formed a development pattern with two superpowers and multiple strong players (Fig. 7.3). The report predicted that the overall industry market size would reach RMB 40 billion in 2021, and the market size of the live-streaming platform industry would be expanded mainly from the following two aspects. On the one hand, cost control on

Fig. 7.3 Douyu listed in the US

7.1 E-sports Live-Streaming

139

bandwidth and anchor income would enhance the profitability of platform companies. On the other hand, emerging business forms such as live commerce, cloud gaming, and paid live broadcast had also promoted the rapid expansion of the entire industry market. According to iResearch’s Research Report on China’s Game Live Streaming Industry 2021, in 2020, the trading market size of China’s video game live streaming industry would exceed RMB 34.3 billion. Driven by the rapid growth of major platforms such as Huya and Douyu, the trading market size had maintained a considerable growth rate, and the Report predicted that by 2021, the scale of the entire trading market would hit RMB 43 billion. With the rapid advancement of video game live streaming platforms like Bilibili and Kuaishou in China, their development statusquo cannot be accurately reflected into their income statistics, and more income from game live streaming content of such platforms should be incorporated into the statistical range. These platforms would bring new vitality to the game live streaming market along with the development of the live streaming business. What’s more, as stated in iResearch’s Research Report on China’s E-sports Industry 2021, as major E-sports game activities and events kept amplifying their social influence and speeding up the commercialization, the downstream E-sports industry, including game live streaming activities, E-sports sparring, and E-sports derivatives had developed rapidly. It was predicted that by 2021, the E-sports industry ecology would account for 28.3% of the whole E-sports market, and the video game live streaming market in the E-sports ecology would surpass 24 billion in 2021. With the improvement of living standards, users paid more and more attention to entertainment, leisure and cultural life. Watching game live streaming allows users to enjoy the fun of games without playing, and can make full use of fragmented time. According to the Analysis Report on the Employment Prosperity of E-sports Players—A New Occupation released by the Ministry of Human Resources and Social Security in 2019, taking the LOL Pro League (LPL) in China as an example, the game live streaming viewers were more than 10 billion in whole 2017, and the number exceeded 7.09 billion in the first half of 2018 alone. And the 2018 Season World Championship attracted 205 million players around the world, more than 1/30 of the global population. In 2019, the user scale of video game live streaming platforms in China reached 300 million, an increase of 15.4% over 2018. Under the influence of the covid-19 epidemic, watching E-sports live streaming had become the preferred choice of leisure and entertainment activities, driving a steady increase in the market size of E-sports live streaming apps after 2020. Due to the slowing growth of future users and the gradual expansion of paying users, a new development trend of game live streaming platforms would inevitably be formed. At present, China’s E-sports live streaming industry mainly has the following development characteristics. A. The industry has developed rapidly and the market structure is stable. The rapid growth of the E-sports game industry has brought a large number of excellent live streaming content, and also advanced the E-sports live streaming industry. The business profit model of E-sports live streaming will be further enriched.

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According to iResearch’s Research Report on China’s Game Live Streaming Industry 2020, in 2019 the live streaming revenue was still the most important part of total operating income of domestic independent video game live-streaming platforms, accounting for 93.5%. As 2020 witnessed the rise and rapid development of emerging services such as cloud games and live commerce, the revenue sources of video game live-streaming platforms would be further diversified, while the proportion of total revenue from live streaming services would gradually decrease. The Research Report also showed that with the formal listing of Huya and Douyu, the closedown of Chushou TV and the transformation of Zhanqi TV, the video game live streaming industry would be more concentrated, basically forming an international competitive landscape with two superpowers and multiple strong players. Before 2019, there was still no new independent video game live streaming platforms established, representing such platform products had gradually become saturated. Even when video game live steaming had become an indispensable promotion channel for new content industry, there still existed huge charm and new opportunities. Young enterprises such as Bilibili, Kuaishou and Xigua Video would continue to raise capital investment into such live streaming service. In addition, several live streaming platforms like Kugou Live, Now Live and iQIYI all broadened the service and accordingly formed the diversified content ecology. Such service competition would still be extremely fierce in the future (Figs. 7.4 and 7.5). B. The game live streaming market has obvious operational advantages, and the industry layout is stable.

Old platforms

Douyu

Huya Live

Listed platforms

Penguin E-sports

Kuaishou

Expansion of video platforms

Extension of entertainment live-streaming platforms

Huomao

cc.163.com

YY Live

iQIYI

Momo

4399youpai.com

Xigua Video

Lizhi

Now Live

Kugou Live

Fig. 7.4 Overall competitive landscape of game live-streaming platforms in 2020

7.1 E-sports Live-Streaming

141

Other businesses (%)

Live-streaming business (%)

Fig. 7.5 Market distribution of independent game live-streaming platforms from 2017–2022

In contrast, the user stickiness of E-sports live streaming is significantly higher than that of other industries. E-sports live streaming has great advantages, with high user retention rate and considerable monetization capability, and basically meets the layout and needs of network giants and commercial market. The current layout of China’s E-sports live streaming industry is as shown Fig. 7.6. Content IP owner Game licensing Event IP owner

Game IP owner

Regulators Public security organs

IP owner

Content licensing

Content providers Brand sponsors PUGC Pro players

Cultural sector Cyberspace Administration of China SAPPRFT

Content participation

Contracted live streamer

Brand owner

PGC E-sports event production Entertainment program designing

Individual live streamer

Marketing sponsorship

Game live-streaming Content

Business cooperation

Output

Users

Fig. 7.6 China’s game live-streaming industry chain in 2020 (Source iResearch)

Business partners Game companies Advertising agencies E-commerce platforms

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7 Special Analysis on the Development of China’s E-sports Industry

As shown above, the content copyright holders of E-sports, including game copyright holders, event copyright holders, and IP holders, authorize games to game live streaming platforms, and work with other content providers to provide E-sports live streaming viewers with a series of live streaming programs conducted by professional players, streamers contracted with a brokerage firm and individual streamers, as well as E-sports events and entertainment variety shows. Brand sponsors and business partners are dedicated to marketing and supporting E-sports live streaming to promote its development. Besides live streaming, E-sports companies also combine it with videos and communities to continuously increase the reliance and activity of user players on games. C. Game live streaming platforms are faced with transformation and content has become a key factor. The E-sports live streaming competition has come to an end. Platforms based on traditional game live streaming are faced with transformation, and namely they will advance towards pan-entertainment and develop into an integrated entertainment platform with diversified entertainment methods. And content has become a key factor in competition. Other than regular live streaming of video games and video game competitions, the E-sports live streaming industry will also expand horizontally to various fields, including movies, variety shows, medicine, teaching and other diversified content. The future competition among live streaming content lies in enabling users access to various interesting products, and the content diversification aims to attract and integrate users from different fields. The second is the diversification of live streaming content. Traditional online game streamers are simply specific to online game users, so as to create niche online game influencers. The current competition among online game live streaming platforms has also come to an end. For live streaming content in the future, E-sports live streaming will add new game elements and characters from multiple dimensions to attract users from all walks of life. Moreover, due to the huge user base and the content displayed on online platforms, more entertainment content including E-sports games have landed on these platforms. Everything can be entertained, and pan-entertainment is the future development direction of live streaming. The combination of “live streaming + variety shows” and “live streaming + education” have become the future development trend of pan-entertainment in live streaming content.

7.1.1.3

E-sports Events Live-Streaming and Case Analysis—Taking the LOL World Championship Live-Streaming as an Example

The development of the live streaming industry can be divided into four stages (see Fig. 7.7). The first stage was from 2005 when the live streaming industry just started. At this stage, E-sports in China were mainly carried out in the form of voice chat, and interactive platforms were dominated by PCs. The second stage was an era of game live streaming from 2011 to 2013, and focused on game live streaming and

7.1 E-sports Live-Streaming Image-text era (2005)

Game live streaming era (2011-2013)

From plain texts to emoji and simple interactive live streaming, core voice actresses, PC

Originating from the American Twitch, focusing on game live streaming and interactions, China beginning to follow the

143 Pan-entertainment era (2014-2016)

The golden era of live streaming, capital injections, ventured into by a great deal of Chinese internet companies

Future era of going global (2017)

Exploring new model of “short videos + live streaming”, unlimited potential in Southeast and Northeast Asian market

Fig. 7.7 Development stages of the live-streaming industry

interactions. The acquisition of Twitch, the pioneer of game live streaming, resulted in China’s market exploring the industry. In addition, the debut and development of the LOL in China in 2011 supplemented the rise of the live streaming industry, and and played a major role in the industry’s growth. The third stage was an era of pan-entertainment. With many capital injections, a large number of live streaming platforms were born, and especially mobile APPs sprung up, giving rise to a batch of live streaming software. The fourth stage is the future path of the live streaming industry. The future development trend of the industry in China will pay attention to live streaming combined short videos, refined and vertical development of content, and the expansion of domestic live streaming platforms to overseas markets.

Development History of the LOL Live-Streaming The development of the LOL live streaming can be mainly spilt into six stages. 2017 witnessed a breakthrough in the development of the LOL live streaming. The live streaming of the 2017 Season World Championship was performed by the official, combined with traditional media for dissemination. A total of 144 players from more than 28 countries and regions participated in the competition. Both RNG and WE from the LPL division had successfully entered the semi-finals. For the semi-final SKT vs RNG, the peak viewers exceeded 80 million. For the final, a total of 57.6 million viewers watched SSG defeat SKT and claimed the championship trophy. To sum up, viewers across the world watched 1.2 billion hours throughout the World Championship. At the same time, the success in holding 2017 Season competitions in various areas in China had helped bring lost users back, resulting in a significant increase in the proportion of the event’s active users to the game’s active users. In the same year, the total live streaming viewers of all LPL events had exceeded 10 billion. Only in the first half of the year, the number of live steaming viewers of LOL events had been more than 7.09 billion. The 2018 Season World Championship attracted more than 205 million audiences around the world, hitting 1/30 of the world’s population. On November 3, 2018, Chinese IG team won the title

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in the 2018 Season. This victory received warm congratulations from national people, and its social influence went beyond the E-sports circle. Mainstream news media such as the Media Center of Communist Youth League, CCTV News, Ziguangge News, Xinhua Insight, Environmental Times, ifeng.com, etc., all sent congratulatory messages one after another.

7.1.2 Derivative Industries of E-sports Live-Streaming In recent years, major live streaming platforms have been actively exploring the possibilities of “live streaming + ”, and infiltrating into E-sports, variety shows, tourism, education and other domains, so that they can constantly create new derivative industries, find new commercialization channels, enrich their own live streaming ecosystem and improve their commercial monetization capability, making them invincible among these platforms. However platforms like Douyu and Huya with games and E-sports as their core live streaming business are facing a dilemma: they have to endeavor to change the industrial structure and develop their derivative industries because their commercial monetization channels are too simplistic.

7.1.2.1

Content Diversification of Live Streaming Platforms

At present, the information content on China’s online game live streaming websites and platforms has become more diversified, and they are committed to creating a new industrial ecology. Live streaming platforms have always been competing in live streaming content, and with the vigorous development of the industry, the content competition among online game live streaming platforms starts shifting from competition for streamers to for content ecology. It can be seen that other than live streaming their online games and events, major online game live streaming platforms have further developed multiple content, including entertainment programs, fashion shows, self-organized competitions, and self-made variety shows. During the epidemic, game live streaming platforms have planned to pilot live streaming for several industry sectors, such as community public welfare, online education, e-commerce and online shopping.

Construction of Diversified Content on Douyu Douyu attaches great importance to the continuous construction of diversified E-sports content. In the field of online game-related content, Douyu has invested more into online game sectors by signing outstanding online game

7.1 E-sports Live-Streaming

Films & TV series, variety shows, music, radios, online

145

Game live-streaming, event live-streaming, show live-streaming, two-dimensional works, virtual streamers, outdoor live-streaming, food live-streaming, online shopping

Online education, social welfare

Fig. 7.8 Content diversification of game live-streaming platforms

streamers in the industry and organizing top Chinese events. In terms of online game community building, Douyu also focuses on popular competitions and elevates the real-time discussion atmosphere of games to increase game users and related player communities. Moreover, Douyu has guided online game streamers to create game-themed content and exchange with fans, and has gradually broken the barriers of online live streaming fans and established player communities with E-sports as the core. In the second quarter of 2020, Douyu held more than 50 high-quality E-sports events including the Douyu PUBG Golden Legends, which greatly broadened game user groups and their positive thinking during events. Furthermore, Douyu would continue to devote itself to the content creation in various sectors such as food, daily life, science and education, bringing more wonderful live videos to users. In addition to the support and innovation in various online game competitions and food, a variety of products, including Yuba BBS, videos, playing partners and voice chat are also available on Douyu to satisfy different needs of each user group. Douyu now has established a multifaceted matrix of “diversified live streaming content (online games, food, daily life, science and education) + competition broadcast + self-organized events”, showing that other than online games and conventional content, Douyu will increasingly become more colorful in respect to outdoors, food, culture & entertainment, daily life and other themes. By doing so can not only provide richer content for old users, but also retain more new users and meet their different entertainment needs [2] (Fig. 7.8).

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7.1.3 Extended E-commerce Business According to iResearch’s Research Report on China’s Game Live Streaming Industry 2020, E-sports live streaming companies will enter the live commerce market and tap new ways to make profits. Amid the covid-19 epidemic, the downturn in offline channels made online traffic an important source to attract users, and live commerce has become a significant way to boost economic recovery. Game live streaming platforms such as Douyu Live and Huya Live have launched anti-epidemic public activities to help brands and agricultural product manufacturers affected by the epidemic sell their goods and support work resumption. Like traditional 6/18 e-commerce day, game live streaming platforms also established their own day to open up new channels for live commerce. E-commerce days will become regular together with online game live streaming platforms, as their most important operation mode. For example, Douyu Live organized a public welfare activity called “Buy for Hubei” specific to Hubei brands to help Hubei enterprises fight against the epidemic and resume work. This activity gathered 26 influential streamers from various fields like games, outdoors, food and entertainments, with significant driving effect. According to statistics, Douyu sold a total of more than 400,000 agricultural products for Hubei brands in the two-day activity on April 17 and 18. Such live marketing activities not only have promoted the rapid economic recovery in Hubei, but also provided valuable experience for platforms to tap the combination of “live streaming + ”.

Huya’s Tries for Live Commerce On May 9, 2020, a team of Huya’s streamers came to the experience park of the rural cultural industry in Longchuan County, a mountainous area in Guangdong for poverty alleviation. They, together with the vice head of the county conducted live commerce activities and called on fans to fight against the epidemic and make contributions to agriculture, finally selling nearly RMB one million. As the live streaming platform for this public welfare activity, Huya is always committed to bringing users a large number of positive information content. Through implementing agricultural assistance activities, Huya Live effectively takes advantages of strong immediacy and connectivity of internet to directly display the real situation of Longchuan county to users, thereby realizing a complete integration of “live streaming + streamers + public welfare”.

7.1 E-sports Live-Streaming

7.1.3.1

147

Talent Development: E-sports Streamers and Commentators

According to incomplete statistics, the current practitioners in the E-sports industry were just 50,000, and job vacancies would reach 260,000, and by 2020, the number would grow to 500,000. Therefore, how to train and educate professional E-sports talents has become an urgent issue for the industry. At the same time, practitioners with professional experience in operation & management and skills, and good vocational quality are extremely limited, so the overall quality of practitioners needs to be speedily improved. With the in-depth layout of the E-sports industry, more and more E-sports companies have penetrated into E-sports education, empowering traditional education systems with their advanced industry experience and bringing industry resources and knowledge to the E-sports major. Professions such as E-sports streamers and event commentators have become the main training targets for E-sports talents. In the Notice of Completing the Declaration for Proposed Enrollment Major of Higher Vocational Schools in 2017 issued by the Ministry of Education in September 2016, the major in “E-sports and information management” was set as a supplementary discipline. Previously E-sports talents may only be cultivated by clubs and event companies, but in the future, there will be lots of E-sports professionals who graduated from colleges and universities. Among 13 new positions jointly launched by the Ministry of Human Resources and Social Security and other departments in April 2019, E-sports operators, E-sports players, and E-sports-related posts were also included. 1. E-sports streamers As shown in statistical network platforms, online game content was the most watched and viewed section on online game live streaming platforms, accounting for 77.6%. To be specific, PC-based games accounted for 36.3%, and mobile games came in at 40.1%. And the total view counts of mobile games had also surpassed PC-based games. In terms of the distribution of influential streamers on online game live streaming platforms, 31.6% of top 1,000 popular streamers concentrated on online games, and the remaining 68.4% were on non-online games. There was a big difference between the viewing rate of online games and the proportion of video game streamers to the top 1000 popular streamers, generally because video game streamers were obviously at a disadvantage against entertainment streamers in respect to the amount of user rewards and bullet comments. In 2019, the total income of the top 1000 popular live streaming content on online game live streaming platforms accounted for 31% of the total revenue of all network platforms, and live streaming platforms at the midstream and downstream had started to contribute more to the total revenue of all network platforms. In addition, in terms of the number of followers subscribed of the top 1000 network streamers, 52.7% of such streamers had a fan base of more than 500,000, but for top-level streamers on game live streaming platforms, streamers with fans ranging from five to ten million and fans above ten million accounted for only 6.8% and 6.6%, respectively (Fig. 7.9).

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Fig. 7.9 LOL streamer Dasima

Streamers are the most important information content generator of online game live streaming platforms. During the covid-19 pandemic, streamers of game live streaming platforms were quite active. According to Xiao Hulu’s big data, from January to March 2020, the number of online streamers on major game live streaming platforms showed a significant growth trend, and reached its peak in March, with the total number of online streamers already more than 4.3 million. In post-pandemic period, internet live streaming had become a new choice for early adopters and job seekers who were isolated at home. On the first day of February, the number of new streamers on game live streaming platforms reached 1.6 million, a month-onmonth increase of 110%. Due to effective pandemic control and orderly resumption of work and production in China, active streamers slightly decreased since April and remained stable after steady decline. 2. Event commentators E-sports started relatively late in China. A complete three-tier (national, provincial and municipal) E-sports training system has not yet been formed. Only few colleges and universities offer E-sports majors, and there are rare opportunities for E-sports personnel to receive formal and professional training. And once-famous professional E-sports players have disappeared after the short-lived splendor. Core talents of E-sports, that is, E-sports players, teachers, referees, game commentators, etc. are an important foundation for the development of the E-sports industry. For the E-sports industry, the shortage of human resources was more in personnel in niche segments, such as club directors, game marketing directors, coaches, referees, commentators and game program directors, and these positions are vital for the entire E-sports industry. Since the setup of the “E-sports & Management” major by the Ministry of Education in September 2016, some colleges and universities have started to offer courses related to E-sports. Therefore, Shanghai Sports School started recruiting students for the Broadcasting and Hosting Art major (E-sports commentary) from 2018 to provide professionally-trained E-sports commentators for international events.

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E-sports commentators in China now can be categorized into two kinds: One kind is from retired professional players, which also are the source of the earliest E-sports commentators. On one hand, such event streamers are usually quite well-known in the field of E-sports, and are very familiar with and professional in E-sports games; on the other hand, they have considerable experience in competitions and insight into how to adopt tactics and how events unfold, and have great influence among fans. The other kind is non-professional players, or those who are not experts in E-sports events, but often have strong language skills, clear and smooth articulation, and literacy quality, and are humorous. It is understood that an E-sports event should be equipped with less than 30 commentators by official requirements, which integrate requirements for entertainment-oriented commentators of major manufacturers, various game projects, various competition requirements, video live streaming platforms, and brokerage companies. At present, the demand for E-sports commentators continues to increase. Since the E-sports industry embarked on the road towards sports urbanization, and as events of all sizes have become more and more throughout the country, both the official and third parties are in urgent need of E-sports commentators, because there has a huge shortage for E-sports commentators and the system for personnel selection and training is incomplete [3].

7.2 Shanghai Model 7.2.1 Regional Distribution and Development of China’s E-sports Industry According to the Analysis Report on Operation Pattern and Future Strategies of China’s E-sports Game Industry From 2021 to 2027 released by Intelligence Research, over the past ten years, the number of annual registration of game-related companies in China had showed a fluctuant increase. In 2020, there were more than 280,000 such companies. Judging from the geographical distribution, Guangdong ranked first, with above 90,000 enterprises, accounting for 32.98% of nation-wide companies, followed by Jiangsu and Zhejiang (Table 7.1). Judging from the ranking above, there were four provinces and cities with more than 1000 E-sports companies. Among them, Guangdong was far ahead with a total of 3918 E-sports operations, accounting for 21.35% of all across the country. Chongqing occupied the second place in the number of 3018, accounting for 16.45%. Hunan ranked third with 1218 businesses, accounting for 6.64%. E-sports-related companies in the top three provinces and cities as a whole accounted for 44.43% of the total. According to the Research Report on China’s E-sports Industry 2021, in 2020, the number of registered E-sports companies increased by more than 30% year-onyear; the annual revenue of the E-sports game market reached RMB 136.557 billion, grew by above 44% year-on-year; the scale of E-sports game users rose 9.65%, so

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Table 7.1 2020 Ranking of total E-sports companies in China’s provinces

2020 Ranking of total E-sports companies in China’s provinces No

Name of companies

Number of companies

1

Guangdong

3918

2

Chongqing

3018

3

Hunan

1218

4

Hainan

1154

5

Anhui

758

6

Henan

724

7

Shandong

656

8

Sichuan

632

9

Jiangsu

630

10

Shaanxi

581

11

Hubei

491

12

Zhejiang

379

13

Jiangxi

339

14

Shanxi

327

15

Inner Mongolia

310

16

Liaoning

304

17

Beijing

276

18

Heilongjiang

259

19

Guangxi

256

20

Shanghai

252

21

Jilin

248

22

Guizhou

238

23

Gansu

225

24

Yunnan

197

25

Hebei

195

26

Fujian

157

27

Xinjiang

139

28

Ningxia

122

29

Tianjin

115

30

Qinghai

103

31

Tibet

Source Qichacha, AskCI Consulting

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151

Hebei Hubei Shando Shaanxi Jiangsu Sichua Anhui Henan Hunan Guangdong

Fig. 7.10 Top 10 provinces and cities in China with a total of registered E-sports-related enterprises (Source Qichacha)

China had surpassed North America to become the world’s largest E-sports market. Various domestic regions were also making efforts to advance the E-sports industry (Fig. 7.10). Judging from the locations where E-sports companies were registered in 2021, these companies were still concentrated in Guangdong, Hunan and other regions. Such operations in Henan had grown rapidly, and in Anhui, Sichuan and Shandong had industrial advantages. Although Shanghai was known as the “center of E-sports”, Guangdong had the most E-sports companies, as shown by Qichacha’s data. In terms of geographical distribution, Guangdong ranked first with 2017 enterprises, followed by Hunan and Henan, with 1941 and 930, respectively. The reasons why Guangdong had dominated the E-sports industry for several consecutive years could be divided into the following aspects. First of all, game companies in Guangdong attached great importance to technological innovation and were sensitive to the market. Currently, nine of the top ten profitable mobile games in China were backed by the R&D and operation teams of Guangdong game companies. Such a strong business atmosphere enabled the game industry to flourish, and save a lot of time and economic costs in marketing and cultivation. Guangzhou, Guangdong, as a main leader in developing the E-sports industry, had always paid attention to fostering top E-sports teams and opening up new training channels for E-sports talents, so as to advance top global events.

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On June 26, the Honor of Kings Pro League (KPL for short) 2021 Spring Finals came to a successful conclusion. The all-new Guangzhou Talent Gaming (TTG) team spent only one year to stand on the stage of the KPL finals. Besides players’ efforts, it had to mention the forward-looking layout of the group company Guangzhou Quwan Network Technology Co., Ltd. to which the team is subordinate. With regard to urban integration, in 2020, Quwan Network facilitated Guangzhou TTG’s arena to be landed in Tianhe District, making Guangzhou organize events as a host city for the first time and officially become KPL’s fourth host city for E-sports. The establishment of the team filled the lack of top-level teams in Guangzhou, and further promoted the regional E-sports industry. In the meantime, Shenzhen, as one of the youngest cities in China, was unwilling to lag behind. As the world’s first city with full coverage of 5G independent networking, its building density of 5G base stations tops the world. In recent years, with the holding of large-scale E-sports events represented by the LOL World Championship, the young and innovative Shenzhen has brought more possibilities to develop Esports, and in turn, E-sports have also injected new vitality and momentum into Shenzhen to help it become an international famous sports city. In 2020, Longgang and Nanshan districts in Shenzhen successively issued support policies for the E-sports industry, laying the foundation for Shenzhen to boom the industry. Shenzhen was accelerating the high-quality development of cultural and sports tourism, and was striving to build brand projects of such tourism. The new matrix of cultural entertainment business in the Guangdong-Hong Kong-Macao Greater Bay Area built by Shenzhen not only furthered the E-sports industry, but also added new city labels and richer cultural connotations to Shenzhen. E-sports, as a form of cultural industry popular among young people, accord with Shenzhen’s image as an open and diverse city and its cultural characteristics. Shenzhen also took this opportunity to build it to be a “global E-sports capital”. The main reason why Hunan listed second was its attention on training professional players. Nearly half of professional players in major clubs in China are from Hunan. According to the data in 2016, Hunan native players just for LOL Pro League accounted for 47%. Ruofeng, Xiaocang, xiao8, Yao, Mala Xiangguo, S1mLz, Cool, Condi and many other E-sports players and commentators had made the “Hunan Army of E-sports” famous. And the unique love of Hunan people for E-sports had also made local E-sports industries grow (Fig. 7.11). According to statistics from Weibo Hotspot, in the second quarter of 2021, Beijing topped all regions with E-sports searches of 30.769 million, and was far ahead the second placed Guangdong. After analysis, JDG, TS, WB and other professional teams that take Beijing as their home court all were the frequently-searched keywords. Furthermore, information about game sparring had also driven the growth of Esports searches in Beijing to a certain extent. Similarly, Guangzhou TTG, Shenzhen V5, Foshan GK, Nanjing Hero JiuJ and other teams having their own home courts all attracted search traffic for the province and city where they are located, which indirectly reflected the influence of the establishment of professional teams on the local E-sports industry (Fig. 7.12).

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153

Hebei Fujian Sichua Hubei

Shando Zhejian Shanghai Jiangsu

Guangdong Beijing

Fig. 7.11 Top 10 regions with the most searched information about the E-sports industry (unit: 10,000) (Source Qichacha, Weibo Hotspot)

Shanghai Sichua Henan Jiangxi Anhui Shando Zhejian Jiangsu Guangdong Beijing

Fig. 7.12 Geographical distribution of potential users interested in E-sports (unit: 10,000) (Source Weibo Hotspot)

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In the light of Weibo-based information statistics on potential E-sports users, Beijing once again occupied the first position with information searches of 241,000, followed by Guangdong, Jiangsu, and Zhejiang, indicating that the potential of the E-sports industry in Beijing, Guangdong, and Jiangsu ranked among the top in the country.

7.2.2 Development Status-Quo and Characteristics of Shanghai E-sports Industry With the help of a series of supporting policies, such as building a “global E-sports capital” and a “city of game innovation”, Shanghai’s game and E-sports industries had entered the fast lane of development. According to the Research Report on Market Operation and Investment Potential of China’s Game Industry from 2021– 2027 released by Intelligence Research, Shanghai’s game industry would enjoy a sound momentum of development. Mainland China had outperformed the United States and Japan to become the world’s largest game and mobile game market. Among all cities, Shanghai had occupied an important position. Since 2013, Shanghai’s sales revenue of online games had shown a growth trend year by year. The sales revenue in 2020 was RMB 99.92 billion, an increase of RMB 19.72 billion over 2019. It was estimated that in 2021, Shanghai’s E-sports game market would reach RMB 22.81 billion. Mobile games always were the development focus in Shanghai. There were more than 1,600 game companies in Shanghai, including local companies like Shengqu Games, subsidiaries of Tencent, NetEase and other game giants, as well as foreign game manufacturers like Sony, Riot and Blizzard. In 2020, Shanghai’s sales revenue of mobile games reached RMB 74.37 billion, with a growth rate of more than 40%. According to the “Survey Report on Shanghai Game Publishing Industry from 2019 to 2020”, Shanghai had gathered 10.7% of all listed game companies across the country, 77.3% of A-shares listed game companies and 18.7% of NEEQ listed ones. Although in recent years there were a few newly listed companies in Shanghai, they are generally of high quality. Shanghai also paid attention to the development of small and medium-sized game companies to inject fresh blood into China’s game industry and maintain its vitality. Xindong Network, ULU Games, Bilibili, Lilith Games, Papergames, miHoYo, Moonton, Yoxing Network, HyperGryph, Yotta Games, etc., were all classic cases of growing from small game enterprises to medium and large ones, each having different competitive advantages. Game businesses in Shanghai were growing rapidly, and new powerful manufacturers had brought innovation and vitality to Shanghai’s game industry. With diversified advantages, these businesses had played an integral part in furthering China’s game industry (Fig. 7.13). Rising cost of network traffic had forced companies to focus on high-quality R&D, and the game industry paid more attention to technological innovation. Because local

7.2 Shanghai Model

155

Fig. 7.13 A snapshot of Arknights produced by HyperGryph

game companies in Shanghai already had good foundation for technological innovation, and were provided with strong policy support, the benefits of their independent innovation were increasingly apparent. In 2020, Shanghai launched the “Thousand Sails Plan” (“Qianfan Plan” in Chinese) to accumulate policy advantages and help the multiple billion-yuan game industry go out to the world. Games going global was not only an inevitable choice for the explosive growth of the industry, but also an opportunity to optimize and upgrade the structure of cultural trade and create new trade growth points. The rapid progress of Shanghai’s game and E-sports industry was thanks to great efforts to promote independent innovation, which benefited from the high emphasis put by Shanghai government on talent strategies. Shanghai government had firmly stuck to strategies of talent training, and took the lead in implementing the registration system for E-sports athletes in China. A total of nine vocational secondary schools and higher vocational colleges and universities in Shanghai had offered E-sports major, and the city would also prepare for building E-sports training bases and provincial representative teams. Industry-related service personnel had been simultaneously included into the training system. At present, relying on the excellent talent ecology built over the years, Shanghai’s game industry had cultivated a large number of talents. For example, the proportion of undergraduates and postgraduates topped all national regions, which was also the root cause of the year-by-year growth of the revenue of Shanghai’s game industry. There were multiple important approaches for Shanghai to pool talents, including school-enterprise cooperation to train personnel and strengthening the ability of local enterprises to absorb talents. Shanghai had attracted internationally renowned game companies such as Riot Games, EA, and Ubisoft to set up branches at here. Their accumulated technical experience in PC-based games and console games was expected to help Shanghai’s game industry nurture relevant technical talents. In terms

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of salary, Shanghai was at a healthy pay level. The proportion of highly-paid talents was much higher than the national average. Other than the government’s emphasis on talents, major E-sports clubs in Shanghai also had greatly contributed to talent selection and training. Today, Shanghai had above 80% of national E-sports companies, and more than 250 clubs, 44% of them ranking among the top valuable 50. Not only the FPX club that ever won the LOL world championship, but also well-known clubs such as RNG, EDG and IG were all seated here. It thus could be known that Shanghai was the first choice for leading E-sports clubs to settle. In 2021, it was expected that the revenue of E-sports clubs in Shanghai would be up to RMB 790 million, accounting for 49.5% of the national E-sports income. Although the current Shanghai’s E-sports industry ranked first in both talent demand and talent availability, as stated in the “Evaluation Report on the Development of Shanghai’s E-sports Industry 2021”, the report also showed that those who were willing to go to other cities for work accounted for 18.1% of all E-sports talents in Shanghai. It therefore could be seen that there was a risk of brain drain. Such risk might result from the fact that other cities had enhanced efforts to attract E-sports talents in recent years, or high housing prices, expensive living costs and strict settlement policies led to excessive life stress. Despite of the risk of brain drain, Shanghai was still in a leading position in holding E-sports events, with a lot of experience in running competitions, the entry of many domestic and foreign game and E-sports manufacturers, and complete infrastructure. Recently Shanghai organized a series of important events, such as the 2020 LOL World Championship, which was viewed more than 1 billion times, including livestreaming and 24-h replays, and was watched by nearly global 46 million viewers in real time. At the end of 2021, the 3rd Shanghai E-sports Masters had more than 40 million online views throughout the whole event and peak views exceeding 2.2 million on a single platform. This event was a challenge to the monopoly and oligarchic development of influential E-sports events, and provided a new solution to the combination of E-sports and urban sports culture industry. The “Evaluation Report on the Development of Shanghai’s E-sports Industry 2021” showed that the revenue of E-sports events in Shanghai was expected to further increase in 2021, accounting for 50.7% of the national E-sports revenue. In the case of E-sports broadcasts, with the revenue growth of Bilibili Live, the income of game livestreaming in Shanghai was expected to reach 14% of the national total in 2021. Shanghai’s experience in holding competitions and results achieved were beyond question. Shanghai had formed a relatively complete E-sports industry chain. Specifically game developers in the upstream industry had always kept up with market trends and E-sports companies engaged in content distribution and production & broadcasting, events, etc. in the midstream industry not only focused on copyright protection, but also strived for innovation. E-sports resources including arenas were abundant.

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157

7.2.3 Experience Summary and Success Reasons of Shanghai Model When the covid-19 swept the world, Shanghai was the earliest to keenly realize the feasibility of online model of E-sports events and became the first city in the world to launch online E-sports games. In 2020, the revenue of E-sports events in Shanghai accounted for 50.2% of the national total, and the revenue of E-sports clubs was up to RMB 670 million, coming in at 49.6% of the national total. From enterprises to the government, the whole city had made concerted efforts to further the E-sports industry and forged ahead towards building a “global E-sports capital”. According to the 2019 China E-sports City Development Index jointly released by Huya Live and E-sports World, Shanghai scored 99.21 points and was regarded as the only “super first-tier E-sports city” in China. In addition, Shanghai ranked first overall with a score of 78.7 points, as shown by the latest E-sports City Development Index released at the 2021 Global E-sports Conference. From tournaments to venues, players to associations, Shanghai had worked out a set of “Shanghai Models”, becoming a typical example of developing the E-sports industry across the country and the world. The degree of internationalization, human resources, and profound cultural background are the inexhaustible sources of strength for Shanghai to advance the E-sports industry.

7.2.3.1

Legal Policy Support

Shanghai, as the earliest Chinese city to exploit the E-sports industry, issued 50 Policies for Cultural Creativity in December 2017, clearly proposing to accelerate the construction of the Global E-sports Capital. In June 2019 Shanghai again introduced 20 Policies for E-sports to signal the way forward for the E-sports industry. Districts in Shanghai had also successively released relevant support policies.

E-sports Support Policies of Each Shanghai District For example, Jing’an District issued the “Implementation Plan of Jing’an District on Advancing the E-sports Industry” to comprehensively promote the construction of Lingshi E-sports Center and help build Shanghai into the global E-sports capital. Yangpu District introduced 23 policies to further the E-sports industry, including such policies provided for headquarter economy that meet conditions, and five public policies for office space subsidies, operating support, listing incentives, talent subsidies and business services. Xuhui District released the “Implementation Opinions on Promoting the High-quality Development of the Sports Industry in Xuhui District”, which proposed to rely on the AI industry highland in Xuhui District, give full play to the cluster advantages of Tencent East China Headquarters, YOOZOO and other leading E-sports enterprises, and seize the high ground of the E-sports industry chain.

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The District also planned to carry out a new round of revising support policies for cultural industry and made more efforts to sustain the R&D of new E-sports events, holding of important competitions, construction of important carriers, content production and dissemination of events and E-sports culture. Putuo District published the “Implementation Opinions on Speeding up the E-sports Industry in Putuo District (For Trial Implementation)”, which covered the entire industry chain to support the introduction of excellent E-sports enterprises, venue construction, event holding, content development & operation, platform establishment, talent attraction, development & integration of E-sports derivatives, E-sports equipment R&D, etc. As the covid-19 pandemic became normal, these policies had provided important support to develop the E-sports industry and promote the innovation in the digital entertainment industry [4]. In addition, the Commission on Legal Affairs of Shanghai E-sports Association was established in May 2021 in Jing’an District, and the E-sports legal service platform was officially launched. The setup of the legal service system was of leading importance for the progress of Shanghai’s E-sports industry, and would ensure the healthy existence of E-sports entities and safeguard the sound development of the E-sports industry.

7.2.3.2

Clusters of Leading Enterprises

Great E-sports environment had attracted many E-sports game developers and event service providers to be settled in Shanghai. According to statistics, in 2020, more than 40% of E-sports enterprises in Shanghai were engaged in E-sports game R&D and event services. At present, over 80% of E-sports companies, clubs, teams and live streaming platforms in China are based in Shanghai, including 257 enterprises above designated size of content licensing, 242 ones of E-sports events, and 53 ones of content live streaming. In the ranking list of E-sports brand enterprises, enterprises that had financed more than hundreds of millions all had settled in Shanghai, mainly including Shanghai Yangchuan Electronic Technology Co., Ltd., Shanghai Yaojing Culture Communication Co., Ltd., and Shanghai Evyi Network Technology Co., Ltd., etc. Shanghai has about 37 E-sports arenas, and the number of famous E-sports clubs at here accounts for 48.7% of the national total. And about half of the top influential E-sports clubs in China, such as IG and EDG, are headquartered in Shanghai. Shanghai also has such operations like Bilibili that are deeply engaged in the field of game live streaming and have the strength to spread E-sports among users. In addition, with the driving force of new fans and new demands, companies that focus on the holding of E-sports events and the production and promotion of pan-entertainment programs have expedited the R&D and publicity of E-sports entertainment products.

7.2 Shanghai Model

7.2.3.3

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Cultivation of High-End Talents

Shanghai greatly values talent attraction and cultivation. With respect to hardware and facilities, Shanghai has profound cultural heritage, unique geographical location, and the most cutting-edge technical resources that other cities cannot rival. These all are the core competencies for Shanghai to build a mature E-sports industrial ecosystem, and also deeply attract E-sports talents from all over the country and even the world. The gathering of major clubs here has also prompted many professional players to come to Shanghai, and their leading role has bolstered the standard development of E-sports in Shanghai, thus forming a virtuous circle. Even though major companies have brought together professional players and managerial talents, Shanghai has not ignored the importance of scientific and technological personnel. The reason why games independently developed by Shanghai can occupy a large market share and bring huge profits and output value is the importance given by Shanghai on high-tech talents and the strong support for new game technologies used for independent innovation and R&D. These original games are not only widely acclaimed in China, but also have great influence abroad, all which have laid a solid foundation for the E-sports industrial ecosystem in Shanghai. With the emergence of the online competition model, the format is constantly being introduced. The pioneering competition events in Shanghai have provided a benchmark effect, and attracted many talents who have seen the scale effect of such events. Meanwhile, Shanghai has pooled together a group of talents that are essential for the development of the mid-to-downstream industry chain. In terms of different sectors such as artist brokerage, event operation, game live streaming, and content production and broadcasting, there is a bunch of active leaders in Shanghai. Talking about E-sports clubs, SNG, RNG, EDG, IG and other clubs that have produced many world championships have settled in Shanghai. As regards event operation and content production & broadcasting, Shanghai gathers a host of professional companies, including Bilibili E-sports, VSPN, and IMBA TV.

7.2.3.4

Event Holding

Large-scale international E-sports events, as the most high-profile part of the E-sports industry, have always been the sweet pastry that cities compete against each other. However Shanghai has won the right to host 40% of more than 500 influential Esports events every year, so it is deservedly the most popular city for E-sports events. In 2019, Shanghai held 1,500 large E-sports events, accounting for nearly half of the total national ones. Only in November 2020, Shanghai witnessed the holding of several large-scale E-sports games, including Onmyoji: Battle! Heian-Kyo, Dota 2, and Honor of Kings. Such dazzling achievements cannot be divorced from unique advantages in users, location, and transportation in Shanghai, which as the earliest city to undertake professional leagues for domestic and foreign brands, has rich experience and solid foundation unparalleled with other cities. There are the several following reasons

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for successfully holding such large-scale events. First of all, Shanghai has abundant experience in organizing events, possesses the latest software and hardware, is always at the forefront of infrastructure construction, and has built green and healthy Esports values. Next, E-sports have engraved in Shanghai’s DNA. Many clubs and game manufacturers have acquiesced that events held in Shanghai will receive higher attention. Currently, 60% of the top ten events are convened in Shanghai, gaining high popularity good feedback. Third, after realizing the importance of the E-sports industry and discovering its potential and chain effect, Shanghai enterprises all want to get a share of the pie and their enthusiasm of organizing competitions runs high. Fourth, Jiangsu, Zhejiang and Shanghai have a good user base as these areas are dominated by young people, and have gathered a majority of gamers, which account for about 20% of national total. Finally, Shanghai has multiple professional E-sports venues, such as THE HUB·Xintiandi, Tencent E-sports Experience Center, Shanghai Jingjie E-sports Experience Center, Fengyun E-sports Arena, etc. Even though such venues have been booked, Mercedes-Benz Arena, Shanghai Oriental Sports Center and other stadiums also have strong conditions and rich experience to ensure the smooth holding of top E-sports events at home and abroad (Fig. 7.14). In terms of local competitions, Shanghai has the world’s first self-created Esports event, E-sports Shanghai Masters, which is named after the city, backed by the government, and judged by industry associations. It, as an important E-sports event brand in China, is generally considered to be very promising by the industry. Both in respect to the brand influence and the overall operation, production and broadcasting, E-sports Shanghai Masters has its own clear plan for development. It

Fig. 7.14 Dota 2 the international 2016 in Shanghai

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is determined to become a new business card of Shanghai to empower the cultural economy and match its status.

7.2.3.5

Abundant Supporting Resources

Since 2018, there have been a number of E-sports events, manufacturers, and clubs established in cities such as Beijing, Hangzhou, Chengdu, and Shenzhen. They have shown their advantages and potentials and tried to build themselves into E-sports centers. However, due to its unique advantages in economy, culture, transportation, facilities, tourism, etc., Shanghai is competent to develop the E-sports industry. It has gathered a majority of domestic E-sports events, clubs, and manufacturers, and quickly widened the gap with other cities. It is such rich supporting resources that attract a great deal of enterprises, thus forming industrial clusters. Around 2002, a host of leading E-sports industries, such as VSPN, Banana Gaming & Media and Neotv Culture were settled at Lingshi Road in Jing’an District for its cost advantages and historical background. That was how the name “Lingshi E-sports Center” was born. Shanghai well knows the importance of differentiation, specialization and branding development. For the E-sports industrial ecosystem in Shanghai, like Yangpu E-sports Park, South Hongqiao E-sports Industrial Park, and Pudong Sunland E-sports Park, all have focused on subdividing E-sports market and creating their own unique advantages. Although some achievements have been made, the entire city has not slacked off from city-level departments to district-level branches. Instead, it has actively implemented its industrial layout plan, eliminating old-fashioned industries and introducing high-end ones, so as to construct more new E-sports trendy landmarks. In addition, Shanghai has carried out the policy of “replacing the old with the new”, namely transforming many old buildings (such as in Yangpu District) that failed to kept up with the development into venues and event studios that meet the needs of E-sports events. It has always been the common goal for all parties in Shanghai to jointly build a global E-sports capital, and they have gained impressive results. The present-day Shanghai has a large number of industry leaders in various sectors such as content production, IP licensing, club building, game development and operation, and they have always been improving the E-sports competition system.

7.2.3.6

Emphasis on Independent Innovation

Independent innovation has become an important symbol of the development of Shanghai’s E-sports industry. Shanghai had innovated in E-sports from three aspects. The first innovation was in the business model. Launching creative activities promoted the common integration between E-sports and art performance, culture and internet celebrities. For example, the Peace Elite Super Cup 2021 and Airdrop Carnival held at Shanghai Mercedes-Benz Arena used top stars as a publicity stunt, and invited celebrities such as Hua Chenyu, Wang Yibo and Wu Xuanyi,

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the spokespersons of the Peace Elite brand, to perform live. According to reports, the revenue from other sectors of Shanghai’s E-sports industry, other than E-sports games, was expected to reach RMB 3.63 billion in 2020, with livestreaming service taking the majority and accounting for 45.1%. Other derivative industries were also in full swing. Many E-sports theme hotels and cafes had become a check-in place for internet celebrities, showing a trend of explosive growth. The second innovation was in infrastructure. As an old saying goes: A small discrepancy can lead to a great error, for professional E-sports events that has extremely high requirements for network speed, even a 0.1 s lag or network delay is enough to affect the progress and fairness of the entire game. According to public data, the current 4G network delay is typically 30–70 ms, while the 5G network delay can be controlled within 1 ms, even exceeding the highest speed that many private area networks can provide today. For fast-paced E-sports events with dense command interaction, the 5G network is a more sophisticated solution. Shanghai relies on the 5G technology and other new techniques to build intelligent and digitalized infrastructure, upgrade live streaming hardware, and enhance the user experience of watching games. For content producers and broadcast channels, the biggest challenge is how to present a virtual sport to the real world, so that viewers can get closer to the game. And this brings new possibilities to live streaming and rebroadcasts. Enhanced Viewing Experience with the Use of Image Technologies in the Future With the use of VR technology, the viewing experience of E-sports events will ascend to a new level. The innovative application of the technology to the Esports industry can allow users in front of the screen to participate in the arena in a more immersive way, and will also create more additional scenarios, such as multi-angle, highly-recreated virtual arenas, online press conferences and meet-and-greet events with star players, as well as real-time dynamic technical and tactical details of the game, etc. This not only satisfies audiences, but also generates more investment space for brands and enterprises, both which are crucial for the sustainable development of the entire industry. AR technology is currently also a favorite for E-sports events. In E-sports, it allow integration between virtual characters or objects and the real world to present MR scenes on mobile devices or TV sets without any other equipment needed. The 2020 CrossFire Pro League Grand Finals in Shanghai innovatively adopted virtual studio technology and UE4 to truly recreate the CF battle scenes, allowing audiences to see the fierce battles among four teams. At the same time, sponsor advertisements were highlighted through virtual cameras, thus bringing a strong sense of visual impact. Besides, seamlessly switching between the host and multiple virtual battle scenes provided audiences with a stronger sense of substitution and presence, and smoother viewing experience (Fig. 7.15).

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For example, at the Cross Fire’s 12th Anniversary Ceremony, the overall scene design used true three-dimensional scene technology for virtual construction and presentation to show the future of Shanghai as an E-sports city after 120 years. The entire virtual scene had more than 9 million planes, extended east–west over 15 km, and included three buildings with the main body higher than 500 m. The whole scene was grand and full of futuristic technology, with striking visual effect. It applied a variety of AR technologies such as VR fusion and man–machine interaction, and used the world’s best virtual engine ZeroDensity and ray tracing technology to vividly simulate the real light effect. A complete set of virtual system was used for real-time virtual imaging. The tracking sensing technology and next-generation real-time rendering technology were employed to perfectly combine players and competition content, presenting a future, conceptualized Shanghai as the E-sports capital to the audience. Meanwhile, the virtual recreation of Shanghai: A Future E-sports City contained online interactive features, including firework props, video connections, etc., giving players a sense of full participation and strong interactive viewing experience. The third innovation was in cross-border brand cooperation to create physical or virtual products and meet the diverse needs of users. For example, in August 2021, a Ping An Bank E-sports-themed outlet jointly launched by Ping An Bank and Bilibili E-sports was officially opened at Jinke Road, Shanghai. This immersive space made of E-sports experience area, bullet comments area, integrated business area and others with Bilibili characteristics allowed customers to fully experience the most authentic E-sports culture here. Its diversified content and various interactive forms were adequate to cover people from all walks of life, enabling E-sports to enter thousands of households for popularization while meeting the requirements for integrated bank financial services.

7.2.4 City-Based Development of the E-sports Industry As an emerging and green sunrise industry, the E-sports industry has developed a series of economic chains, from the upstream game development and operation, the mid-stream event operation, E-sports clubs (including team players) and E-sports content production, to the downstream E-sports live streaming, E-sports media and other derivatives, all of which continue to show vigorous and rising vitality, and also bring considerable economic benefits. So with the existing development pattern, how to better promote the high-quality development of the E-sports industry in various regions? The first is to create comprehensive iconic event series; the second is to combine traditional Chinese culture and urban culture for cultural creativity that suits the tastes of young people; the third is

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Fig. 7.15 A player is experiencing VR E-sports

to integrate E-sports with urban sports and cultural tourism to drive the development of such tourism through making full use of the features of both online and offline Esports; the fourth is to construct urban spaces, such as building home courts of clubs and E-sports complexes. All in all, each city should develop the E-sports industry according to their local conditions and differentiated development is the only option. Don’t blindly copy good practice because they urgently want to utilize the E-sports industry to push the overall development of the urban economy and advance the progress of other industries. The right approach is to find the correct position and give full play to its own characteristics. Different provinces and cities have different development environments and resources. It is appropriate to adopt the model of differentiated development in the process of realizing the growth of the E-sports industry. For example, on the basis of their strong sic-tech innovation capabilities and a huge range of audiences, Zhejiang, Guangdong, Jiangsu and Shanghai will centralize regional resources to hold largescale events and speed up the construction of infrastructure, including networks and arenas. They also will deploy the E-sports industry in an all-round way and maximize the development potential. Although Henan and Sichuan are geographically restricted and have limited infrastructure resources like network, E-sports enterprises have sprung up across the area due to the strong support of local governments. Through formulating complete development rules for the E-sports industry, introducing advanced technologies and talents and cooperating with leading companies, they can create a good environment for the industry growth. Gansu and Tibet are short of innovation resources, with the industrial structure and technical innovation lacking vitality, but these areas can exploit their own characteristics such as special geographical features and local customs and combine them with the E-sports industry to attract the attention of audiences.

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Tibet Piloted the E-sports Industry Considering Tibet is at a high altitude, the sports ecology here starts with mountaineering. The 2020 Honor of Kings National Competition—Tibet Autonomous Region Trials with the theme of “Conquering the Highland” was the first large-scale E-sports event organized by Tibet. The finals day was opened using special Tibetan etiquette, and the attending guests were presented with Khata and barley wine. The ingenious transition from the traditional sports of climbing Mount Everest to the E-sports industry of conquering the highlands can not only arouse the interest of audiences, but also enable Tibet to create new cooperation possibilities with E-sports in the future on the basis of the Tibetan culture. E-sports, as an emerging industry of networking, informatization and digitization, neither relies on natural resources like traditional industries, nor requires advanced and intensive technical support like electronic manufacturing. The integrated spatial layout and policy measures can also provide a relatively sufficient foundation and prospects for the industry, so it has a high adaptability and inclusiveness to different cities. Its operation and event holding are not completely dependent on the overall situation of the local economy and natural resources, geographical locations, customs and practices, cultural heritage, etc. The vigorous growth of the E-sports industry has also prompted the start of derivative industries. The current E-sports events no longer just involve single operation, holding and other aspects, but have spawned many fields, including game development, live streaming platforms, IP culture, content production, and peripheral product marketing. They, as a part in the industrial chain, are not limited in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen in terms of development, but begin to take root in different market environments across the country. For example, some cities with a wide range of audiences and strong policy support can gather a host of talents in game R&D and operation. Some have good software and hardware facilities and convenient transportation, allowing them to carry out various international large-scale events and exchange activities. And some have low business costs, and some have a better cultural and entertainment atmosphere. Accordingly in terms of a city, when its tourism industry is not well developed and its basic conditions are not strong, they can focus on huge industrial clusters and carefully study the E-sports eco-chain, instead of insisting on a complete layout, so as to introduce and advance the E-sports industry. Cities should act according to their own conditions, and choose the most suitable business to embark on, such as providing special services for domestic clubs or specializing in peripherals and hardware, E-sports education, etc., all which can form an industrial park. After gaining a suitable foothold, they should create a differentiated theme with its own characteristics. First, they should make continuous efforts to improve their core competitiveness in a niche field and after acquiring certain competitive advantages, make their “cake”

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big. There is an example abroad: Katowice, a small city in Poland successfully transforming from the “Polish coal capital” to a “European E-sports center”. The city has changed from high dependency on resources and a gradual decline of heavy industries, resulting in the departure of a large number of young people, to a pilgrimage place for world-wide E-sports fans. When they pursue growth according to local conditions, it is also necessary for them to break geographical limitations and give full play to the advantages of regional cooperation. For example, areas with developed E-sports industry should actively establish cooperation platforms and vigorously enhance collaboration with underdeveloped regions. They should stand on regional resource endowments, exert their comparative advantages, negotiate and plan industrial layout, and guide local powerful enterprises to set up business groups, so as to form an industrial development community in E-sports technology R&D, hardware production, standard formulation, achievement sharing, derivative product operation and other aspects, and expand E-sports enterprises in less-developed areas from at a county and regional range to a national, and even international range. Meanwhile in some developed cities, the atmosphere of E-sports is hot and the soil for competitions is fertile. However, in areas with relatively backward economy, a huge base of E-sports audiences is of no use due to the lack of various event stages. Developed cities should also actively exchange experience and give opportunities to less competitive regions at the appropriate time to hold events, thus realizing common development. For example the China Electronic Sport Tournament (CEST), more than 40 cities in more than ten provinces across the country have joined the cooperation to hold the event in turn and gather forces for common development.

7.3 E-sport Talent Training in China 7.3.1 Practice History of E-sports Talent Training 7.3.1.1

Development Journey of the E-sports Industry

Since around 1998, China’s E-sports industry has gone through four periods: exploration, development, growth and explosion. At early stage, the public misunderstood that E-sports players were just goofing around, but now they are known as athletes who have won honors for their country. 1. Exploration period (1998–2007) In 1998, StarCraft: Brood War, produced and distributed by Blizzard Entertainment together with Saffire, was introduced into China as a RTS game and soon became a symbol of the beginning of China’s E-sports industry. In 2002, a malicious arson attack occurred at 20 Xueyuan Road, Haidian District, Beijing, causing 25 deaths and 12 injuries to varying degrees. As a result, the E-sports industry, which was supposed

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to thrive, had been heavily hit. The arson incident had a very simple cause, and started from a network administrator refusing four young people to surf the internet. At that time, E-sports were just recognized by China and were very promising for further development. However, due to the baneful influence brought by the incident, the whole country started to rectify internet cafes, and in the eyes of many parents, games closely linked to the E-sports industry had also become a dreadful monster. On April 21, 2004, the SAPPRFT issued a ban on TV programs in relation to online games. In that era when the internet was not popular, the incident impeded the spread of E-sports. With national bans and various rumors about the harm of online games, parents naturally prohibited their children from playing E-sports. The term “internet addiction” was frequently mentioned, and games were even called “electronic heroin”. For a long time, a love of playing games had been considered a disease, and a large number of institutions known for treating the internet addiction were appeared. And it was more shocking that Yang Yongxin at the Internet Addiction Treatment Center of Linyi Fourth People’s Hospital adopted electroshock therapy. During that period, the dreams of many Chinese first-generation E-sports players were stifled in the cradle. 2. Development period (2008–2012) In order to welcome the World Cyber Games 2009 (WCG), Chengdu officially relisted E-sports as a competition event at the 11th Sports Games in 2008. On December 29 that year, the GAS organized and combined existing sports events, and redefined E-sports as China’s 78th sport activity. So far, E-sports were formally included in the scope of athletic sports. Open policies had loosened people’s ideas about E-sports, and a considerable part of people had changed their minds about the industry. In 2011, Wang Sicong announced his entry into the E-sports industry, which greatly changed the treatment of practitioners in the industry. Since then more and more capital increasingly continued to pour into the industry. The continuous injection of capital had promoted the growth of E-sports and required more talents. 3. Growth period (2013–2017) In 2016, the National Development and Reform Commission, the GAS, the General Office of the State Council, the Ministry of Education, the Ministry of Culture, the central government and various ministries and commissions clearly expressed their support for the progress of E-sports in special plans or policies. The Ministry of Education issued the “Catalogue of Instructional Programs of Higher Vocational Education (Technical Schools) in General Colleges and Universities” in September 2016, officially adding the “E-sports & Management” major under the broad category of education and sports. Multiple well-known colleges and universities, including the Communication University of China had offered E-sports courses. E-sports had gradually recognized by officials and the public, and were no longer the traditional

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cliché like internet addiction. The E-sports major was considered to be of educational significance. It not only began to pay attention to talent cultivation, but also developed in a systematic and standard manner. 4. Outbreak period (2018 to present) In the LOL competitions of the 2018 Jakarta Asian Games, the Chinese team defeated the South Korean team and won the championship. The game teenagers wearing the national flag won glory for their country. This victory greatly ignited the emotions of young people, and also allowed the country and parents to see the power behind E-sports. Parents found that game-playing they despised can also win honors for their nation. The CCTV even interviewed and reported a retired LOL player, UZI. A series of dissemination of positive E-sports images have changed the social concept and advanced the E-sports industry. National policies have also begun to lean more towards E-sports. In 2020, the covid-19 crisis engulfed the world, and struck a heavy blow to major industries. However, E-sports advanced against the current and experienced growth, resulting in that cities have increased policy support for the E-sports industry, such as the recruitment and establishment of China national E-sports football team and Shanghai E-sports training team. The training of E-sports talents has risen to the national level.

7.3.2 Classification of Talent Cultivation The E-sports industry chain now can be divided into three categories: content licensing at the upstream, such as game development and operation; content production at the midstream, such as event operation and E-sports clubs (including team players); content dissemination at the downstream, such as E-sports live streaming, E-sports media outlets and other derivatives. E-sports talents should be trained according to the actual situation to really satisfy the needs of the industry and positions. At present, the upstream industry chain urgently needs to cultivate three types of talents. The first type is managerial talents. After systematic study and multiple selections, they must be qualified as the backup force for managers of major game companies, clubs and E-sports enterprises. Generally speaking, companies often adopt the management trainee system to foster their future leaders (such as president, general manager, director, etc.). The talent training program usually is divided into two parts: training and practice. The training on corporate culture, leadership and business is essential, while the practice employs a job rotation system, namely arranging trainees in the core departments of their companies to allow them to know all aspects of corporate operations. In the E-sports industry, managers prefer such talents with strong practical abilities that are familiar with the game industry and participated in game production or large-scale game events, because only these talents can better grasp market trends.

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The second type is technical service talents. The upstream industry chain cannot be separated from the innovation in content and technology, so talents of programming, development, video technology and packaging should be professionally trained to ease the current shortage of high-end technology, product homogeneity and other problems in the E-sports industry. And as the globalization, informatization, and systemization rapidly develop and flourish, such high-level people must be trained to be specialized in one field and to have multiple abilities, and to become versatile talents that can adapt to technological crossover and fusion. The third type is functional talents in terms of finance, public relations, legal affairs, administration, personnel management, etc. The cultivation of such talents, especially financial and legal staff is necessary for the standardized development of enterprises, because the entire industry will be in chaos when content licensers at the upstream of the industry chain are not aware of the copyright protection of game content, or are unable to defend their rights in the face of content plagiarism and other phenomena. The midstream of the industry chain is inseparable from talents in content production and output. The most important content outputs of the E-sports industry are various events, so it is vital to cultivate core event personnel, including E-sports players, event referees, and hosts. In addition, it is also necessary to ensure the reserve of logistics personnel. Behind the best performance and wonderful events presented by players on the court are the support from E-sports coaches, data analysts, nutritionists, and player brokers. The content production also focuses on developing talents for event production and broadcasting, such as stage directors, program directors, scenic designers, and commentators. The professional media talents necessary for content dissemination at the downstream of the industry chain include reporters, screenwriters, copywriters, anchors, etc. Unlike general traditional news talents, they should have quick thinking skills and unique views on the industry, and also are sensitive to hot spots, because the Esports industry contains entertainment elements. All these skills and views need to be specially developed. Public relations and marketing talents are also crucial. Because the E-sports industry has developed many derivative sectors, such as E-sports hotels, peripherals, game role figures, etc., their operations require professional personnel for product, business and brand marketing and media publicity. They not only deal with merchants, players, and enterprises to ensure efficiency, but more importantly, are responsible for better promoting E-sports products to the public, so that audiences can recognize the market of genuine products and buy well-designed products with both quality and quantity assured.

7.3.3 Policies for Talent Cultivation From 2003, in which the GAS recognized E-sports as the 99th official sport, to 2008, in which it was readjusted as the 78th sport, E-sports had gained official recognition and China’s E-sports industry has been developing vigorously. Later, in July 2016,

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the GAS issued the “Thirteenth Five-Year Plan for the Development of the Sports Industry”. In October that year, the General Office of the State Council published the “Guiding Opinions on Advancing the Fitness and Leisure Industry”. In April 2017, the Ministry of Culture released the “Development Plan for the Cultural Industry in the Thirteenth Five-Year Period”. Driven by these policies, E-sports had experienced benign, standardized, large-scale and high-speed development since 2016. In 2020, the national vocational skill standards formulated by the Ministry of Human Resources and Social Security included the skill standard for E-sports athletes for the first time. After the E-sports players were officially listed as a new profession by the Ministry and another two departments, the country once again set standards for E-sports talents, which also brought the talent training into a new stage. The introduction of the standard for E-sports athletes was based on the situation that professional personnel only can fill less than 15% of E-sports jobs and there still was a huge talent gap. The rapid expansion of the E-sports industry had also put forward higher requirements for the number and quality of practitioners. Professionalization and standardization were the foundation for improving the talent system and ensuring the vitality of the E-sports industry. The newly released standard clearly defined the profession of E-sports players.

National Vocational Skill Standard for E-sports Players The profession of E-sports players refers to the personnel engaged in different types of E-sports competitions, sparring service, experience and performance activities. Their main work is to participate in E-sports competitions, and they are also responsible for other tasks, including professional E-sports sparring, collecting the developments (situations) of E-sports teams, providing professional data analysis on E-sports content, experiencing E-sports games and offering opinions and suggestions, and taking part in E-sports activities and E-sports performances. The national vocational skill standard for E-sports players divides E-sports players into five levels: level 5/junior player, level 4/intermediate player, level 3/senior player, level 2/technician, level 1/senior technician, in which level 1 is the highest, and also specifies the occupational skills corresponding to each level. There are corresponding requirements for working time, event participation and honors obtained for the eligibility of different levels. For example, practitioners applying for ascending to level 1 have to work in the field for more than four years after obtaining level 2 certificate, or have to get international E-sports event awards. If E-sports practitioners want to be rated, they need to take the theoretical knowledge test and professional competence assessment. It thus can be seen that the country now has made clear regulations on the profession, including specific work content, skill and knowledge requirements. The release of this standard has played a guiding role in the compilation of textbooks, collection

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of questions, and implementation of eligibility assessment for the next step in talent training. Employment with certificates and the optimization and quantification of the industrial rating system are not only conducive to personal career development, but also greatly help players to change careers after retirement.

7.3.4 Overall Development Status-Quo of E-sports Talents 7.3.4.1

Status-Quo of Talent Supply and Demand

In June 2019, the Ministry of Human Resources and Social Security released the Analysis Report on the Employment Prosperity of E-sports Players—A New Occupation on its official website. The Report analyzed various positions in the E-sports industry, including E-sports players, coaches, technicians, etc. It also showed that E-sports professionals are in short supply in China, and there is a hole in the E-sports talent market. It was predicted that the demand for E-sports talents would be nearly two million in the next five years. The Development Report on China’s E-sports Industry in 2021 showed that the overall size of China’s E-sports market in 2020 would exceed RMB 145 billion, and was expected to be more than RMB 180 billion in 2021. It therefore could be known that such a huge market and such an emerging, booming industry with a complete industry chain had a high demand for talents, but the supply had not yet kept up. Today, there appeared hundreds of professional jobs around E-sports events, including at the level of E-sports clubs, media and content production, event and activity organizers, live streaming platform, etc. With the growth of the E-sports industry year by year, the talent gap had been increasingly widened. According to the Development Report on China’s E-sports Industry in 2021, 89% of E-sports practitioners believed that the industry was in short supply of talents. Relevant jobs in various cities were in abundant supply, and the personnel demand in several southern cities, such as Wuhan, Chongqing, Shenzhen and Chengdu was greater. With the entry of E-sports into the Asian Games, the International Olympic Committee officially recognized E-sports as a sport. There were various new professions for young people to choose, including E-sports event operations officers, club managers, directors of E-sports arenas, data analysts, E-sports team leaders, referees, commentators, and athletes. The social demand for E-sports talents was extremely huge, and their treatment had also gone up. In the popular impression, the only way to enter the E-sports industry is to become a professional player and play games. However in fact, after the first round of institutional construction, such talents have become saturated, and both top players and reserve forces in the industry are more adequate. At present, the managerial manpower is the scarcest in the industry and mature professional managers could be numbered. In addition, the demand for personnel related to public relations and marketing, and professional content production and event support is huge.

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Status-Quo of Talent Cultivation

According to the Analysis Report on the Employment Prosperity of E-sports Players—A New Occupation, about 80% of respondents were aged under 30, and most of the respondents had a high school, technical secondary school or university degree, of which about 46% were with a high school or technical secondary school degree, 38% with a junior college degree, and 16% with a university degree. They as a whole had low education background. From the perspective of talent demand, talents in shortage obviously were technology-driven ones. It could be seen that the current training of E-sports talents shouldn’t just start from interests and hobbies, but should gradually shift to develop personnel with professional abilities. After all there was an urgent need of high-level and versatile talents. E-sports education in China can be divided into two categories. In terms of general education, since the Ministry of Education added the “E-sports & Management” major in 2016, a number of colleges and universities, such as the CUC and Nanjing CUC and Sichuan Film and Television University have offered E-sports courses and incorporated the E-sports industry into the education system. Higher vocational schools mainly focus on training E-sports players and coaches, while undergraduate education lays particular stress on theories, so the undergraduate major of E-sports centers on the operation and management of E-sports events with the purpose to cultivate talents who serve the development of the E-sports industry and technically qualify for E-sports event planning, event operation and other positions. Although the learning cycle is long, the talents cultivated are very popular in the market. For example, the Broadcasting and Hosting Art major (E-sports commentary) offered by Shanghai University of Sport in 2018 welcomed the first batch of 20 students. They had already been responsible for commentating on 2020 LOL finalist competitions in their junior year, reflecting the industry’s thirst for talents. With respect to talent training in the E-sports industry, colleges and universities have contributed little, while a number of vocational schools have made a big difference, including Hainan Technology and Business College, Guangdong Lingnan Institute of Technology and Guangdong Huashang Technical School. Such higher vocational education pays more attention to applied skills for the training of E-sports talents. For example, Shanghai Business & Tourism School offered a major in Esports operation and management last year. The major courses involve E-sports event planning and execution, venue management, livestreaming technology, etc., and are closely related to specific positions. Yu Jie, the person in charge of the major in E-sports operation and management at Shanghai Business & Tourism School, said: “What we provide depends on on-site work needs.” (Fig. 7.16). In terms of vocational education, the teaching quality varies greatly due to the constraint of various factors. Talent training mainly counts on major clubs, and Esports youth training camps are often the starting point of the careers of Chinese E-sports players. Most of the training is to cultivate professional E-sports players. These talents join clubs to receive vocational education when they are very young, but the training has a high elimination rate. Most of them have ended the peak of their E-sports career before growing up and changed to become a coach or found

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Fig. 7.16 Students majoring in E-sports

another way out, instead of continuing to receive higher education, which also results in fewer choices and difficulty in re-employment after retirement. 2021 witnessed the introduction of new anti-addiction regulations for video games, the strictest ever in history. By September 3, 2021, E-sports event officials, such as KPL, LPL, PEL, and NeXT had openly expressed that they would answer the call of national policies to set an age limit for competitors. As control had become much stricter, there were cases those underage E-sports players had been removed from the participant list. For example, on September 2, 2021, Creme, the mid-laner of the LPL OMG team was officially removed from the player list because he was aged under 18. Previously, Creme was once known as the “Best Rookie”, because he performed well in the LPL Summer Season. According to the new anti-addiction regulations, he cannot play games on court until at least next year, and the age limit made many minor players face the risk of termination. Restricting minors’ participation in E-sports events may currently have a certain impact on the prosperity of the E-sports industry, but in terms of the big picture of the country, it is necessary to limit the age of E-sports players. Considering China is too anxious to succeed in training E-sports talents and major clubs generally require them to have made achievements before the age of 18, it will inevitably shorten their career and is detrimental to their long-term development when minor players with immature bodies are overdrawn.

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7.3.5 Problems Existed in Talent Cultivation 7.3.5.1

Inadequate Practical Experience

In September 2016, the Ministry of Education released the “Catalogue of Instructional Programs of Higher Vocational Education (Technical Schools) in General Colleges and Universities (Supplementary Majors in 2016)”, clarifying the license to offer the “E-sports & Management” major. The major code is 670411 and classified under the broad category of education and sports and the class of sports, and has been offered since 2017. There inevitably are some additional attributes such as “entertainment first” and “minors-dominated market”, because the E-sports industry has wide audience and is based on games, after all. All these have impeded the cultivation of high-quality talents, which have to be trained through practice like someone groping for stones to cross a river. Unlike mainstream industries, the E-sports industry cannot quickly organize the construction of systematic disciplines. As an old saying goes, too much haste will ruin everything. Although colleges and universities want to provide a considerable number of great talents to fill the huge gap, at least three to four years of training make it hard to meet the needs of the industry in a short term. During the training, it is of little value to learn from the existing experience of other disciplines. There must be no systematic school-running experience to draw on for new majors, no corresponding curriculum system to refer to, no mature schoolenterprise cooperation model to promote, and no work tasks to connect with study courses. In addition, there is still a lack of clear occupational requirements and skill standards for corresponding positions. Meanwhile the faculty in colleges and universities that have already offered the major is also worth considering. For the major inclined to theoretical teaching, both teachers’ practical experience and theoretical knowledge are indispensable. Because it is unclear for skill certificates recognized by the country, society and industry to be used for access or level evaluation, and there is no clear requirement for teachers’ eligibility, some teachers are forced to teach like driving a duck onto a perch. With teachers neither having work experience related to E-sports before starting their careers, nor learning the theoretical knowledge of E-sports, how can we cultivate the talents needed by the industry? E-sports are a man-to-man competition of intelligence and physical strength using electronic devices as sports equipment. Its derivative majors are also inseparable from the provision of hardware and software facilities. Although most colleges and universities have complete computer equipment to aid teaching, their configuration often only supports data collection, teaching demonstration, etc., and fails to meet the teaching needs of E-sports. As a result, colleges and universities have to attach importance to social education with respect to talent cultivation. Students majoring in E-sports, a highly applicable discipline should be encouraged to participate in social practice, to learn and get trained in practice and to feel the atmosphere in leading companies such as clubs and game enterprises, helping them find their own career road.

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7.3.5.2

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Low Social Recognition

The time of E-sports entering the public eye and being included in the admission catalog of higher vocational schools is short. There are very few persons who have really studied E-sports and are engaged in the E-sports industry. And low employment rate and employment channels to be broadened have discouraged many talents. The social recognition of the E-sports industry still needs to be improved. From the perspective of professional E-sports players, most of the current top players are concentrated in the age group of 18 to 25, and talent discovery is accidental. If young people want to embark on the career path of becoming an E-sports player, they basically need to quit their studies temporarily, but many parents are not convinced. In their view, becoming an E-sports players means playing games and not doing a proper job, which is neither decent nor has stable source of income. In contrast, students majoring in Electromechanical Engineering, Electrical & Electronic Engineering, and Auto Repair in vocational schools are skilled in one field and able to become self-sufficient. From the perspective of students, even if they can withstand the pressure from their families, they still have to consider their future development. After all, the career of E-sports players is basically only five to ten years. What should they do after retirement? Can their own strength and anti-pressure ability guarantee a place for themselves in this industry? In a word, both as far as young people and parents are concerned, these factors make it a difficult decision to give up school and pursue a career in E-sports. There are also many misunderstandings about other skilled talents in E-sports operation and management, game planning and execution, and media communication in society. The most common one is to confuse them with professional players, and the public thinks what they learnt is game operation, game strategies and other hands-on courses. However in fact, they need to learn more knowledge and skills in many fields such as marketing, visual design, economics, computer programming, E-sports psychology, E-sports industry analysis and management, E-sports industrial ecology, etc. Talents trained in such a way can meet the skill requirements for multi-disciplinary integration. The second misunderstanding is about the current employment situation. The society generally believes that a “good” job is a stable one, such as officially budgeted posts. On the basis of this idea, many students will choose a job that has nothing to do with their major after graduation, but indeed, the rise of the E-sports industry has brought considerable dividends. Today, the main income of professional players includes basic salary, bonuses, and performance bonuses, and those who have the ability can also earn money through endorsing products and livestreaming. There are large differences in the salary of professional E-sports athletes at different levels. The salary levels of frontline players, second-tier players, and youth trainees are obviously different. Top professional E-sports players can basically earn more than RMB one million each year. But the third-tier players may only have about RMB 6000 a month, which can just maintain the most basic life. Similarly, for the club operation positions that are currently the most in demand in the industry, working in small and medium-sized clubs can basically get a salary

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of RMB 100,000 to 250,000 a year. For large clubs, the number can be doubled from RMB 350,000 to 600,000, excluding bonuses. However all these are just for experienced operation staffs with strong capabilities and interpersonal network in hand. Employees who just start to work may only get several thousand a month. Therefore, it is imperative to guide university graduates to change their opinions on employment. Not only they will discover broader employment channels after changing their way of thinking, but also the mass will shape a new concept and gain a new understanding of employment content and directions. With an open mind and a new idea, they will be able to embrace E-sports, which unlike traditional stable employment patterns, is a new employment form.

7.3.5.3

Incomplete Training System

As far as the college training is concerned, many schools now have set up E-sportsrelated majors, but the education quality varies and no a complete teaching system has been formed. From the aspect of vocational education, it is necessary for clubs and event organizers to establish an effective training and promotion system, and improve the competition-based training system, so as to ensure the continuous supply of professional talents. The sci-tech development, such as advances in 5G technology and the application of VR and AR technology, will inevitably lead to changes in job positions and functions in all aspects of the E-sports industry. Changed demand for talents requires colleges and universities to follow up and even go forward together accordingly in major construction and personnel training, so how to establish a more scientific and reasonable training model for E-sports professionals that agree with the characteristics of the industry is the top priority of major construction and promotion. Other than the existing curriculum system, some universities have taken a different tact and started an E-sports talent training class, which generally has high thresholds and charges high fees. In 2021, Peking University first opened a training class for senior E-sports talents. The class mainly included courses in philosophy, management, cultural industry, sports industry, etc. and would invite successful entrepreneurs in the E-sports industry to give lectures. It targeted E-sports industry management personnel and aimed to foster the industry’s leaders, with a fee of RMB 68,000. The participants included Hu Xuanchuan, the principal of Shengjie Gaming Academy and the founder of SJG E-sports Club and others. It thus could be seen that this kind of training classes was not for the general public, but more for providing these leaders with a communication and learning platform, and basically played no role in improving the quality of E-sports talents in an all-round way. For traditional sports, competition-based training is an important way to improve athletic skills. However, there are no fixed local competitions in present-day China. Most are large-scale events with commercial investment. Their participants are basically well-known players who have been fully trained by clubs, and there rarely have new stars rising. Nowadays, China’s E-sports industry is trying to integrate traditional sports and achieve two-way incentives for events and players. Participating in a competition has various benefits: stimulating students’ interest in learning and

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teachers’ enthusiasm for teaching, examining shortcomings in teaching and learning, and knowing whether the current teaching materials and education methods are suitable for industry requirements to improve educational quality and cultivate more outstanding talents. Consequently a complete training system has to combine actual competitions, thus promoting teaching, learning, reform and construction through competitions. Only in the actual competition can we gain more experience. Hou Miao, head of Tencent E-sports, said at the 2020 Global E-sports Leaders Summit that Tencent Global E-sports Arena would officially launch the provincial team competition mode in 2020. “This mode can not only provide a high-level competition platform for more local E-sports players and a better channel for local talent training, but also advance local E-sports industry, as well as strengthen the public’s awareness of the industry and support the E-sports ecosystem.”

7.3.6 E-sports Talent Cases 7.3.6.1

Examples of Talent Training in Colleges and Universities

In the “Notice of Completing the Declaration for Proposed Enrollment Major of Higher Vocational Schools in 2017”, the Ministry of Education announced 13 supplementary majors in 2016, including the “E-sports & Management” major. The major code is 670411 and classified under the broad category of education and sports and the class of sports [5]. This is also the beginning of E-sports entering colleges and universities. After trials in many vocational colleges, in 2017 the CUC cooperated with China’s leading E-sports company VSPN to set up the first undergraduate major certified by Project 211. The CUC, as one of universities in Project 211 offering E-sports majors in China, became the first “crab-eater”.

“E-sports Majors” in the Communication University of China The CUC classifies this newly established major in E-sports under the category of Digital Media Art Major (new digital entertainment) for a purpose of cultivating a group of outstanding personnel in game planning, E-sports operation and program production. To this end, it sets up multiple courses in relation to E-sports operation & planning and industrial management, including economics, psychology, sociology and other humanistic curriculums. Its first batch of students enrolled is 20, including both liberal arts and science ones, and the major adopts a 4-year schooling system, with the tuition of RMB 8,000 per year. The enrollment method is the same as the traditional college entrance examination process. The initial test is divided into three rounds: interview, paper test and proposition creation. The CUC will test examinees’ comprehensive abilities in film and television, new media, event organization, creativity,

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aesthetics, logic, etc., and thinks highly of their teamwork competency. After passing the initial test, they have to reach a certain score in the college entrance examination for being successfully admitted. The major belongs to the first-tier one in art. In terms of faculty, the reason why the CUC is the first undergraduate school to offer the Digital Entertainment major is that it has abundant teaching resources and educational experience. First of all, it began to recruit students for the Animation (Interactive Arts) major in 2004, and for the Digital Game Design (divided into game design arts and game design technology) major in 2010. It has accumulated 12 years of teaching experience and resources, and its students generally are reputed in the industry. The CUC has a mature teaching plan for this major and is equipped with a professional teaching team. It not only invites senior E-sports practitioners to teach event-related courses in programming and game arts, etc., but also use their resources to provide opportunities for students to deeply know the organizers of E-sports events and hold several small competitions under the guidance of tutors. Besides fixed tutors, the school will also invite some excellent players to give students lectures on competition experience, so that students can better understand the current situation of the E-sports industry and help them combine theories and practices in learning. From the perspective of training direction, the media, an important part of the E-sports industry, can not only be used to publicize and promote the industry, but also directly create value in the industry chain in the form of event broadcasting and derivative programs. The CUC was keenly aware of the talent gap in content dissemination, operation and planning in the E-sports industry. Unlike the targeted and detailed teaching in previous commercial institutions or higher vocational colleges, the school aims to develop such a host of versatile E-sports talents that have comprehensive abilities in planning, operation, broadcasting, and anchoring. Because professional E-sports players are often engaged in the industry at a young age, and their flowering period is very short, they are destined to be unable to take the college entrance examination and then graduate after at least four years of undergraduate education. That’s why colleges and universities take a different training road to foster talents with commercial organizations and higher vocational schools. In terms of teaching content, the CUC insists on a balance between practices and theories to ensure that the knowledge imparted is verifiable. On the basis of this major, it is also committed to breaking down disciplinary barriers and enhancing the connection with its ace majors, in order to jointly build and share teaching and research resources. For example, there is a huge room for improvement of the overall level of China’s E-sports commentary. If the E-sports industry wants to develop in a better direction, it must have a team of commentators with a strong educational background and great professional competence. In this regard, the Broadcasting and Anchoring School of the CUC, as the cradle of national top dubbing and hosting personnel, can provide support.

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Fig. 7.17 The CUC worked with Huya to set up the E-sports research center

In 2020, the CUC launched another new attempt and announced that it reached an in-depth strategic cooperation with Huya to jointly establish an E-sports research center. Both sides were committed to cultivating all kinds of E-sports talents for China’s future, advancing the upgrading of local high-quality E-sports brands, building national E-sports ecosystem, and formulating more complete industrial standards to promote the E-sports industry. They also contributed to holding the first Beijing International College Student E-sports Festival (Fig. 7.17). After years of development, the E-sports industry has gradually formed a certain scale. Other than the path of becoming an E-sports player, E-sports talents can be put into event organization and management, event recording and production, club management, brokerage business and other aspects. And more professionals are needed to form a stable ecology and improve the industry. Universities that can provide academic degree certificates, cooperate with leading companies, and have employment guarantee are undoubtedly more reliable. Even if the training cycle is long, it also proves that standardized development provides an excellent solution to the lack of professional talents.

7.3.6.2

Examples of Talent Training for the E-sports Industry

Although colleges and universities have only begun to include E-sports as a new discipline since 2016, the industry has never stopped training E-sports personnel. Different from universities where are to impart knowledge and educate people, commercial

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establishments act in their best interests for E-sports talent training. Only persons who can create business value deserve to be cultivated, which has been widely agreed within the industry. Therefore, the industry training is still to foster professional Esports players. After all, high-level pro players are the most indispensable part of maintaining the long-term vitality of E-sports events, providing audiences with a high-quality and high-standard game viewing experience, and gaining traffic and popularity. The most classic business training model in China is the “youth training camp”. E-sports companies such as major clubs employ traditional approaches, including conducting open recruitment on social media like Weibo, monitoring and screening potential talents in the South Korean server or domestic server, and introducing by professional players and practitioners, or they can work with other institutions and platforms to look for new talented players and invite them to join the camp. Later they will start closed training to learn E-sports in a short period. Most of the recruits are talented and well-grounded ordinary people or rookies. However, now there are many commercial organizations under the banner of “youth training camps” to deceive naive young people and rake in money in the name of “realizing their dreams”. Only the camp of major well-known clubs can offer more formal training courses, and the one established by game companies are more targeted. For example the KPL (Honor of Kings Pro League) youth training camp is built to recruit young players who love the game Honor of Kings, have superb skills and are willing to embark on the road of E-sports and join one of the 12 KPL clubs. The Honor of Kings Pro League (hereinafter referred to as KPL) is the highest-standard professional competitive event of the game. The KPL in a year is divided into two seasons: the spring game and the autumn game. Each season is again split into three parts: the regular season, the playoffs and the finals. And it has been included in the Asian Games. The KPL, as a large-scale event that is very entertaining and has a wide range of audiences, is bound to cultivate new reserve forces while paving a brilliant path for the players in active service. The youth training camp is a place for professional training of talents. For example, the player ClearLove, who won the LPL Spring Championship in 2014, is selected from the first KPL youth training camp, so is AG’s player Yinuo. They all have achieved dazzling results. Today, the conditions for entering the KPL youth training camp are very harsh. Judging from the selection of the summer camp in 2019, there are three ways in total. The first one is participating in the secondary league and qualifying for next round. The second one is becoming the king of underdogs, who need to be ranked in the top 50 in the Battle of Top Players, namely a local player with 2000–2100 or more points. The third one is through recommending by major famous clubs, which have experienced the KPL, qualifiers or secondary leagues. Take the KPL summer training camp as an example. From the end of July to the end of August, players have to sign an agreement after entering the camp and then join the formal training. From Monday to Thursday, they will fight against each other for nearly a month in a best-of five (BO5) form. The format and on-site arena arrangement will simulate the official KPL competition to the greatest extent

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possible. After the end of training, clubs will vote to determine the list of official players, as bench players for the KPL autumn season. Different from the conventional one that everyone knows, the training mode of the KPL camp is not as boring as ordinary drilling. It simulates the formal competition. As seen by the KPL audiences, there are professional coaches who will guide players for their game controls at any time and use their rich practical experience to customize the training plan for players. After competitions, professional analysts will replay the game frame by frame to find out the weak points, so as to improve weaknesses and work out new tactical systems. In addition, the KPL will evaluate player attributes in all aspects according to the unique ability evaluation system to help them improve strengths and address weaknesses, and raise their professional level and training ability. The entire training mode strives to be standardized and professional. There are battle rooms, directors, commentaries, observers, reception personnel, etc. arranged to provide youth trainees with a real feeling of gaming on the KPL stage. At the same time, the youth training camp will also give players a sense of urgency, always reminding them not to let their guard down just because training is training. To the contrary, they should treat each round of training as an official game, and only in this way, hundreds of rounds of training can be effective.

7.3.6.3

Strengthening the In-Depth Integration of Production, Education, Research and Application in the Industry

Training E-sports talents should be conducted by different levels and through multiple channels. The first level is using the club’s youth training system to foster high-level, top-notch professional players and discover gifted E-sports talents. The second level is through vocational education to combine production and education. According to the characteristics of E-sports talent training, we’ll formulate a talent training model and system to supply fresh blood to the E-sports industry. The third level is to aim at the talent demand of the E-sports industry. Starting from colleges and universities as E-sports education and training bases, we’ll accurately grasp the positioning of talents training and continuously provide talents. First of all, we should promote the diversification of professional institutions in industrial production, education, research and application, and set up special organizations to advance the in-depth integration among the four aspects, including talent training centers established by commercial institutes and talent management centers in universities, etc. Such organizations are responsible for personnel training and market connection to ensure a balance between supply and demand. In the meantime, we should actively build a bridge between universities and enterprises, and integrate E-sports learning, training base construction, teacher training, and student practice, so as to realize the seamless connection between majors and industries and closely tie talent training to industrial development. Secondly, we should build an incentive-based in-depth integration mechanism of production, education, research and application. For many parents, E-sports are often equated with game addiction, and they even think that encouraging E-sports means

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encouraging game playing. Only by establishing a practical incentive mechanism and laying out incentives in spirit, payment, honors and work can we change the inherent thinking of a considerable number of people. We should incorporate the industry’s broad prospects into long-term planning, and strive for in-depth industrial development. Finally, we should encourage diversified integration approaches. First, colleges and universities can not only cooperate with enterprises, but even run their own operations. They can cultivate what they need. After truly understanding the market demand, they can formulate precise plans for talent training. The second is to conduct joint research. The government, enterprises and universities together will carry out research and share concepts, experience and insights around training methods of basic talents and high-end talents. The third is to co-build entities. Universities, institutions and enterprises jointly establish E-sports practice platforms or organize events and make concerted efforts to promote the in-depth integration of production, education, research and application. Practice Questions 1. Which cities do you think can successfully create a new development model for the E-sports industry? Why? 2. How can new technologies such as AR and VR be better integrated into the E-sports industry? 3. How do you think should the “Shanghai Model” plan its future development direction?

References 1. Huya officially opened the live interactive open platform [EB/OL]. https://www.fromgeek.com/ internet/50-387198.html. 2. Douyu continues to build a diversified ecosystem around esports content [EB/OL]. https://bai jiahao.baidu.com/s?id=1676899046881035707&wfr=spider&for=pc. 3. Esports major: cultivate esports interpretation “training” talents [EB/OL]. https://www.bilibili. com/read/cv2962078. 4. Shaohua, Gao, Sun Liping, and Fang Zhe. 2021. Shanghai Steers A Steady Course to Develop into the Global Capital of E-sports with Impressive E-sports Indexes. Economic Information Daily, 05. 5. Ming, Zhao. 2018. Research on Characteristics and Promotion Strategies of China’s E-sports League. Jimei University.

Chapter 8

Problem Analysis on the Development of China’s E-sports Industry

Abstract In recent years, China’s eSports industry has developed rapidly, with a number of high-quality E-sports related products emerging on the supply side, domestic E-sports clubs and teams gradually showing strong competitiveness in international events, and E-sports tapping into a wider user market in China on the demand side, with domestic consumers showing strong interest and willingness to consume E-sports industry related services and products. However, there is still a big gap between China’s E-sports industry and international E-sports industry in terms of industrialization and standardization. This chapter will elaborate on the shortcomings of China’s E-sports industry in terms of content, industry chain and event influence. Keywords China’s E-sports industry · Problem analysis · Technology

8.1 Dominance by Leading Enterprises, Survival Difficulties in SMEs As the E-sports industry grows, there have been mature companies that dominated in all aspects of the industry chain. Several main industrial players, including Esports leagues, E-sports clubs, E-sports game enterprises, event production companies, game livestreaming platforms, and E-sports brands have enjoyed a high reputation. In terms of the current industrial composition, revenue from games, E-sports events, E-sports clubs, and livestreaming accounts for a large proportion, of which game income comes in at more than 90%, including online games, PC games and mobile games. Multiple E-sports games, such as Honor of Kings, LOL, Dota 2, CS: GO, Overwatch, Battle of Balls, and Hearthstone are the most popular and wide-ranging ones in the current market for a long time. As products with high user stickiness, their development and operation are firmly controlled by leading game manufacturers like Tencent, Perfect World, Riot Games, Giant Network, etc. It can be found from analyzing the entire China’s E-sports market that the core resources and profits of the entire industry have been currently carved up by the leading E-sports game operators or manufacturers. According to the data released © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_8

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by the mobile analytics application Sensor Tower, the game Honor of Kings brought Tencent RMB 13 billion in revenue in 2018 alone. Operators earn the largest proportion of profits. As the authorizer and organizer of E-sports events, game manufacturers have an absolute right to speak, and are in charge of all management affairs related to E-sports events. For example, Valve Corporation, the organizer of The International Dota 2, is not only responsible for the research, distribution and operation of the game, but also for the authorization of Dota 2 series. Various large-scale international events that landed in Shanghai are also hosted by major game manufacturers and operators, and they have absolute dominance over competitions. Today, the awareness of copyright protection for E-sports events is increasingly becoming clear. Because there is no a clear standard for holding game events, like Honor of Kings and LOL leagues, they can only be held in the form of invitational tournaments, most of which are just for the purpose of performance. Because of the firm control of game manufacturers and operators over events, it is hard for social individuals to participate in these large-scale events that have already formed and have a fixed audience, indirectly resulting in the depression of third-party events and the impact on fairness in terms of competition rules and win/lose determination. Xia Peng, CEO of the E-sports Operation Center of Migu Interactive Entertainment, believed that if third-party E-sports event operators want to grow bigger, they have to maintain a stable and close cooperative relationship with leading upstream manufacturers. For example, VSPN financially backed by Tencent holds the rights to operate Honor of Kings and Peace Elite leagues; ImbaTV centers on Dota 2; Banana Culture’s staple is PUBG; NEOTV mainly runs the NetEase Blizzard series. In contrast, there is no a stable business source for more small and medium-sized event operators. The common business mostly is less important one of game companies, such as the operation or commercial promotion of regional small-scale events, subcontracting and secondary subcontracting provided by major events organizers. Most of the revenue is from advertising sponsorship and subsidies of local official agencies. In a short term, this business model, as an important part of regional events, seems to have no problem at all, and the revenue is relatively considerable. However in a long run, it is difficult for such model to withstand the test of time. For example, under the influence of the pandemic, small and medium-sized enterprises do not have the same stable business source as the leading enterprises due to the lack of online technology and communication resources. The sharp decline in businesses and offline events entrusted by game firms and major operators will directly lead to their difficulty in survival. Other than in E-sports events, the same problems also exist in the E-sports livestreaming industry. For the present-day game livestreaming industry, Huya, Douyu, and Penguin E-sports are among the top leading companies. On April 3, 2020, Linen Investment Limited, a wholly-owned subsidiary of Tencent, purchased 16.5238 million Class B ordinary shares of Huya from JOYY at a purchase price of about US$260 million. After the purchase was completed, Tencent would become the largest shareholder of Huya. Previously, Tencent had become the largest shareholder

8.2 Core Technology Dependent on Foreign Countries, Inadequacy …

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Fig. 8.1 Huya live webpage

of Douyu, and Penguin E-sports is an E-sports platform established by Tencent. Therefore, Tencent is about to rule the game livestreaming industry (Fig. 8.1). The current competitive landscape of the game livestreaming industry has changed from fighting among thousands of platforms at the early stage to competition among several leading companies. The dominance of such leading companies will further hinder potential competitors from entering the industry, or they are allowed to step into the industry, but there is no money to be made. For example considering Tencent rules the game copyright and E-sports content at the upstream of the industry, a platform company will be unable to enter the industry, though it is ready, if Tencent refuses to grant the copyright in the derivative work of Tencent games to it. Such refusal can be a devastating blow to it.

8.2 Core Technology Dependent on Foreign Countries, Inadequacy of Independent Innovation Ability The technological competition of E-sports mainly lies in the relevant technical reserves and innovative R&D. The core technologies mainly include the maturity of technology architecture, technology model, technology demonstration, etc. The technological R&D and innovation speed of the E-sports industry determine the technical barriers and market share of enterprises. In the late twentieth century, the research and development of E-sports was at a budding stage. More and more digital technologies began to appear in China, and electronic devices gradually entered every household. Some paid TV programs, cinema TV, and interactive TV games have begun to emerge. Operators had also offered the VOD service, but it featured one-way transmission to the audience and lacked autonomy. Audiences cannot edit and play film and television works according to their personal preferences. Such VOD service determined at a basic level that audiences cannot have a high degree of participation and autonomy.

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In the E-sports software issued by China, players are not able to tactically or verbally connect characters they control with ones controlled by teammates, which limits the flexibility and characteristics of E-sports experience to some extent. In this regard, players’ thinking activities are not realized, and their emotional needs cannot be met to vent their feelings. However, foreign countries, to a certain degree, have reached the level, at which players can control E-sports game characters independently, so the market and audiences will naturally prefer E-sports products developed abroad. The development of core technologies of E-sports projects cannot be divorced from a large amount of investment in money and time. However, China now has not built an integrated public technology service system yet. Most of E-sports R&D companies seek quick success and instant benefits, and only pay attention to economic performance. Due to the low requirements for software agents, a large number of E-sports manufacturers have shifted to the agency right of imported products. The insufficient capital investment in project R&D, incomplete targeted training of R&D teams and indifference to the talent training for E-sports product R&D and design, all these directly leads to the scarcity of high-end technical talents in E-sports software. And it is difficult for ordinary enterprise technicians to independently develop domestic E-sports products with good quality, high technical content, independent intellectual property rights, huge market potential and development space. As a result, core technologies have to rely on foreign countries as always.

8.3 Lack of High-End Technology, a Serious Problem of Product Homogeneity The E-sports industry has always been regarded as a sunrise industry with infinite possibilities for future development, but in fact, the game industry is currently facing a serious crisis of product homogeneity. At present, most of popular games in China’s mainstream market use the same game rules, and some are even completely the same, like selling horse meat as beefsteak. The MMORPG are still the most popular game type throughout the whole Asia. For example, the big hit of games like I Am MT and Xiaobingbing Legend has led to a large number of homogenized games flooding into the market. In Europe and the United States, the entire market is predominated by three categories of games: strategy, match-3, and gambling, basically covering all with a bit of reputation. Therefore, audiences are easily bored. The imagination and innovation of China’s E-sports industry are very limited. Globally successful games such as LOL, Overwatch and Dota all are developed by foreign game manufacturers, and operated by domestic game companies as agents. In comparison with foreign games, there is still a big gap in terms of the number, profitability and influence of E-sports games independently developed by domestic game developers.

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Fig. 8.2 The interface of sword and fairy 7, a Chinese game

In China, there is an extreme lack of innovation in E-sports themes and storylines. E-sports games have long adopted the cliché version of theme frameworks, and mainly focus on martial arts and fantasies. It is rare to see games with a war, sci-fi, sports or reality setting. There are repetitions among game systems and background and character settings. Although fantasy and martial arts games easily let Chinese consumers culturally relate to, the year-by-year increase in E-sports products with similar elements has made game modes more similar, directly causing consumers to have aesthetic fatigue. Precisely because some game companies repeatedly roll out similar products, and even more copy and plagiarize works, the truly excellent local original online games cannot stand out (Fig. 8.2). Besides, the game production in China still focused on popular brand products, rather than game features. Only relying on brand popularity to attract players has caused manufacturers to be busy purchasing various hot IP. “Time is popularity” has become a consensus shared by many manufacturers when they buy time-sensitive brands. It is certain that they won’t pay much attention to innovation for quickly launching games and occupying the market, so they will gradually fall into a vicious circle of “great brands, terrible games”. Even though they purchase famous game brands, there are also major deficiencies in brand adaptation and cross-border operation of E-sports events in China. In the context of pan-entertainment, cross-industry connection and integration have gradually deepened. The game sector has cooperated with other pan-entertainment industries such as film and television, literature, animation, etc. Building a panentertainment industry chain around high-quality brands has become an important trend in the development of the current game industry; Great brands in the field of film and television, literature, and animation, as well as their large number of fans provide the content and user base for the development and operation of mobile games [1]. However, E-sports events only have competitions as the main content, and in a limited manner, provided to users that are mainly E-sports fans. It also is impossible to attract more fans to raise game brand value through brand integration. The

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rapid growth of the E-sports industry has promoted capital and passion to pour into event organization and swarmed into the field together, but the brand building and commercialization failed to keep up with the increased investment into events. It is obviously not an easy task to create a different E-sports event brand in a short time. Different events often adopt the same format and mode, and have the same players participated. Similar events are not only a huge drain on the participation enthusiasm of players, but also are tantamount to killing the chicken to get the eggs for the viewership market.

8.4 Inadequate Game Copyrights, Insufficient Awareness of Copyright Protection After an industry is matured, it must be accompanied by gradual standardization. For the E-sports industry, the definition of game content copyright is obviously an urgent issue to be solved after the industry is ripe. Now large online games are characterized with high development cost, big market risk, short service life and ease to be plagiarized, so there are multiple frequently-occurred problems, such as lack of awareness of copyright protection, difficulty in copyright determination, high cost of rights protection, and plagiarism through changing game appearance only. In China, the online game industry started at the end of the twentieth century, and was dominated by PC games and game agency. Unlike overseas, the pay-fordownload game software has not been grown up in China. So far, only few local game products take paid downloads as the mains profit model. Reasons for such development failure can be divided into several aspects. In the early, domestic users did not develop the habit of paying for software. At that time, the environment and public awareness of copyright protection were still in a stage of building and promotion, and the industry rarely regarded game works as pure software. Moreover, in fact, the software protection model was insufficient to protect the originality within game works and the art, music, and text elements with higher market value [2].

Profit Model of Online Games The early online games, such as Legends and Journey adopted the mode of selling game time cards for profits. If you want to experience more and play more, you must pay for time cards. Later, as games became more beautiful and sophisticated, the industry developed and sold various hero skins, props and other products used by players to show their differences with others in the game for the purpose of enhancing the game experience. Although games can be downloaded for free, many levels can only be overcome with paid heroes and props.

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Fig. 8.3 Cover of red dead redemption 2

In the process of continuous progress of the industry, game production has been increased both in the cost and sophistication, and it is even very common for a single game with the development cost more than RMB 100 million. For example, Red Dead Redemption 2 cost more than US$800 million, took eight years, and had more than 2000 people participated in the development and above 1000 motion capture actors and 700 voice actors hired. However, in terms of game intellectual property protection, the industry and judicial circles rarely take regard games as software works, and more often divide games into art, music, and text works, and works created in a similar way of filming (Fig. 8.3). Unlike traditional works such as movies, there are difficulties in game comparisons to determine infringements. Especially large role-playing games and competitive games basically have multiple story lines and variable endings, and each player’s different choices can trigger different plots, so it is difficult to compare the pictures frame by frame like traditional movie works. Some games just changed the protagonist’s name, description details, etc. of original ones, but exactly copied the portrayal of characters and the depiction of plotlines. For example, Shengqu Games has created a series of classic games such as Legends, Dragon Nest, and Adventure Island. As early as in 2002 the piracy of Legends series was run on private servers. In recent years, the types of online game infringements have been diverse. Some are the overall game copying run on private servers; some are cross-platform infringements of PC games, some infringements of text adaptation, as well as infringements of game livestreaming and short videos. As a miniature, this example reflects the urgent need to enhance the awareness of copyright protection in the E-sports industry. The most valuable part of many games now is their sophisticated design. The rules settings, such as the attribute of heroes and props in a game determine the balance and ease of playing it. Therefore, only by paying attention to the game design protection, game plagiarism can be avoided.

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8.5 Unbalanced Regional Development, Deficient Support of Local Policies China’s E-sports industry has always advanced towards the standardized development, and now is jointly managed by the Ministry of Culture and the National Press and Publication Administration. However its R&D industry attributes have not yet been clarified, which determines that the emerging industry is not only managed by multiple ministries and commissions, also monitored by other relevant governmental departments. Although the government often imposes strict controls on the early game publishing, it slightly is indifferent to the later development and lets things be. The loose market supervision has placed many game companies on the edge of morality and law, and they attempted to modify game content in the late, exploiting legal loopholes and spreading vulgar culture. This requires the government to strengthen the supervision over later game operation and maintenance by enterprises. Judging from the 2020 ranking of total E-sports companies in China’s provinces, the number gap was huge. Guangdong ranked first with 3918 companies, almost the sum of such companies in provinces of lower and middle ranks. This exactly proved the extreme imbalance of regional development. Such imbalance also exists in the number of major events held, the construction of E-sports facilities, the emphasis on talent training and other aspects. Other than Guangzhou and Shanghai, both recognized as an E-sports capitals, most cities lack material guarantee and complete hardware facilities for industrial development, including the network speed that needs to be upgraded urgently and stable technical support, etc. Even if they host events, there will inevitably be some problems, such as network delay, disconnection, and suspension of games to check for abnormalities. Not only the infrastructure has not kept up, local policy support is also insufficient. Each region has their own reasons why they didn’t give strong support for the development of the E-sports industry. There are various reasons like remote geographical locations, inconvenient transportation, inaccessible information, and small audiences, all which caused some local governments to think less of the cluster development of the industry, so of course no relevant policies have been introduced. As a result, many talents and enterprises have flowed to other regions. Some areas have been constrained by conditions. Although they have released relevant policies, the support is insufficient and the direction is wrong. For example, in 2017, Taicang in Jiangsu, Zhongxian county in Chongqing, Mengzhou in Henan, Hangzhou in Zhejiang, Wuhu in Anhui, Zhangqiu in Shandong and many other counties and cities took moves and announced their plans for building an E-sports town. Later they began to attract investment, and several places gained capital of more than RMB 2 billion. However, to this day, many regions still have not completed the construction of basic venues and E-sports parks due to planning issues. The plans are just an idea on paper, and the date of completion seems light years away. Furthermore, as leading domestic E-sports events, LPL and KPL, established the home and away

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systems, a large number of event resources began to gather in first- and second-tier cities under strategies of regionalized operation of Tencent E-sports. Consequently many already-built E-sports towns fell into an awkward situation of no competitions and events to be held.

8.6 Talent Cultivation System to be Improved, Re-employment Channels to be Widened The rapid expansion and growth of the E-sports industry will inevitably lead to the shortage of talents. Today more attentions are paid to players, coaches, support staff and other front-stage personnel, which relatively tend to be saturated. Talents in industrial operations (such as referees, club managers, E-sports event operation staff, etc.) are even more scarce. And the reason for the talent gap is closely related to the incomplete talent training system. In 2020, the report released by the Technical Guidance Center for Employment Training of the Ministry of Human Resources and Social Security clearly showed that there would be a huge talent gap in the E-sports industry in the next five years, which was conservatively estimated at 3.5 million.

E-sports Talent Training in China At present, the training of E-sports talents is roughly divided into three categories. The first category is that colleges and universities within the traditional education system offer E-sports majors and build E-sports colleges. A batch of undergraduate universities, such as the CUC and Sichuan Film and Television College have embarked on the journey of cultivating E-sports personnel through enrolling students. The second category is that some well-known social training institutions, including Xinhua Computer College, Shandong Lanxiang Technician College, and Keahoarl E-sports have ventured into the field of developing E-sports talents. The third category is the selection and training of talents by leading E-sports companies. For example Guangzhou Quwan Network Technology Co., Ltd., Team WE, among others recruit potential young players from all over the country to join the training camp, thus realizing self-sufficient delivery of talents. In China, there already have a set of standard four-level (from county, city, province to the nation) processes employed to train traditional sports athletes. Talents are selected and trained from sports schools and training teams at each level. All levels undertake different training tasks and goals, with a strong purpose and a clear development path. However, the emergence of E-sports players is generally unexpected. They can be headhunted by and contracted with clubs and enterprises only after they are somewhat famous. Even amateur players can be selected into the youth

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training team or the competition team. The training mechanism is not reasonable and normative enough. So far, the training of talents has been out of touch with the actual needs and job requirements. And there is no clear and unified requirements and standards to specify how to cultivate talents and what kinds of talents needed. Colleges and universities that have offered E-sports majors also have not figured out the concept of personnel training. By comparing their training programs, it can be seen that they are different in the concept of talent training, employment guidance and analysis and curriculum settings. Some schools value the cultivation of event hosts, and their curriculum system focuses on media and hosting parts. But some lay emphasis on developing students’ abilities in game design, industrial management, etc. In the end, the most important major courses to learn are often just additional content on this basis. Moreover the classification of talent training has relatively lagged behind. During enrollment, schools fail to clearly define the differences among undergraduate, junior college, secondary vocational or social training, and struggle to reach a consensus on whether the enrollment follows suit of general admissions, art admissions or performance admission. The course teaching is just based on the existing faculty team, and E-sports are only used as a gimmick to attract students. There is no complete systematic structures in actual individualized teaching. What kind of people can be seen as E-sports talent? Schools have not yet made clear this concept, let alone the economy-oriented E-sports companies. Similarly, such companies do not have a unified job measurement standard for employee recruitment, and treat the personnel training and guidance carelessly. The professional qualification certification for this emerging industry has not yet been determined. What kind of core competitiveness do E-sports talents have? What are the position classification and promotion channels for E-sports practitioners? What is the corresponding national assessment system? These series of issues need to be settled urgently. Only by formulating a unified employment standard and establishing channels for talent self-improvement can we avoid the risks in the growth process of E-sports talents. Judging from the current situation, most E-sports students in colleges and universities can be considered as “guinea pigs”, and the career development path of E-sports players has been unclear. Colleges and universities have to find their ways to educate professional talents according to the learning results and development of the first few classes of students. Likewise these students will also experience growing pains after entering the workplace. How to plan their career life and how to show their own professional competitiveness all will become a problem for graduates (Fig. 8.4). Today the retirement security mechanism for E-sports athletes is not perfect. Most E-sports players do not connect their careers with post-retirement lives. Life security, retraining, continuing education and other matters after retirement completely depend on the guidance and management by companies. Besides it is impossible for clubs’ profit purpose to provide long-term living guarantees for E-sports talents. Therefore, compared with other competitive athletes, E-sports athletes have an unclear identity. They are more like corporate employees or media-packaged stars. Now the first-line star E-sports players get paid a lot, and can have an additional prize bonus for winning a place in large-scale events. “Earn money quickly” is a common value among current

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Fig. 8.4 E-sports players

E-sports practitioners, because they get upset about the unguaranteed post-retirement life. If the standard system for E-sports talent training and career development fails to be introduced as soon as possible, and the re-employment channels after retirement cannot be broadened, the E-sports talent training will inevitably slow down due to lacking momentum in later stages, eventually causing parents and students not to choose the E-sports major easily. At the same time, E-sports players need to create a positive social image and improve their social status. Athletic sports are the most favorable carrier and way to stimulate patriotic enthusiasm and form cohesion. Most great national players in athletic sports are regarded as national heroes and spokespersons of positive social images, and used a vivid example by parents to encourage their children in family education. However, the social recognition and public image of E-sports players, which also is a category of athletes, are far from reaching this point. For most families, it is often out of frustration to let their children become E-sports players. Many famous players were used to be “teens with internet addiction” or “troublemakers”. The famous LOL player, Uzi (Jian Zihao) was a teenager addicted to internet in the eyes of parents and teachers when he first entered the E-sports industry. He once said in an interview, “At that time, my family got a lot of complaints about me.” Like most teenagers who are keen on video games, Uzi was also got chased by his parents in internet cafes, and was beaten if got caught. It was not until a club came to invite him to play in the professional league that the tension between him and his family was eased. Even though some players, on behalf of their country, have topped many international competitions and won honors, they still aren’t widely recognized by society, and the public still has many doubts about players who take E-sports as a profession.

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Practice Questions 1. In the post-pandemic era, how has the E-sports industry’s demand for talents changed? 2. How to improve the social recognition of the E-sports industry? 3. In terms of subject teaching, what kind of professional qualities and knowledge do you think E-sports teachers should have?

References 1. CADPA Game Publishing Committee, CNG. 2018. Electronic Competitive Industry Report (Games). 2. Xiaojun, Tian. 2021. Development of Game Industrial Ecology and Innovation in Copyright Protection, vol. 06. Posts & Telecom Press, 02/05/2021.

Chapter 9

Countermeasures and Suggestions for the Development of China’s E-sports Industry

Abstract The problems of China’s eSports industry can be summarized as the lack of originality of industrial content, low industrial concentration, and the lack of industrial communication influence, which are related to factors such as talent system, technology system, and operation system, as analyzed in the previous chapter on the limitations of E-sports industry development. In order to further improve the development situation of China’s E-sports industry and overcome the existing difficulties, this chapter will propose countermeasures and suggestions for the development of China’s eSports industry from the perspectives of enhancing originality, strengthening industrial chain integration effect and optimizing industrial influence. Keywords China’s E-sports industry · Industrial development strategies · Industrial management strategies

9.1 Industrial Development Strategies 9.1.1 Possessing Independent Intellectual Property and Core Technology China’s game industry now has a good momentum of development, and has led the global in the field of mobile games. However, as the E-sports industry thrives, China is shackled in terms of core technology. Most of local Chinese and international E-sports events center around foreign game products, and the core technology used by Chinese companies for game development are also introduced from abroad. For example, Warcraft III is officially authorized by Blizzard, developed and operated by NetEase. The LOL is operated by Tencent Games in mainland China, but its developer is American Riot Games. In contrast, China do not have so many advantages and lacks real locally-produced games, which reflects the current shortage of core competitiveness in E-sports game development again. In recent years, the concept of independent intellectual property has attracted increasing attention from the society with the development of the knowledge economy age. Such property can be a self-developed brand, a book or some kind © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_9

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of core resources. As China’s E-sports industry has witnessed continuous development and expansion, it is urgent for the intellectual property sector to be in line with international standards, especially in the E-sports industry. As analyzed above, because the core technology of Chinese E-sports products is mostly dependent on foreign countries, and the country is short of independent innovation capacity, especially first-line software and hardware manufacturers, there is no strong support, and almost no autonomy and the right to speak at the upstream of the E-sports industry chain in a long time. In addition, due to the absence of independent intellectual property of games, there have been lots of infringements in China, mainly including game plug-in profit, plagiarism, copycat, piracy, etc., which even have formed a vicious circle. So the independent intellectual property is extremely important. The top priorities of industrial development strategies include developing and promoting high-quality E-sports game products with independent property rights, such as international E-sports arenas, and solving the shortage of independent property rights of game content and core technologies. The sustainable development of China’s game and E-sports industry always cannot be separated from core technologies, and the number-one concern is to vigorously develop game engine technologies, operating systems, and game chips with independent intellectual property. If China now wants to fill the market void of self-developed online E-sports, it needs to create its own E-sports brands. On the one hand, it is necessary to act on national macro policies, such as various national support policies for independent R&D of E-sports projects, increase the capital investment into and in the first place, lay a solid material foundation for the E-sports product R&D, and set up its own development teams. On the other hand, domestic e-commerce companies should also learn from foreign countries’ advantages and simplify the tedious steps and funding issues in the negotiation with overseas E-sports technology companies in the past, so as to create truly unique E-sports games that integrate core technology and independent intellectual property. From the perspective of game R&D and production, it is essential to combine the characteristics of the E-sports industry with game content, thereby enhancing the creative uniqueness and originality of E-sports games at both technical and content levels at the beginning. Only in this way can we break from the status-quo of game development and gain a long-term foothold at both home and abroad markets.

9.1.2 Promoting the Application of 5G and VR Technology 5G cloud technology and VR technology are facilitating a new round of development of the information industry. As the primary application fields of technology and culture, E-sports and games are facing an unprecedented change. Looking back on history, it is not difficult to find that the E-sports industry is a technology-dependent sunrise industry. Every upgrade of information technology will bring about great fluctuations in the E-sports industry, which exactly are the opportunity for the industrial growth.

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E-sports are chosen as the starting point of breakthroughs not only in AI technology, but also in other scientific technologies such as modern communication technology, chip technology, new visualization technology, big data technology, smart wearable technology, etc. Every launch of blockbuster E-sports games or the optimization and upgrading of game versions will definitely prompt users and players to update their game devices, thus forming a good cycle. For example, competitive games such as StarCraft and Quake have benefited from the development and popularization of LAN technology. It can be said that compared with some industries that are less sensitive to technology, E-sports has been a measurement standard and a mirror for the modern social sci-tech level since its birth.

5G and E-sports With the advent of the global 5G era, there will be a significant improvement in GPU computing power, graphics rendering capability and data transmission capacity, meaning that devices suitable for various E-sports games will be more lightweight. It can be said that the 5G network will spark a new round of reform in the game industry. This is because 5G’s cloud rendering technology can place high-performance GPU processors on the cloud, thereby reducing the computing pressure and complexity of terminal devices and minimizing costs. At the same time, 5G fits the terminal mobility and high-quality game content that players value. Players can enjoy cloud games without the need of installing games and game media to have an AR/VR experience. The Internet of Things based on 5G can also allow characters and environments in the game to interact, enabling players to have an extraordinary experience. Consumers can enjoy large games without a high-set host and device. For example, they can play Assassin’s Creed and LOL on mobile phones. Under the joint promotion of Huawei and three major communication operators (China Mobile, China Unicom and China Telecom), China has taken the lead in the world in 5G infrastructure and terminal technology, and the number of users is also raising year by year. Nowadays mobile phone manufacturers including OPPO, VIVO, and Samsung have demonstrated at the experience area of trade fairs that their 5G phones can play such large games. Tencent has cooperated with the US chip manufacturer Qualcomm to develop cloud games. NetEase and Huawei have established an innovation lab for 5G cloud games to promote the ecological construction of the cloud game industry, and have realized the cloud gamification of the large game Nishuihan. During the pandemic, this point was ever mentioned in the “Speech at the Meeting of the Standing Committee of the Political Bureau of the CPC Central Committee on Finding Solutions to Dealing with the Covid-19 Pandemic”. When talking about “keeping the economy running smoothly”, the “Speech” pointed out that expanding consumption is one of the important entry points to hedge against the impact of the pandemic. It is necessary to accelerate the release of emerging consumption

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potential, expand the application scenarios of 5G technology, stimulate spending in electronics such as 5G phones, and increase spending in e-commerce, e-government, online education, online entertainment, etc. Among them, the online entertainment mentioned in the “Speech” takes games as the core. Platforms with high bandwidth, low latency, high transmission, and high quality have been built to speed up the popularization of new technologies such as 5G networks and mobile high-speed internet, as well as the application of intelligent technologies and smart mobile terminals, and to advance the spread of E-sports. A new form of the game industry based on the new generation of 5G cloud technology and VR technology is taking shape, and a new wave of dividends brought about by the popularization of 5G infrastructure and terminals in China is being generated. It is necessary to promote the application of 5G cloud technology and VR technology in the game and E-sports industry. It is essential for gaining inexhaustible energy to broaden the application scope of the E-sports industry, and this means opening a new world for the industry at the level of technical application. To this end, we have to make full use of the transmission advantages of 5G technology, update terminal devices, and drive the productization and lightweight development of VR technology. Moreover, we should work harder to change users’ cognition of E-sports, intelligentialize E-sports industry, popularize E-sports consumption, and give full play to the integration of technology and E-sports products, thus maximizing industrial value. In other words, when games are regarded as E-sports, game events will be incorporated into the cultural entertainment industry and become an important part of it. The emergence of the concept of game events can not only enhance the game stickiness of existing players, increase the game duration, but also attract new players by enriching its gameplay and core. And 5G technology facilitates the broadcast of traditional events, and also makes AR/VR game events possible. On October 18, 2020, the national finals of Beat Saber Challenge jointly organized by Netvios and China Telecom e-Cloud were started during the 2020 World Conference on VR Industry, opening the systematic development of “VR games + E-sports”. The event covered 28 provinces, more than 100 cities and a thousand physical VR stores across the country, and had above 3000 players participated. Different from other exploratory VR games, this event has a complete structure, and incorporates national multi-stage selection, marketing promotion, offline and online livestreaming, and various subcultural elements, setting a good example of VR E-sports entering the public eye. With the support of 5G technology, audiences will have better experience in viewing VR game events in the future, laying the foundation for the dissemination of high-quality game content.

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9.2 Industrial Management Strategies 9.2.1 Focusing on the Content Development of E-sports Products China has a broad development space for E-sports, but there is an obvious problem: the homogenization of E-sports content is serious, and the world view, plot and setting are too outdated. Specifically, game themes are scarce, and game background settings and characters are too similar. In terms of themes, games like Fantasy Westward Journey, Moonlight Blade and Nishuihan are mainly divided into several categories: martial arts, fairy tales and fantasy. Although such games have natural advantages in cultural identity for Chinese consumers, E-sports products with similar elements have raised year by year and game modes inadvertently have become more similar, easily causing players to have aesthetic fatigue. Some game companies even have copied and plagiarized a large number of game works, killing a group of truly excellent original online games. In this regard, due to the emphasis on E-sports product development, more attention has been paid to three aspects: content, R&D and sector optimization. First, at the content level, more importance is attached to content development of E-sports products, and combination with pan-entertainment content such as novels, animations, and short videos to exert greater potential on more tracks. The LOL developed by Riot Games has referenced lots of European and American history in its background to add the color of Western mythology, and used localized content as a carrier to broaden channels of cultural transmission from the perspective of games. Similarly, Japanese game developers have produced multiple games based on the Chinese famous novel “Romance of the Three Kingdoms” as the background material, occupying a large game market. However, there are very few successful cases of localized games in China. The national game Honor of Kings has large numbers of players. Although it creatively blends historical figures, including Cao Cao, Lu Ban and Li Bai, most game characters only borrow the name of such figures. The game not only lacks detailed description on the historical culture and character background, but also fails to build more connections with these figures and play a role in the dissemination of excellent traditional Chinese culture. Second, as far as the game development is concerned, emphasis is laid on the development of interactive media between players to increase autonomous content and create more communication forms, not just limited to typing and voice. Therefore, it is especially important to deeply explore the content autonomy of video games. For domestically-developed E-sports projects, it is appropriate for perspective production to increase the visual area of operating game characters and improve model building of game protagonists, further ensuring the smooth quality of game screens and reducing the operand in the follow-up process of E-sports projects, so that some players with blind spots in perspective can enjoy the fun of E-sports independently. For example in competitive games, it is necessary to add more handling ways of existing items, such as buying and selling, processing, making friends and

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Fig. 9.1 Game modeling

teaming-up. Through establishing more diverse autonomous relationships, we can form richer E-sports interactive methods (Fig. 9.1). Third in terms of game content, it is still crucial to take the original scene painting and the initial character gestures as an important reference to enhance the game texture. The game development starts from two aspects: the modeling production of game characters and game stability. For China’s self-developed E-sports projects with a third-person perspective, targeted players cannot freely switch the 360-degree full perspective of characters they operate, causing some players with blind spots in perspective not to fully experience the fun of E-sports in an immersive manner. Therefore in the production of personal perspectives, it is proper to increase visual panels of players to control characters, strengthen the research and development of character design, and optimize scene ground and flowers and trees in E-sports project. With respect to the effect overlap of the competitive scene layout and special positions it is necessary not only to take into account the convenience of transmitting third-person competitive E-sports, also to enhance the effect of animation effects on the basis of suggestions to rationalize Honor of Kings. Therefore, the design of scene ground should be properly optimized. The model design of ground, flowers and vegetation can be said to be one of the essential elements in a 3D game, and these models are often the most commonly used resources, so how to optimize flower and vegetation models is also a necessary step in the development of E-sports projects.

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9.2.2 Expanding Social Values and Application Spaces The mainstream E-sports and games on the current market are usually defined in a narrow sense and aimed at pleasing users and audiences. But the essence of games is human–computer interaction, and the content of the interaction can be purely entertaining or functional. This is the so-called functional game, which means a serious game or an applied game. Unlike traditional games, functional games were born to solve real social and industry problems. Now there are many successful cases in the international market.

Functional Games The Adventure of the Seas was developed to solve the problem of Alzheimer’s patients, namely disorientation. On the surface, it is a game, but actually a test for patients. The game is designed to collect a large amount of user behavior data during passing game levels, thud finding reliable ways to detect Alzheimer’s disease in advance. Besides, some games are also used for skill training. For example a 3D game developed by Serious Factory can provide an environment for simulation exercises for acute coronary syndrome doctors (Fig. 9.2). In addition to these games for professional use, there are also job and life stimulation games, such as Cart Life, in which you can feel three-dimensional scenes of the life of a cart stand owner. In China, Tencent is endeavoring to build the structure and category of Chinese functional games through fully expanding this niche segment. After recent years of research and development, Tencent has started the layout of functional games in an all-round way, and plans to launch

Fig. 9.2 An interface of the adventure of the seas

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five categories of such game products: traditional culture, frontier exploration, technical training, science popularization and parent–child interaction, so as to fully explore the positive social value of games. Among them, there are not only self-developed games, but also excellent ones released by operators. Some of these products have already been launched, and some are still in the preparation stag. It is conceivable that they will greatly contribute to the social progress. According to data, China’s E-sports industry with a purpose of entertaining audiences in a narrow sense has brought an output value of more than RMB 300 billion. In terms of both application value and output value, there is a wider space for functional games, that is, the generalized video game industry as mentioned above, turning the time spent in narrow games into practical training and learning and creating more great industrial value. It is of great significance for the development of the game industry to promote generalized E-sports. For example, the biggest highlight of the game Scribblenauts Remix is that any word written by players will be directly converted into the corresponding object, and in the game, learners can change the established strategy at any time according to the feedback, thereby reversing the direction of the game ending. The instantaneous feedback can play a good role in correcting deviations. Therefore, thinking how to broaden the social value and application space should be the key to furthering the E-sports industry. In the future, E-sports and games can be developed around the purpose of military training, skill training, and education popularization. The use of international cutting-edge game interaction technology, 5G cloud technology, and VR technology can completely bring positive impetus to the growth of broad sectors such as military training, skill training, and education popularization, and the market development space is also far beyond the narrow E-sports and games. In this regard, it is necessary for richer content of the E-sports industry to blend traditional culture. Through encouraging and advocating domestic E-sports operators to develop games and derivatives and combining China’s profound traditional culture and historical foundation, we’ll take the excellent culture in line with modernization as the development object of the E-sports industry, and make more efforts to localize and create high-quality games, achieving the transformation of E-sports games from imitation to original creation. In the meantime, we’ll fully tap the potential resources around E-sports and promote the sales of substantive items and cultural products such as photos, music, and books derived from E-sports. We aim in this way to strengthen the strong sense of cultural identity of E-sports users, grow our E-sports teams, drive industrial upgrading and consumption and add the value of international cultural dissemination.

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9.2.3 Talent Training and Employment Expansion From a product perspective, the core of a game product is to meet the needs of users. Furthermore, creating excellent cultural products is precisely the advantage of developed countries, which lead not only in technology, but also in how to use technology. This is reflected in two aspects: on the one hand, advantages of cultural products in developed countries in terms of artistry and innovation; on the other hand, leads in the number and level of related professional talents in developed countries. The core value of a game, as a typical cultural creation, lies in innovation. However, compared with international leading counterparts, the current market in China is very large, but products are different in their levels. As the world’s largest game market, China barely has sectors that can truly regard games as cultural products. The reason rests with the shortage of innovative game talents, the talent training system to be improved, and the re-employment channels to be expanded. Chinese E-sports enterprises now have a series of problems. For example they are induced by commercial interests and lack a sense of social responsibility and historic purpose, cultural heritage and goals. They can gain sustainable potential only by cultivating high-notch E-sports talents. For colleges and universities, it is an important mission to cultivate professional game designers who have a sense of social responsibility and historic purpose, are culturally ambitious and hold a positive attitude. This will inject the internal driving force of Chinese culture, spirit and Chinese dream into the sustainable development of China’s game and E-sports industry. In order to solve the above problems, we must first clarify the talent status-quo of the game industry. The existing standards for game talents vary, and the split between technology and design is very serious. People who learn game design often do not have programming thinking skills, and similarly it is hard for those who learn game technology to know where to begin with art design. The more serious problem is that there is currently no Game Design major in the catalogue of instructional programs of the Ministry of Education, and some related majors are usually categorized under the subject of animation and digital media. This cannot but be said to be an omission. Therefore, cultivating innovative game designers with a global view is the key to solving current problems in the game industry. Under the wave of global informatization, the top priority is to adjust and upgrade the training mechanism in colleges and universities. According to Chinese national conditions, we should start from the following aspects. First, we should cancel the division of students into different tracks in high school, promote discipline integration in an all-round manner, and no longer adopt single approach to reserve talents. Second, we should invest more efforts into English and computer education to improve importance attached by students and parents to them. Such education is practical-oriented and adopts a diversified assessment system. Third, we should increase the practical experience and research capacity of higher education teachers, and establish a result-oriented evaluation mechanism. Fourth, we should make full use of resource advantages of colleges and universities to attract talents.

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We should merge the manpower demand in domestic E-sports market, make the most of national colleges and universities as think tanks, establish school-enterprise cooperation according to talent needs of companies and build a multi-party training model to balance the supply and demand of talents. As mentioned above, multiple colleges and universities have taken the lead in taking action. For example the CUC and Sichuan University of Media and Communications have offered E-sports majors, introduced advanced teacher resources, endeavored in improving the training system and curriculum mechanism to cultivate high-standard, multi-level and wide-ranging compound talents and help advance China’s E-sports industry. The government should increase policies and financial support, attract high-level sci-tech personnel and overseas scholars, empowering the development of E-sports. Moreover, we should consider building featured E-sports towns and setting up new institutions such as E-sports teaching research centers, E-sports athlete qualification centers, training centers for E-sports teachers and students to solve the problem of supply and demand of Chinese E-sports talents and help China’s E-sports industry embark on a scientific, normalized and green road.

9.3 Industrial Marketing Strategies 9.3.1 Enhancing the Development of Local Cultural Products in China As mentioned above, Chinese E-sports games, both in terms of content and technology, now are facing the bottleneck of insufficient localization. As the global influence of China’s economy, culture, and technology continues to increase, highquality game products themed with Chinese culture have begun to attract the attention from the international market. We should strengthen the development awareness of local cultural products, use cutting-edge technology to explore traditional Chinese culture, blend traditional cultural elements on the basis of existing development foundation, and show high-quality games themed with Chinese culture to the world, In this way, Chinese culture may become new innovative competitiveness for domestic E-sports games in the international market. Before that, we should first elaborate two concepts of Chinese local culture and game culture.

Local Culture and Game Culture Local culture refers to the traditional culture that has been formed and developed in the long-term historical process, retained in the national memory with a stable form and is well known to people, including ideological concepts, political beliefs, value orientation, moral sentiments, behavior habits, etc. It

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permeates people’s daily lives and guides everyone’s way forward. Although it cannot be seen or touched, it is the power source for a nation to unite and forge ahead into the future. Chin’s local culture is a huge heritage passed down from generations to generations, and is full of long-lasting fresh vitality. The so-called online game culture refers to the cultural heritage reflected in online games, and can be divided into external culture and internal culture. The external culture is endowed by game developers and expressed as ingame historical settings, theme scenes, game specifications and other details. It plays a key role in the cultural positioning of the entire game. But the internal culture relies on game players and is jointly created by them. It exists outside the game and is a kind self-deepened and developed by itself. It is relatively obscure and requires players to actively seek and feel. In fact, online games, like other products, can convey certain concepts, knowledge, and even some value propositions. Especially with the help of young players, community culture prevails and continues to promote the growth of online game culture. Online game culture runs through the entire process of game production, from topic selection and planning to content production, advance publicity to online distribution, etc., and signs of traditional culture can be found at every step. For example in August 2020, China’s Game Science studio released a 13-min video about the original game Black Myth: Wu Kong. Its high-quality 3A-level game picture quality, game fluency, and magical characters and gameplay that Western players have never seen before have made countless Western game streamers addicted (Fig. 9.3). The video was reposted and viewed millions of times in less than 10 days. In recent years, Chinese-themed game works have frequently ranked on the hot list of Steam, the world’s largest game platform. It can prove the potential for sustainable

Fig. 9.3 A screenshot of Black Myth: Wukong

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development of China’s local cultural products. Therefore, we should pay attention to the investment into the research and development of E-sports games, make more efforts to produce online sports games with Chinese characteristics, and attempt to add martial arts and Taoism elements to enrich the content of E-sports cultural products.

9.3.2 Creating a New Combined Model of “E-sports + Scenarios” The E-sports industry was once likened to the sports industry, but in fact, as a new form of competitive sports, it actually has a development history of less than 20 years, causing the public to know little about it. It is necessary to combine with more real scenarios, achieving its penetration among wider population. In the past, most of the concept of “scenarios” took themselves as the core and explored changes in the production and lifestyle of the masses. In the era of mobile internet, the connotation of such scenarios has been expanded, including the virtual ones of the internet and real social ones. In this sense, the scenarios includes not only its own time and space factors, but also user factors, and is centered on user needs. In a word, it centers around users and finds how to better serve users. In E-sports, the interaction between users, on the one hand, users and games, on the other hand has become a new way of socializing. For games, both game and social scenarios created by the internet are scenario-based services. For users, due to the prevalence of mobile terminals, E-sports tend to be mobile. Apart from two internet scenarios, physical scenes where users are located are also worthy of attention, and are exactly what we currently lack. The arrival of the era of mobile internet has reshaped the communication significance of such scenarios. Scholar Li Qin believes that “immersive communication that is ever-present, ubiquitous and omnipotent centers around people and uses the human environment that connects all media forms as the medium.” In mobile communication, users can change scenarios anytime and anywhere through mobile terminals, and are no longer limited to a fixed place. At this point, scenarios are combined with users’ personal characteristics to form the user’s individual behavior scenes. Most users that previously watch on computers at home have gradually changed to watch anytime and anywhere by mobile terminals, and places are expanded to the public area from the previous private personal space. As far as the application is concerned, for example game livestreaming, user’s behavior scenes can be observed, recorded and analyzed to better provide users with personalized and precise services. In the subsequent development process, the combined model of “E-sports + scenarios” should be further expanded and take into account three scenario factors: game, social and user’s behavior to provide users with personalized and precise services.

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Games and Innovative Livestreaming Marketing In August 2019, Ping An set its eyes on E-sports that attract extensive attention of young groups and launched innovative livestreaming marketing, and held a special Honor of Kings Treasure Scramble together with Penguin Esports. Through native ad placement and customized cooperation in E-sports livestreaming, it connects games with insurances, integrates game scenes and security concepts, and conveys the idea that you have me to guard your treasures in games, so as to improve the brand favorability and help sales of insurance products. In a word, the livestreaming activity had more than 4.953 million viewers within two hours, and nearly 240,000 bullet comments and 150,000 customized gifts sent, with remarkable results obtained.

9.4 Suggestions for Industrial Policies 9.4.1 Increasing Policy Guidance, Changing the Public Opinion Environment E-sports in China are on the rise, and are controlled, guided and supervised to embark on a healthy and benign development path only with complete legal regulations. China’s E-sports has always been jointly managed by the National Administration of Press and Publication and the Ministry of Culture. However, since the nature of the E-sports R&D industry has not yet been clarified, the industry still needs to be monitored by several government functional departments and managed by multiple ministries and commissions, resulting in strict control on early publication and loose supervision over late-stage markets, as well as friction between markets and management connections. For example, after obtaining a publication number, enterprises work in grey areas and take opportunities to spread vulgar culture, so it is required to strengthen game operation and maintenance in later stages. Related government departments have carried out lots of rectification work to advance the game industry, but for the high-investment and high-risk E-sports industry, the existing domestic support approaches, especially policy support and approval and management over competition content, are not detailed and direct enough, and problems of adopting one-size-fits-all solutions and providing weak project support still exist. The following points should be done to solve the problems above. First we should improve the legal regulation of E-sports. The GAS, together with the Ministry of Culture, the Ministry of Education, the Ministry of Information Industry, and the SAPPRFT, in accordance with “Law on Physical Culture and Sports” and “Measures for the Administration of National E-sports Competition (Implementation Trail)”, jointly formulated and promulgated laws and regulations that are suitable for the

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status-quo of the E-sports industry to manage the E-sports development path. During development, we’ll give full play to the subjective initiative of relevant professionals in each functional department, and take moves by laws to improve the quality and efficiency of supervision. Secondly, we should reorganize E-sports regulations. We should, according to the development situation, continue to improve the legislation in key areas, including the R&D of E-sports PC-based games, event holding, E-sports livestreaming platforms, E-sports venue layout and commercial operation systems. Competent departments should amend and supplement laws, and specify detailed rules for implementation to fill legal gaps. For example, some special laws and regulations on E-sports are promulgated to set out punishment for vulgar cultural on online livestreaming platforms, pornography, gambling, violence, and vicious competition. We strive to build an environment where there are laws to abide by, and violations must be punished, in order to create a healthy E-sports industry chain and a favorable commercial operation environment, and gradually form a virtuous growth cycle of “market orientation, industry self-discipline, and legal supervision”. Finally, we should enhance the evaluation system construction of the E-sports think tank. From the dimensions of E-sports industry chain, value functions, institutional guarantee, etc., we should construct a professional system for evaluating the mobility of E-sports development. We should conduct both quantitative and qualitative analysis based on big data, formulate evaluation standards, refine evaluation content, help develop the E-sports industry and set up a guarantee mechanism with perfect supervision, complete evaluation, and clear rewards and punishments to facilitate E-sports to step on a path towards the scientific, standardized and rapid development.

9.4.2 Strengthening “Internal Cycle”, Helping SMEs As E-sports are popularized, the overall trade scale of E-sports has expanded, and the capital chain required has grown expanding. But it is hard for a majority of domestic small and medium-sized E-sports developers to accept, and the current situation that leading enterprises have dominated the industry and SMEs are struggling to survive is formed. Specifically, the E-sports platform industry is currently facing the following development difficulties. The entire market is at stagnation and is highly concentrated. Large enterprises have monopolized the industry with their great authority, resulting in the failure to meet diverse social needs timely and reducing the overall utility of social products. Compared with other industries, the construction of E-sports platforms should be supported both financially and technically. Various games have to be licensed and approved by government policies, and daily operations and audits also are in line with specific requirements. For example, the “Interim Regulations on Internet Culture Supervision” issued by related cultural departments clearly stipulates that enterprises engaged in network culture business should submit an application for

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a business license to such departments. These enterprises are limited to those with a registered capital of more than RMB 10 million. This provision is suitable for not only game operators but also platform operators, has increased the pressure and difficulty of capital raising, and obviously raised the entry threshold for new companies. Tang Jiajun, secretary-general of the CADPA Game Publishing Committee, said at the 2020 International Game Business Conference that small and medium-sized game companies are interested in going global, feel troubled with monopoly by leading enterprises, and lack talents. Among them, monopoly by leading enterprises now is the main problems. The leading enterprises in the game and E-sports industry are far ahead in terms of channels, resources, data and talents, but they are constrained by a relatively single corporate culture and development goals. The sustainable development of China’s game and E-sports industry requires supplementation and improvement by innovative SMEs to help them survive, advance the industry, enhance its “internal cycle” and bring innovative vitality to its development.

9.4.3 Regional Characteristics and Coordinated Development of the E-sports Industry As an emerging industry based on network, information and digitization, E-sports neither rely on natural resources like traditional industries, nor require advanced and intensive technical support like electronics manufacturing. The integrated spatial layout, together with policy measures can provide a more adequate foundation and prospects for the industry. Although main influencing factors of industrial layout such as locations, nature, economy, society and technology are conducive for economically-developed cities, including Beijing, Shanghai and Guangzhou to rapidly gather E-sports resources, expand the industrial scale and form overall advantages, such factors cannot be the limitation for other cities to step into the E-sports industry and construct differentiated themes with their own characteristics, thereby maximizing economic benefits created by the industry. There is an example abroad: Katowice, a small city in Poland successfully transforming from the “Polish coal capital” to a “European E-sports center”. The city has changed from high dependency on resources and a gradual decline of heavy industries, resulting in the departure of a large number of young people, to a pilgrimage place for world-wide E-sports fans. However, in the case of China’s E-sports industry, its development varies across different regions and focuses on a single sector, and the regional resources have not been fully utilized to create a positive effect. In this regard, we should pay attention to E-sports industrial clusters and build a complete industry chain to extend the regional cooperation. It should always be clear that the development of any industry is closely related to the market entry conditions, various property right and taxation systems, and a good cultural atmosphere for events all created by the government.

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On the one hand, governments at all levels should actively cooperate with local E-sports enterprises to strengthen the awareness of the research and development of high-end E-sports products at the middle and upper stream of the E-sports industry. Through content licensing, events holding, club operations and other approaches, both sides should work together to supply the society with high-quality E-sports content, and cover each link of the E-sports industry chain and promote its overall growth. Concretely speaking, we should actively undertake to create high-end game content and establish local game clubs. On this basis, we also should give full play to the dominant advantages of the government, build branded professional leagues, popularize games through events, and combine games and events to enhance the popularity of E-sports clubs and meet different needs of gamer groups. On the other hand, E-sports towns can provide policy support for multiple links in the E-sports industry chain and form a complete ecology like E-sports industrial parks and industrial clusters within its space, or in other words, they can be regarded as an independent and enlarged display of an urban E-sports industrial park or industrial cluster. For this matter, the further development of the E-sports industry necessitates a specific physical space. After all a too scattered space is not conducive to management and resource optimization. Furthermore, we should center around the E-sports industry to push the integrated development of related industries and to extend the brand management and business operation of the industry to other social services, such as real estate, finance, media, film and television. We also should work hard to promote the benign development of the “E-sports+” model, formulate a new mechanism for cross-industry interaction, use overlaid functions derived from the E-sports industry chain, and form a new landscape of coordinated development with balanced planning for the E-sports industry layout, diversified industrial entities, enriched social functions and marketized product operation. In addition, reshaping the E-sports image deserves attention. How to clarify and expand the communication channels and gradually make social E-sports culture is matured are also critical to the coordinated development of the industry. First of all, on the basis of interconnected media platforms, we should broaden E-sports communication media in an integrated and innovative way, instead of just being limited to old channels. To this end, traditional and new media organizations should make joint efforts. For example the SAPPRFT can create diverse communication channels such as E-sports TV and radio channels. Domestic and foreign experts, scholars, E-sports masters and other professionals are regularly invited for filming industry-related interview documentaries. Mainstream media should report more about E-sports content, events, and derivative industries. Traditional media should increase the coverage of E-sports, and such organizations should actively rebuild the social image of E-sports, so that more people can change their views on the E-sports industry and improve their recognition of the industry. For one thing, all departments should increase rewards and implement tougher punishments, and mobilize more social forces to participate in the dynamic monitoring of E-sports livestreaming content to improve its supervision efficiency. For the other thing, they should strictly resist the dissemination of vulgar content and illegal acts to create a standard and

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orderly E-sports livestreaming environment, reshape and maintain the social image of E-sports and realize the joint development on a larger scale. Practice Questions 1. Please briefly talk about the impact of the newly revised “Law on the Protection of Minors” on June 1, 2021 on the development of the game and E-sports industry? 2. China now has become the world’s largest E-sports market, with more than 200 cities ranging from super-first-tier to fourth- and fifth-tier ones all ventured in E-sports. What’re your opinions about this? Do you any advice on this? 3. Try to analyze the commonalities and individualities in the content of E-sports industry policies in various Chinese regions? How do these commonalities and individualities affect the future development of regional E-sports?

Chapter 10

Innovation Characteristics and Development Trend of China’s E-sports Industry

Abstract The problems of China’s E-sports industry can be summarized as the lack of originality of industrial content, low industrial concentration, and the lack of industrial communication influence, which are related to factors such as talent system, technology system, and operation system, as analyzed in the previous chapter on the limitations of E-sports industry development. In order to further improve the development situation of China’s E-sports industry and overcome the existing difficulties, this chapter will propose countermeasures and suggestions for the development of China’s E-sports industry from the perspectives of enhancing originality, strengthening industrial chain integration effect and optimizing industrial influence. Keywords China’s E-sports industry · Industrial development strategies · Industrial management strategies

10.1 Innovation Characteristics of China’s E-sports Industry 10.1.1 Industry Standards: Favorable Policies, Helping to Thrive the E-sports Industry National policy support is an important prerequisite for the sustainable and healthy development of China’s E-sports industry. Over the past 20 years, E-sports industry policies in China have experienced several stages, and a two-pronged approach was adopted to encourage development and regulate management. Entities in the E-sports ecosystem will cooperate with each other to establish national standards, implement policies and regulations, regulate E-sports events, and cultivate relevant talents, thereby advancing the E-sports industry. By doing so, E-sports will gradually converge towards traditional sports with a mature model, such as football and basketball, enabling it to create huge impact on dissemination, help expand the mass base and accelerate the sound development of the overall E-sports market (Fig. 10.1). According to the Analysis Report on the Employment Prosperity of E-sports Players—A New Occupation released by the Ministry of Human Resources and © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 P. Duan et al., Electronic Sports Industry in China, https://doi.org/10.1007/978-981-19-9288-9_10

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The SAPPRFT released Notice on Issuing the Development Plan of the “Notice on Prohibiting the Action Plan to Promote Ministry of Culture for the Broadcasting of Computer Consumption-Driven Cultural Industry during the Transformation and 13th Five-Year Period Game Programs” Upgrading

The GAS recognized e-sports as the official 99th sport

The Ministry of Human Resources and Social Security, the State Administration of Market Regulation and the National Bureau of Statistics together released 13 new occupations including e-sports operator and e-sports player

The GAS redefined Catalogue of Instructional Notice on Holding e-sports as the 78th Programs of Higher Vocational National Electronic Education (Technical Schools) Sports Open 2018 sport in General Colleges and Universities

Shanghai released “Twenty Opinions on Accelerating the Healthy Development of the E-sports Industry”

Fig. 10.1 Summary of key policies in the E-sports industry

Social Security, with the rapid economic growth, national policies had gradually shifted to support and encourage E-sports, as shown in the Table 10.1. Specifically in 2008, the GAS changed E-sports from the 99th official sport to the 78th one. In July 2015, the GAS promulgated the Provisional Regulations on the Management of E-sports Events, which provided policy support and standards for the development of the E-sports industry. In 2017, the former Ministry of Culture issued the “Development Plan for the Cultural Industry During the 13th Five-Year Period”, proposing to support the development of new formats such as sports performances and E-sports. E-sports officially became an electronic demonstration sport in Jakarta Palembang 2018 Asian Games. At this point, E-sports achieved the same status as traditional sports in the national sports strategy. On June 7, 2021, the Ministry of Culture and Tourism released the “14th Five-Year Plan for the Development of the Cultural Industry” (hereinafter referred to as the Plan) on its official website, specifying the overall requirements, goals, supporting measures and direction for the development during the 14th Five-Year Plan period. Among them, in terms of optimizing the supply of key cultural industries and improving the cultural consumption environment, the Plan proposed making more efforts to boost the integrated development of E-sports and the game and entertainment industry, shifting the focus content of E-sports-related cultural industries to their digital advantages, and raising the influence of the E-sports industry in the mass cultural industry. In addition, national policy support is the foundation for the growth of the Esports industry, and with the increase in the international influence of E-sports; the supporting policies of local governments are also being strengthened, as shown in the Table 10.2. In recent years have witnessed gradual increase in positive opinions on E-sports, which was regarded a great scourge first to now a healthy sport activity. From mainstream media, official accounts to folk public opinion, key words related to E-sports

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Table 10.1 Support policies of Chinese and international organizations for E-sports Time Motivating factors

Motivating effect

2003 The GAS approved E-sports as the 99th official sport (changed to the 78th in 2008)

E-sports were included into the national sports strategy

2004 The first China E-sports games (CEG) was opened

Officially-held E-sports events

2006 All-China sports federation held a press conference to publish the regulations on E-sports management at the GAS

Official standards for E-sports events

2007 The 2nd Asian indoor games (AIG) became E-sports were recognized by the Olympic the first multi-sport event with E-sports council of Asia included in Asia 2013 The GAS built a 17-member E-sports team for competing in the AIG

China first won awards in E-sports

2015 The GAS promulgated the “provisional regulations on the management of E-sports events”

Support policies and standards for the industry development

2016 The GAS issued the “13th five-year plan for Promoted development of E-sports the development of the sports industry” 2016 The ministry of education announced the Accelerated cultivation of E-sports talents adding of an “E-sports and Management” major under the category of sports in higher vocational schools 2016 The national development and reform commission released the “notice on issuing the action plan to promote consumption-driven transformation and upgrading”

Encouraged organization of national or international E-sports events and activities

2017 The ministry of culture issued the Policy support for E-sports development “development plan for the cultural industry during the 13th five-year period”, proposing to support the development of new formats such as sports performances and E-sports 2018 E-sports officially became an electronic demonstration sport in Jakarta Palembang 2018 Asian games

Unprecedented increase in the significance of E-sports

has changed to be ones with positive meanings like health, main-training, industrial development and internationalization. This transformation has a great connection with the support for E-sports and the industry at the national level. With the increasing support of national policies for the E-sports industry, media have also guided public opinions on the development of China’s E-sports from various aspects, constantly creating a good market environment and atmosphere at the social and cultural level. Dividend policies will help cities introduce upstream and downstream industries such as E-sports manufacturers, event operations, livestreaming platforms and peripheral products and produce excellent E-sports enterprises and products, thereby

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Table 10.2 Support policies of local governments for E-sports Beijing

Several opinions on accelerating the innovative development of cultural and creative industries

Shanghai

Several opinions on accelerating the innovative development of cultural and creative industries in Shanghai Measures for the registration and management of E-sports athletes in Shanghai (for trial implementation)

Sichuan

Measures for the registration and management of E-sports athletes in Sichuan (revision)

Xi’an

Several policies on supporting the development of the E-sports and game industry

Chongqing

Several policy opinions on accelerating the healthy development of the E-sports industry

Hangzhou

Implementation opinions of Xiacheng district people’s government of Hangzhou municipality on building an E-sports entertainment town to stimulate business cluster development (for trial implementation)

Yinchuan

Implementation opinions on promoting the E-sports industry

Taicang

Several policies on promoting the transformation, upgrading, innovation and development of modern service industry

advancing new formats of the E-sports industry and expanding the development space of the industry. On February 19, 2020, the Information Office of Beijing Municipality issued “Several Measures on Responding to the Impact of Covid-19 Pandemic to Promote the Healthy Development of the Cultural Industry”, mentioning E-sports Beijing 2020 Plan. In the Plan, the landing of 2020 Honor of Kings World Champion Cup in Beijing had attracted much attention, reflecting the further optimization of international E-sports competitions. In the 2nd E-sports China Annual Ceremony on April 21, 2021, Shanghai, Wuhan, and Xi’an won the title of “E-sports city of the year” because they had achieved close integration of E-sports and the region with policy support and building industrial parks. The E-sports industry has gradually become one of new approaches for cities to create E-sports business cards and enhance their influence, and also provided new cases for the development of urban digital economy during the pandemic (Fig. 10.2).

10.1.2 Game Products: Famous IP, Creating High-Quality Content Ecosystem As E-sports games gradually mature, well-known game brands have derived various game products based on their original worldview, so as to enhance the game freshness and user stickiness. Combining various E-sports events aims to create game ecology, improve the value of E-sports game brands and broaden the future E-sports market. Besides E-sports games and E-sports events, main E-sports brands have begun to gradually create their own derivative content and further form a content matrix.

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Fig. 10.2 Honor of Kings World Champion Cup

On the basis of games themselves, main game brands derive gaming content and occupy more niche markets to help upgrade original competitions to be a mature system and increase the growth of the E-sports industry. For example, the LOL develops auto chess games, card games and turn-based mobile games with each genre launched its own events, and the value of the entire brand ecosystem continues to increase. Other than games and events, literature, manga, animation, music and other forms all have been expanded with an attempt to create an all-round derivative content universe and greatly enrich the brand extension value. E-sports can drive industries such as games, digital content, hardware, and pan-entertainment. Especially main Esports brands can also extend many peripheral derivatives in the fields of animation, film and television, literature and sports apart from their own events, and are an important driving force for industrial upgrading and enterprise development.

LOL Brand Expansion The LOL brand has expanded into multiple fields, including film and television, variety shows, documentaries, virtual girl groups, animation, and web fiction. In the future, it will also explore the domain of movies and theme parks to create a Disney-style E-sports universe. In terms of film and television, Youhug Media cooperated with TJ Sports to create LPL-based works; in terms of variety shows, an E-sports reality show named “Go Beyond! Hero” was launched with LOL authorization. The program includes three teams formed by star summoners, and together with team managers and players, they will deeply know various sectors of the E-sports ecosystem, including competitions, themed livestreaming, event organization, club training, and compete for the title of “Star Summoner Team of the Year” at the E-sports carnival, so that audiences can feel the fun of E-sports and understand the charm of games. With

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Events

Games

Video

● LOL Mobile

● Worlds series

● Multi-media platforms: LOL

● Auto chess game:

● Regional

universe

Teamfight Tactics

professional

● Literature: LOL: My Time

● Card game: Legends

tournaments and public

● Manga: Hero’s Faith

of Runeterra

events

● Animation: Arcane

● Turn -based RPG:

● Teamfight Tactics

● Virtual idol group: K/DA

Ruined King: A League

game events

● Music: LOL music carnival

Fig. 10.3 An example of creating an expanded LOL universe

regard to documentaries, Riot Games, TJ Sports and Bilibili jointly presented a LPL documentary Knock Who for the first time, focusing on China’s LPL teams. Arcane debuted at the 10th anniversary celebration of the LOL, will tell a story about two iconic League champions and the power that will tear them apart. With the gradual improvement of the quality of content derived from E-sports brands, popular content has been slowly recognized by users. For example, an Esports spinoff Cross Fire launched in 2020 scored 8.0 with nearly 140,000 people rated on Douban as of August 2021 (Fig. 10.3). In addition, various E-sports towns were built around E-sports events, variety shows, education and services, forming a host of extended industries. In 2017, Tencent E-sports announced its cooperation with Supergen and it was expected that more than ten pan-entertainment E-sports industrial parks would be built at central districts in major cities across China within five years. Business giants, such as Suning, Ali and Tencent all invested into the E-sports venues industry. Related industries at both upstream and downstream had been driven to grow rapidly through the “E-sports+” model. In the next step, governments, capital and related enterprises will use E-sports as a fulcrum to leverage emerging industries such as games, animation, IT, big data, tourism, and cultural creativity. The “E-sports+” model can better help grow the E-sports industry in all aspects, extend and improve the overall industrial chain, enlarge the scale of the industry and consolidate the user population, forming a virtuous circle of E-sports.

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10.1.3 Game Operation: Globalized, Home-Based, Interconnected Development E-sports events can be divided into two types: leagues and cups, each with their own characteristics and advantages, but considering the development history of E-sports and the audience experience, the league system is more favorable for the development of the E-sports industry. In 2020, Valve officially announced that after TI 10, Dota 2 would begin to shift from the nearly ten-year cup system to a league system. The Dota 2 Pro Circuit would introduce a new match system, which would provide a more stable game mode and a more scientific format for players throughout the year. E-sports events are home-based, that is, referring to the home and away system of traditional sports. To be specific, cities have their home venues established to form a home and away game league, so that E-sports events concentrated in one city will be hosted at multiple home cities through clubs. 2018 was the first year for domestic E-sports events to become home games. Tencent E-sports put forward the Urban Development Plan for E-sports to not only meet the needs of local governments but also create high-quality events. With the home and away system, it would continue to try deeply combining regional culture and events. For one thing, it provides support for setting up strategic events; for the other, it is closely linked with other businesses to help create an E-sports business card for urban digital culture. Tencent took the lead in finishing its domestic layout of LPL and KPL events just from a single city, two cities to multi cities, speeding up the localization of E-sports events. The Plan had been successfully implemented in four cities: Zhuhai, Changsha, Chongqing and Xi’an. On May 31, 2019, the LOL Demacia Cup was held at the Hengqin International Tennis Center, Zhuhai. In June that year, the CrossFire Pro League (CFPL) Season 12 Finals and the CrossFire Mobile Pro League (CFML) 2018 Spring Finals landed in Changsha. In October that year, Chongqing Banan Gymnasium and Chongqing Grand Theater ushered in the 2018 CFPL and CFML Autumn Final and Chinese E-sports Football League at the same time. Later, the 2018 LOL Music Festival and Awards Night was held in Xi’an Qujiang International Convention and Exhibition Center. In the future by integrating different cultural resources in local cities, the Plan would aim to enhance users’ understanding of the new cultural symbol of E-sports, ecologically connect more diverse cultural subjects, and in terms of E-sports, provide digital cultural experience, which is richer and more three-dimensional. In 2020, the home battlefields of the Overwatch League were expanded to a global scale, creating events with a multi-country home and away system. The league structure was divided into two leagues, Atlantic and Pacific. At the same time, 20 teams from 19 cities in the United States, Canada, China, South Korea, France and the United Kingdom were split into four major regions by geography. Among them, four teams from China were categorized into the eastern region of the Pacific Alliance. For the convenience of each team’s participation, the home venue of 19 cities in 2020 was determined at once. Organizing global leagues was to create more opportunities for each team to compete with other regions and exchange tactics with each other,

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thus narrowing the power gap between them, securing the watching value of leagues and improving the viewing experience of audiences.

10.1.4 Technological Innovation: Extensive Application of Intelligent Technology, Enriching Immersive Experiences E-sports now have gradually started to rely on AI-based technologies, including sensors, virtual reality, human–computer interaction and so on. The AI characteristics are mainly manifested not only in the simulation of, but also the enhancement and expansion of human capabilities, with the purpose of further enhancing the gaming experience of E-sports users and meeting their needs [1]. Technological progress is the internal driving force for the rapid growth of the game industry, and accelerates the evolution and upgrading of the entire E-sports industry. The application of AI, big data, 5G, cloud computing and other technologies has triggered a new round of R&D and innovation in China’s E-sports industry, and quickened the upgrading of the industry. Compared with traditional sports, E-sports can accommodate and adapt to the development and innovation of various emerging technologies. Science and technology constitute a primary productive force, and cloud technology and VR technology are driving a new round of advancement of information technology. In the digital age of fast growth, the combination of AI technology and cultural and creative industries can bring about huge changes in industrial upgrading, content production and user participation, and the E-sports industry is facing big development opportunities. Virtual Reality, abbreviated as VR, mainly uses imaging technology to create and simulate a virtual simulation system that is infinitely close to reality. As early as around the 1990s, Japanese and European game companies had attempted to introduce it into the game industry, but they failed to follow through due to technical problems. Now, with the maturity of 5G communication technology, the application of VR technology in E-sports will greatly drive E-sports onto the road of sports. E-sports competition will go beyond the brain fighting in front of the electronic screen, but also depends on players’ physical power, forming a perfect combination of games and sports and the fusion of the real and virtual worlds. Making E-sports a technology-based sport is an excellent way to deal with E-sports [2]. AI technology helps propel the industrialization of the E-sports industry, and improve the quality and production speed of E-sports games, creating a new industrial growth point. In the future, China’s E-sports industry can count on new technologies such as VR to bring new viewing experience to E-sports users, make remote VR E-sports and cloud gaming E-sports possible, and produce more opportunities for paying E-sports content.

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10.1.5 Content Production: Updating Scene Production, Meeting the Diverse Needs of Users At present, more and more E-sports games focus on improving the quality of game scenes. We can use featured scenes to empower E-sports games and make innovation with respect to the richness, fun, interactivity and scalability of E-sports games both at content and form level, so as to win the love and recognition of users and gain an acting point for attracting new users. According to the survey results of Penguin Research in March 2020, under the background of the deployment of new 5G network infrastructure, the E-sports industry had embraced new opportunities in terms of network security and user viewing experience. For users who have expectations for the application of 5G technology in E-sports viewing, a quarter had never watched E-sports events before, so such application in the E-sports industry would drive the conversion of potential E-sports users into users. Regarding users’ expectations for the application in E-sports viewing, more than half of users thought that the primary requirement was to improve the basic viewing experience, including “more smooth viewing without buffering”, “clearer pictures”, “free choice of viewing angle”, “VR-style immersive viewing”, and “rapid zooming-in or bullet time”, In this way, the low latency and high broadband features of 5G technology could further play a role in the viewing experience of E-sports events.

Application of 5G&VR Technology in Games In April 2021, Beijing Mobile and Sky Limit Entertainment jointly announced an in-depth cooperation in the “5G&VR-Based E-sports National Challenge”, with an aim to bring subversive E-sports experience. Both sides were intended to utilize the latest Ice Lake-SP processor to significantly optimize and raise the performance of 5G&VR-based gaming. Through this technology, the E-sports playing distance can be greatly expanded. Not only indoor multiplayer competitions that players can move freely within a certain range can be conducted, but also remote players who are several kilometers or tens of kilometers away from each other can access 5G&VR-based games at the same time like normal online games. Furthermore, players no longer need a backpack, but just have to wear conventional VR glasses and hold a controller to play lightly. Game data is basically processed in the cloud and on the edge, and then transmitted to players through low-latency and high-speed 5G network, thus greatly improving user’s game experience and enhancing the immersion of games.

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10.1.6 Dissemination Platforms: Focusing on Events Copyright, Fighting for Copyright Values E-sports events copyright has become the focus of the E-sports industry. How to maximize the value of events copyright will become the development center of China’s E-sports dissemination platforms. According to iResearch’s Research Report on China’s E-sports Industry 2020, at the end of 2019, events copyright contracts were due one after another, and a new round of competition for E-sports copyright kicked off. In 2020, Youtube, a foreign livestreaming company and the largest video sharing platform in the US announced to pay US$160 million (about RMB 1.123 billion) for buying 3-year exclusive television rights of all E-sports events including Overwatch leagues, Hearthstone competitions, and Call of Duty leagues from Activision Blizzard. Moreover, the cooperation between the two parties was just limited to game livestreaming. Google Cloud Services would provide Activision Blizzard with convenient cloud computing services, bringing users a better experience in cloud gaming. In China, various leading livestreaming platforms had also purchased the copyrights of well-known E-sports events at high prices. In 2021, Huya Live paid RMB 2.013 billion for obtaining the right to use the content resources (livestreaming rights and on-demand rights) related to the LPL, LDL, LPL All-Star Weekend and award ceremonies in the following five years, and the right to transfer these rights to a third party. Such rights were applicable to the mainland China only. Regarding the copyright of large-scale events, Huya was the only livestreaming platform that owns the copyright of LPL, LCK, LEC and LCS. The content was complete; the cooperation was stable, and the event sector was huge. And its advantage in the copyright of major events have a large number of users with high engagement rates. According to iiMedia Research, Huya users that watch livestreaming more than once a week accounted for 87.9%, higher than 85.5% of Penguin E-sports and 84.8% of Douyu. As the key development direction of E-sports platforms in the future, the purchase of events copyright can attract a large number of users’ attention, and bring about lots of economic benefits to Chinese E-sports media platforms.

10.1.7 Social Cognition: E-sports Culture Gradually Maturing, Improving Social Reputation The development of an industry necessitates two environments: hard environment, namely the environment of the industry itself, and soft environment, namely the social environment. The orientation of social public opinion, the cultural identity of the society, and the value trend of the public are all important components of the social environment. A good social environment and social atmosphere are the soil and cornerstone for the smooth development of the industry. In China, E-sports are poorly integrated with mainstream public opinions and mainstream culture, because

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Fig. 10.4 A screenshot of the documentary: E-sports In China

they are affected by inherent social concepts and people’s cognitive biases. And also they have not gained the right to speak in the media. E-sports are still in a weak position in terms of social attention and recognition, as well as social cultural needs [3]. “It’s not just games. It’s sports, art, and culture.” On March 14, 2020, a documentary titled “E-sports in China” was broadcast on CCTV Discovery channel, and was the second time that E-sports were reported on CCTV after the program “E-sports” (Fig. 10.4). The documentary took a total of 457 days to shoot, filmed more than 20 different game events, and interviewed more than 80 veterans of the E-sports industry, covering the current situation of China’s E-sports industry in an all-round way. Over the past 17 years of development, great changes had taken place in the content form of E-sports, relevant policies and regulations, and public recognition. The previous negative impression of the E-sports industry has gradually faded, but the social recognition of the emerging E-sports has been rising. The documentary deeply showed the importance of the industry for national cultural dissemination. “E-sports games carry the function of cultural export.” As overseas E-sports have been hugely exported to China, European and American culture have also been continuously penetrated in local culture, creating opportunities for cultural integration and innovation, but also bringing challenges to the survival and development of traditional culture. “Overseas E-sports are great, but ultimately, they’re from foreign countries.” China’s Esports industry cannot secure long-term growth through agency and acquisition alone. China needs to create its own E-sports content. On the basis of its digital cultural attributes, China’s E-sports industry should undertake the responsibility of inheriting and carrying forward Chinese traditional culture. It also needs to play a role in promoting local culture to go abroad and strengthening cultural export.

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10.2 Development Trend of China’s E-sports Industry 10.2.1 E-sports Professionalization and Marketization 10.2.1.1

E-sports Major

In 2003, the GAS defined E-sports as a formal sport, but ten years later, only 20% of netizens in a 2013 poll by People’s Daily Online believed that E-sports were sports. There were several reasons for this situation. For example, the degree of professionalization between the two was far apart; domestic E-sports events had many problems, such as chaotic organization, single content, irregular process, and uneven quality of personnel, all of which affected public perception of E-sports. Therefore, it was extremely necessary to guide the professionalization of China’s Esports industry. As recent years have witnessed rapid development in China, E-sports events have been increasingly frequently hosted; event classification has become more clear, and a large number of data analysis platforms have been used to report and study E-sports events, so that China’s E-sports industry can become professional in terms of brand building, event preparation and other aspects. Moreover, the highspeed progress of information technology has further accelerated this process. Beijing launched the 2016 World Cyber Games (WCG) conference, put forward two key words: professionalization and nation-wide popularization, and said that on the one hand, the WCG would work with International E-sports Federation (IeSF) to set up an E-sports education system and train referees, commentators, program producers, coaches, team and event management professionals for the whole industry; on the other hand, the WCG would make more efforts to popularize E-sports at a nationwide level with regard to the selection system of 2016 World Championship, college competitions, national E-sports center network, etc. In China, the professionalization of the E-sports industry is closely linked with nation-wide popularization and the two interconnect with each other. Like traditional sports, E-sports also have to be rooted in a broad mass base for its development.

Folk Game Culture in Foreign Countries Taking South Korea as an example, E-sports there have turned the entire nation into E-sports players. Ten years ago, more than 13 million Korean households were accessed to OnGameNet channel. The treatment and popularity of excellent E-sports players are not second to that of traditional sports stars. The headshot of famous professional game players is printed on credit cards, and those with outstanding achievements even can be exempted from military service. All of these show the popularity of E-sports in South Korea. Similarly there is a huge mass base in the United States across the ocean. E-sports viewers account for almost a quarter of the 125 million game video viewers in the

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country, with about six hours a week spent in E-sports. As a result, the nationwide popularization of E-sports needs to be driven with professionalization [4].

10.2.1.2

E-sports Marketization

According to the “In-depth Research on China’s E-sports Industry and Forecast Report on Investment Prospects from 2016–2020”, each sector in China’s E-sports market would show a trend of professionalization and marketization, and gradually move closer to the mature traditional sports like football and basketball, so as to accelerate the healthy development of the overall E-sports market. After years of development, the E-sports industry has slowly grown and formed a complete industrial chain from game licensing to content production and dissemination. A series of related industries, including content production, authorization and distribution, event operation, dissemination and censorship, education and training, and special device R&D have been driven to grow in an all-round way. In 2019, E-sports operators and E-sports players had been listed as new occupations by the Ministry of Human Resources and Social Security. As the industry slowly matures, E-sports become more professional. For example in addition to traditional training teams, the FPX was also equipped with physical trainers and psychological consultants to solve both physical and mental fatigue resulted from the intensive competition schedule, gradually realizing the integration of sports science and E-sports events. Brand appreciation also brought huge commercial benefits to the team. The team won multiple brand sponsorship, including OPPO and Oishi in a short time. The company behind the team, the game publisher FunPlus, had a large number of fans in Europe and the United States, and ranked first in the 2018 TOP30 Brands Overseas and the annual revenue list of Chinese game manufacturers. According to statistics, in 2018, there were more than 500 popular E-sports events, over 5000 E-sports teams in operation in China, with the market size exceeding RMB 100 billion. In the first half of 2019, the actual sales revenue of the E-sports industry was RMB 51.32 billion, and E-sports practitioners exceeded 440,000. China had become the most influential and potential E-sports market in the world [5]. As to sponsors, the title sponsorship of Chinese E-sports brands continued to rise; the prize money for E-sports events was considerable, and professional groups such as clubs, professional players, and event commentators had decent income. Computer peripheral manufacturers such as mice, keyboards, gaming chairs, and headphones, as well as livestreaming platforms like Douyu and Huya all were the main title sponsors of E-sports. But in recent years, with the rise of E-sports, many well-known brands such as BMW, vivo, and Jeep had also joined in. In 2019, Nike China and TJ Sports reached a four-year agreement to become the official exclusive clothing and footwear partner of LPL, with an average annual cost of over RMB 50 million.

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10.2.2 E-sports Entertainment According to the “In-depth Research on China’s E-sports Industry and Forecast Report on Investment Prospects from 2016–2020”, the E-sports industry and the entertainment industry shared a very high degree of overlap in terms of young user groups, and the two were gradually converging, so it is necessary to widen their user groups and amplify their influence. With the increasing attention paid to E-sports, the combination of “E-sports+ entertainment” had become a new development trend. The E-sports industry blended the attributes of the pan-entertainment industry, and both highly overlapped with respect to their target groups, namely young users, so it had a natural advantage in entertainment. The two industries were gradually showing a trend of fusion, taking advantages of each other to expand user groups and strengthen their influence. Users of E-sports and entertainment are a huge group dominated by the young generation. The content and forms of E-sports is becoming more entertaining to attract a large number of user groups. E-sports have broken the boundary of the content and started to step into the field of reality shows. It has gradually become a normal for E-sports stars entering the entertainment circle and professional players/streamers appearing in entertainment programs and music videos. And entertainment celebrities participating in livestreaming E-sports games, endorsing events, and performing at events have become the main publicity mode of E-sports. Due to the influence of the entertainment orientation of E-sports, the overall Esports market in China is rising rapidly, so is the scale of the E-sports ecosystem. Taking the cross-border cooperation between Penguin E-sports and the entertainment industry as an example, Penguin E-sports have continued to conduct crossborder cooperation to spread E-sports streamers and production content out of the Esports circle. It joined hands with Tencent Sports to create a live interactive program “Gaming at Home”. Entertainment stars and E-sports streamers competed in four popular E-sports games. The program livestreamed the real life and gaming state of the stars and E-sports masters, attracted audiences to experience the fun of E-sports games without a knockout system adopted. Penguin E-sports also teamed up with QQ Music to launch the “Penguin Game Musician Project”, greatly enhancing the peripheral influence and content accumulation of E-sports streamers and responding to the Penguin E-sports brand’s cultural concept of “Spark More”. The Project was an excellent example of the combination of content ecological concept and practice of E-sports platforms and reflected the mature form and innovative development of the E-sports industry. Although there is still a certain gap with traditional sports players and entertainment stars in terms of commercial value, well-known players of Chinese E-sports clubs have gradually gotten a large amount of internet exposure, and have been listed many times in online awards. For example, three E-sports players were selected on the list of the Character of the Year at the 2019 Weibo Awards Ceremony, of which the LOL player Uzi won the top position (Fig. 10.5).

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Fig. 10.5 LOL player Uzi

Major E-sports clubs such as EDG, RNG, and FPX build brand images through self-made content, converting players’ exposure traffic into brand marketing resources. The further integration of E-sports and entertainment will generate a sizable fan economy and bring huge user traffic, which will inevitably broaden the market boundaries of the E-sports industry. And the entertainment of E-sports advances steadily to enlarge the affected population of E-sports, improve the positive social image of E-sports, and facilitate the maturity of China’s E-sports industry.

10.2.3 Mobile E-sports Because mobile games have a low threshold for playing and users have a strong willingness to participate in and watch games, many manufacturers have shifted their strategical focus on the field of mobile games. With the unprecedented development of mobile games, mobile E-sports have experienced explosive growth. The development trend of mobile E-sports is essentially a reflection of the change in consumer demand. New phenomena such as improved performance of mobile devices, younger user groups and increased demand for entertainment have created new opportunities in the E-sports market, and mobile E-sports products represented by Honor of Kings have opened the gate of developing mobile E-sports. Chinese game giants represented by Tencent and Hero Entertainment have successively ventured into mobile E-sports games and their events, and have made such events increasingly diversified and mature. Under the combined effect of powerful participation of capital, meticulous layout of enterprises, and strong growth in mobile demand, mobile E-sports

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will become the first choice of E-sports users, and will also be the ultimate trend of E-sports development. According to the survey of Penguin Intelligence, 70% of Chinese E-sports users were from the new increase after 2016. Thanks to the explosion of mobile games and mobile E-sports, 84% of users watched games on mobile phones, and mobile devices made E-sports users multiplied rapidly. The high density, high frequency and high interaction of mobile E-sports had extremely high requirements for network bandwidth. In 2016, the market share of mobile E-sports in China accounted for 53.74% of the overall market, officially surpassing that of PC-based E-sports as a new competitive area in China’s E-sports industry. With the concerted efforts of Huawei, China Mobile, China Unicom and China Telecom, China’s 5G infrastructure and terminal technology have been far ahead of the world. With the advent of the 5G era, “5G+ E-sports” will help the all-round upgrading and growth of the E-sports industry and bring new development opportunities to the industry. 5G technology is characterized with high speed, high reliability, large capacity, and low latency, and enables the real-time transmission of high-quality multi-channel signals for event livestreaming, and can greatly improve the production and broadcast of E-sports events. In addition, such technology leads more users to participate in the E-sports industry, thereby realizing the further popularization of mobile E-sports and the full development of public events.

Huya: Attempt of 5G Livestreaming On April 28, 2019, Huya Live had successfully attempted 5G+4 K highdefinition outdoor livestreaming, and had launched the trial commercial use of 5G technology in the livestreaming industry. First live scenes are captured by 4 K cameras and uplinked to edge nodes through the 5G network for processing. Next they are distributed and transmitted to the viewing end through ultra-low-latency 5G network, thus realizing 4 K, 50 M, HD outdoor livestreaming and bringing users an ultra HD viewing experience and more timely interaction. This 5G network attempt was the first time to provide highdefinition livestreaming services in 5G and edge computing after Huya Live and China Telecom signed a 5G cooperation memorandum, and Huya Live would continue to deepen the cooperation on “5G+livestreaming platforms” with China Telecom. The complete building of 5G infrastructure in the future would drive the full coverage and development of mobile E-sports. In 2019, Google rolled out the first seamless game platform Stadia, which relies on powerful cloud computing to process game data in the cloud, so users can play games smoothly on televisions, computers or mobile phones. This move not only broke the limitations of hardware and platforms, but also greatly expanded the boundaries of the industry and contributed to the growth of E-sports.

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10.2.4 E-sports Nation-Wide Popularization The rapid progress and popularization of mobile E-sports has contributed to the further expansion of its user base in China, and such a huge user group has increased steadily. According to the estimate given by Penguin Intelligence, E-sports users are divided into light, medium and heavy ones by the time they spend on E-sports content. Heavy users who watch E-sports content for more than three hours per week reach 40 million, and are very loyalty and have strong desire to consume. They also are the core value user of the E-sports industry and play a leading role among noncore users. Light and medium users who are very likely to become heavy users total 240 million and 120 million respectively. There is room for growth in their E-sports interest, which has huge commercial conversion value. In this case, China’s E-sports industry has entered the stage focusing on user emotional training, commercial value development and niche market operation. And Chinese E-sports users are predominated by young, high-educated and highincome groups. According to the World and China: Development Report on Global E-sports Industry 2019 jointly released by Penguin Intelligence, Tencent E-sports, and Journal of E-sports, Chinese E-sports users were dominated by men, and women only accounted for 30%. Users aged under 35 accounted for 79%, and second-tier cities were the main area for E-sports users, coming in at 39%, much higher than first-tier cities. Besides more than 50% of users had a stable personal monthly income between RMB 3001 and 8000. More and more female users had begun to contact and pay attention to the field of E-sports, and E-sports games had become one of their main entertainment methods. IResearch’s Research Report on China’s E-sports Industry 2020 predicted that the proportion of female users would continue to show an upward trend in the next few years, and the E-sports competition system gradually improved also provided conditions for the rising tendency. They not only had appeared in the audience, but also would be active on the E-sports arena.

10.2.5 E-sports Virtualization As new technologies such as 5G, AI, AR, VR, MR and XR are widely used for event livestreaming, users’ viewing and usage experience are being greatly improved. Since E-sports contain digital elements, its images, sounds, game scores and other data can be directly read, so content platforms are launching virtual streamers of all kinds. VR E-sports are rising due to the rapid development of VR technology and the explosive growth of the E-sports industry. E-sports are a major access point for users to experience VR, and in turn VR E-sports are an important development direction of the E-sports industry and can provide players with a better gaming and E-sports experience (Fig. 10.6).

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UHD or 4k/8k

Big data

AR

technology

Cloud computing

technology

Intelligent terminal 5G technology

Fig. 10.6 Technology-driven power

The breakthroughs in VR technology and the continuous popularization of related devices have laid the foundation to grow VR E-sports. As the reform wave of VR advances and the E-sports industrial ecology overall matures, a good user and market base has been laid for the growth of VR E-sports, which has gradually entered a “golden period” of development.

VR-Based Game Viewing: Beat Saber October 18, 2020 saw the holding of the World Conference on VR Industry. the National Beat Saber Challenge final was taken place in Nanchang. Unlike traditional small VR competitions, the National Beat Saber Challenge final, as NetEase’s first attempt in VR E-sports, is a professional athletic activity for nation-wide people. It created a precedent of professional large VR E-sports events and provided a typical reference value for VR E-sports. In addition, the Challenge worked with China Telecom to jointly launch VR-based game viewing services. Users not only can get an immersive viewing experience through the MR-based live and broadcast, but also can enjoy a 360-degree panoramic view. Such services provide online game viewers with an excellent audio-visual viewing experience. The application of VR-based viewing technology means the true use of VR technology throughout the whole link from products, events to livestreaming. As a new type of E-sports activity, Beat Saber Challenge used its own VR-based features to show more possibilities for E-sports events. With the combination of VR technology and E-sports in the future, users can watch live matches in 360 degrees and truly feel the live atmosphere through terminal

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devices. What’s more, VR-based E-sports will place users in E-sports games, bringing a completely different competitive experience from traditional E-sports. The development of E-sports games on traditional PCs has come to a reasonable end. However with the popularity of virtual reality (VR) and the gradual maturity of its technology, the combination of VR+ E-sports has more room for growth both in the form of game control and the category of games. E-sports virtualization will become a new form of E-sports development in the future. The further progress of technology will bring greater and broader imagination to E-sports. Practice Questions 1. The “global village” predicted by McLuhan in the digital age has become reality. What’s your opinion about the impact of digital technology on the development of the E-sports industry? 2. The game and E-sports industry in China has experienced a process from social disapproval to gradual popularization. What factors have contributed to this transformation? 3. Briefly analyze what opportunities and challenges posed by the international and domestic environment for the development of the E-sports industry in the post-pandemic era?

References 1. Peng, Duan. 2018. Future Imaging in the Context of Intelligent Media: Concepts, Status-Quo and Prospects. Modern Communication, Journal of Communication University of China 10 (40): 1–6. 2. VR+E-sports. https://www.sohu.com/a/365189843120099894. 3. Shuyan, Qi. 2006. Social Mainstream Recognition of the E-sports Industry, Media’s Role in Its Development. Journal of E-sports 15: 20–21. 4. How to “specialize” and “popularise” E-sports in China? http://www.cankaoxiaoxi.com/science/ 20160318/1103834.shtml. 5. The market operation of E-sports industry is getting better. https://baijiahao.baidu.com/s?id= 1650496655594834060&wfr=spider&for=pc.