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eSports: Historical Review, Current State, and Future Challenges

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DOI: 10.4018/978-1-7998-7300-6.ch001

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Chapter 1
eSports:
Historical Review, Current State,
and Future Challenges

Julien Bousquet
University of Quebec at Chicoutimi, Canada

Myriam Ertz
https://orcid.org/0000-0001-9959-2779
University of Quebec at Chicoutimi, Canada

ABSTRACT
The eSports industry has experienced tremendous growth for a decade, despite the pandemic hitting
the entire planet. While major sporting events have been canceled or postponed, eSports continues to
grow strongly. While encouraging, this trend will also cause the young eSports industry to take up many
challenges in the coming years. eSports will not compete directly with professional sport, but it seems
on the verge of being integrated into major professional leagues worldwide, a trend that started a few
years ago. Professional sport and eSports, combined, seem poised for a promising future. Given the
rising interest in eSport, this chapter presents a historical review of the phenomenon before outlining its
current state from an economic and market perspective. A final section will further outline the remaining
challenges and avenues for the future of eSports.

INTRODUCTION

eSports, a contraction of the terms “electronic sports,” can be defined as “a form of sports where elec-
tronic systems facilitate the primary aspects of the sport; the input of players and teams, as well as the
output of the eSport system, are mediated by human-computer interfaces” (Hamari & Sjöblom, 2017,
p. 211). There remains a debate about whether eSports should be recognized as a sport (Holden et al.,
2017). In fact, due to its virtual nature and lack of physical activity, eSport has therefore been criticized
for not being an actual sport, and professional sport (i.e., real sport) remains, therefore, the reference
point when thinking of sport (Ke & Wagner, 2020). Meanwhile, eSport has grown in importance and
DOI: 10.4018/978-1-7998-7300-6.ch001

Copyright © 2021, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
 
eSports

is currently gaining momentum due to the current COVID-19 crisis, leading to the digitalization of
most cultural and sports activities. Yet, it is too early to assert the collapsology of professional sport,
and the term “tremor” might be more appropriate for now. Still, the industry shows somewhat worrying
signs of weakness, supported by the pandemic (Covid-19), which is not helping the situation. Although
eSports seem to be a very recent phenomenon, it dates back almost half a century, with the first video
game developed in 1967. Besides, it has become widely popular over the last ten years. This industry
is structured around stakeholders that have evolved (i.e., publishers, infrastructure platforms suppliers,
teams/players, competitions organizers, broadcasters, sponsors, and spectators). eSports operate accord-
ing to the same logic as a traditional sport. Marketing approaches are similar to sports marketing and are
appropriate for developing and implementing strategies related to organizations working in the eSports
industry (Pizzo et al., 2018).
The eSports industry will face many challenges in the coming years, including a need for recognition.
Even though July 2018 marks the 1st forum between the International Olympic Committee and the Global
association of international sports federation, which seems to bring the traditional sports industry and
eSport closer together, the road ahead still seems long and winding. Another critical point is the need
to better organize / structure competitions. The 2018 World championship attracted nearly 100 million
spectators, and thousands of contests are held each year worldwide. Some authors (i.e., Chikish, Car-
reras, Garcia, 2019) advocate for even more professional governance to legitimize this industry. Finally,
eSports does not have a very positive image due to certain pejorative elements associated with addiction,
social isolation, or even violence (Jonasson & Thiborg, 2010), and even psychological problems linked
to gambling or sports betting (Peter et al., 2019). This is partly what is holding back the integration of
eSports into the Olympics.
This industry has been evolving for over fifty years now and has undergone significant changes.
The main objective of this chapter is to understand its origins and its historical evolution to its current
place as an industry while presenting the challenges it will face in the coming years. This chapter is
intended as a historical overview of the evolution of the eSports industry which will allow academics,
students, and/or professionals to have an overview of this industry. Therefore, we will try to answer the
three research questions that underlie our reflection: (1) Where did eSports come from? (2) What is the
current state of the eSports industry and its market? And (3) What are the challenges and prospects for
the eSports phenomenon?
This chapter, mainly based on an exhaustive review of the literature and the secondary factual data
on which the authors will base their analysis, addresses this question of the advent of eSports and will be
organized into three sections. The first will situate the place of this phenomenon, as well as its historical
evolution. This first section emphasizes the historical change, decade after decade, to fully grasp the
milestones that have brought the eSports industry to today in 2021. Then, the second section portrays the
development, the distribution of revenues, the structuring, the audience and, player motives and typol-
ogy that make up the eSports industry. Finally, the last section looks at the challenges that the eSports
industry will face in the coming years through two themes such as eSports venues and the regulation of
the industry to establish itself more sustainably.
Therefore, this young industry is experiencing a very significant boom, growing in popularity
year after year. As mentioned, it is too early to announce the collapse of traditional professional sport.
Nonetheless, we may be on the cusp of a new industry that should take hold over the next decade. The
following chapters dig deeper into the phenomenon for a comprehensive review.

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ORIGIN AND EVOLUTION OF eSPORTS

Although there is not a total consensus among authors about the origin of eSports, some significant
events seem to overlap over the decades and through the words of those who have taken an interest in
them. Esports is closely linked to the development of video games (Billings & Hou, 2019). We will
analyze the events that have marked the evolution of this industry for almost 70 years now through these
periods, emphasizing the actors (stakeholders) who shaped it.

The 1950s: The First Computer and the First Video Game

In 1952, IBM launched its first scientific computer, the 701, for military use (Stanton, 2015, p.18). This
was the start of a great IT revolution. The same year, on another machine, the EDSAC (electronic delay
storage automatic calculator), the famous and popular Tic Tac Toe, also called XOX or Three Wins, was
born. This game, although it may seem simplistic today, consisted of creating a series of three crosses
(X) or three circles (O) horizontally, vertically, or diagonally on a grid of 9 tiles (3x3) (Larch, 2019).
A few years later, in 1958, developed at MIT on an analog computer, Tennis for Two was launched,
the first multiplayer game that had the characteristic of being played with a joystick and offered two
players to play against each other. Today, this game is considered by many to be the birth of eSports
(Sholz, 2019, p.19-20). This game was developed with entertainment in mind. The audience can follow
the two players competing against each other on the course. Some elements of eSports were present such
as a game, spectators, and players.

The 1960s: The Release of Spacewar!

The1960s were marked by the creation of the game Spacewar! on a mainframe computer (PDP-10 type
computer). In 1962, a group of students from the Massachusetts Institute of Technology (MIT) developed
Spacewar!, the first game installed on multiple computers. At the time, the game already had relatively
complex characteristics. Two ships (one for each player) clashed, each with a limited amount of fuel and
ammo. Each vessel was also subjected to a gravitational force of a star (Stanton, 2015, p.33).
Although at launch, the game used the keys of the PDP-10’s keyboard to orient the ship, the creators
added a joystick to make it easier to move and smooth the boat and its handling. Spacewar! was regarded
as the game that most influenced the developer community in the 1960s. The code has been used many
times in the years since. During the 1960s, access to computers was mainly limited to professionals at
their workplace, so it was reserved for a niche far too small to consider a market.

The 1970s: The First eSports Tournament and

the Arrival of Arcades and Consoles

From the beginning of the 1970s, the development of video games accelerated under the impetus of two
phenomena: the creation of arcades and game consoles (Edge, 2014). Equally important, the general
public seemed to be increasingly receptive to video games. In 1972, Oxford University hosted the first
eSports tournament called “The Intergalactic Spacewar!” (Billings & Hou, 2019). This competition
brought together 24 players who competed simultaneously in teams of 5 on mainframe computers (PDP-
10). The winning team received a one-year subscription to Rolling Stone magazine (Edwards, 2013).

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In the same year, the arrival of the first arcades appeared (Borowy & Jin, 2013). It was a critical mo-
ment in developing the video game industry. Arcade games were an important step forward, especially
around the social aspect. Arcade game rooms popped up in every mall throughout the USA, beginning
a social aspect of the non-programmer cultural movement into the enjoyment of gaming. The begin-
nings of eSports had begun. In 1972, the Pong arcade machine was released in the United States and
enjoyed immediate success. This was followed in 1976 with the first arcade machine, Sea Wolf, capable
of recording a player’s score (Stanton, 2015, p.41).
Alongside the development of arcades, game consoles saw their appearance in 1972 with the Magnavox
Odyssey (Sholz, 2019, p. 19-20). It was the first console that could be connected directly to a television.
But it was Atari that took the most important place in the market in 1975 with the launch of a game
console, called Home Pong, to host their famous arcade game, Pong. In 1976, Atari launched the Atari
2600 console. This console was characterized by its distinctive and iconic brown wood panel design. It
was also known as the console that popularized microprocessor-based design and pioneered the use of
ROM cartridges. Consoles and video games entered family living rooms (Edge, 2014). However, during
the 1970s, many companies struggled to monetize their products sufficiently.

The 1980s: The Birth of eSports

In 1980, the first national competition, the Space Invaders Championship, was organized in the United
States and hosted nearly 10,000 players from across the country (American Esports Publisher, 2019).
Qualifications occurred in several cities and regions across the United States (San Francisco, Fort
Worth, Chicago, Los Angeles, and New York). The following year, encouraged by this first success,
Atari launched the World Championship with a prize of $50 000. Although between 3,000 and 10,000
participants were expected, only 174 showed up at the tournament. The primary issue was that players
had to pay all expenses to participate, which led to poor attendance. Furthermore, the winners didn’t
receive the money prize promised by the tournament organizers. This tournament was a failure. It demon-
strated the inability of stakeholders to generate profits on a sustainable basis and to organize themselves
sustainably (Smith, 2012).
The first television program, Starcade, launched by the American channel TBS, was born in 1981
(Capsl, 2019). It was a game show where contestants competed against one another by playing arcade
video games.
At the start of the decade, companies emerged that kept records of the best scores of the most popular
video games such as Pac-Man, Donkey Kong, Defender, or Centipede. At that time, the market was split
between shooting games (i.e., Defender) and action games (i.e., Pac-Man). Importantly, the majority
was played solo. Twin Galaxies, an entity promoting video games, went so far as to publish these scores
in the Guinness Book of World Records (Allegra, 2018). The early 1980s marked the heyday of arcades
with their deployment in shopping malls, gas stations, restaurants, and amusement venues (Billings &
Hou, 2019). The turnover of this industry was close to 900 million dollars. But by the middle of this
decade, arcade sales started to erode due to the growing popularity of personal game consoles and the
accessibility of computers to the general public. In 1985, the NES console was released in the United
States, dealing a fatal blow to the arcade industry.
Another important event occurred somewhat later. Both Germany in 1982 (Atari VCS Bundesliga) and
the United States (US National Video Team) in 1983 witnessed the creation of the first teams of players
with communities of players competing against each other. These groupings of players marked the be-

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ginning of the structuring of what will later become eSports (Billings & Hou, 2019). More precisely, in
1988, Netrek, a multiplayer computer game, was born (Capsl, 2019). It had the particularity of allowing
16 players to compete against each other simultaneously via the Internet. The Internet changed the way
of gaming forever, making it possible to play the game with anyone on the planet.

The 1990s: The Development of the Internet and eSports Competitions

The arrival of the Internet disrupted the video game industry. Players can now keep their scores online
and share them with other players far across borders. Communities of players exchanged more easily
on their practices and the events (Edge, 2013). Although the game console market was doing very well,
personal computers (PCs) gradually established themselves over the long term. In fact, some specific
innovations contributed to popularizing PC games, such as improved graphic resolution (640x480) and
the integration of the CD-Rom in PCs. This latest technological development allowed more interesting
gameplay thanks to more realistic graphics. PCs were slowly catching up on game consoles, making it
possible to replace them. 1993 marked a critical moment with the release of the game Doom (Stanton,
2015, pp. 142-134) on PC, offering the possibility of saving the games and playing them again later.
Additionally, this game embodied the long tradition of the first-person shooter (FPS), with the player
seeing the action through the eyes of the character they are directing.
Along with technological and technical developments, tournaments and competitions (i.e., Battle by the
Bay and QuakeCon in 1996 or Red Annihilation in 1997) intensified (Billings & Hou, 2019). Tournament
organizers had a more viable business model than in the previous decade. They finally generated profits
and could attract more players and especially publicize the events. Sponsors, like AMD or Intel at the
time, were gradually taking an interest in and becoming essential stakeholders in this nascent industry. By
the early 1990s, it seemed clear that the future of competition would revolve around personal computers
(PCs). For example, the Nintendo World Championship in 1990 or Nintendo Power Fest in 1994 took
a tour of 29 American cities, with a final taking place in California at Hollywood Studios (American
Esports Publisher, 2019). Participants from the United States, Canada, United Kingdom, Australia, and
Chile participated. A few years later, in 1997, The Red Annihilation competitive event was organized: a
US nationwide competition of 2,000 participants competed against each other around the game Quake
(Edwards, 2013). The prize for the winner a Ferrari 328 GTS. Dennis “Thresh” Fong was the winner,
becoming the first professional eSports player in history (American Esports Publisher, 2019). Similar to
these American initiatives, the same developments took place in Europe and South Korea, which would be
a precursor in Asia. The end of the 90s ended with the release of the game Starcraft First Blood in South
Korea, which was a huge success. The deployment of high-speed Internet promoted the deployment of
cybercafés, which allowed the democratization of eSports to the young population (Sholz, 2019, p.22).
The emerging proliferation of eSports tournaments and competitions led to the professionalization of
players. Professional leagues emerged in many countries, such as the Cyberathlete Professional League
(CPL) in 1996 in the United States, the AMD Professional Gamers League (PGL) in Eastern Europe in
1997, the Deutsche Clanliga (DeCL) in Germany in 1997, and the Clanbase League in the Netherlands
in 1998. These leagues played an essential role in the organization of tournaments and the structuring
of the industry. Nevertheless, leagues were developed independently of each other and had difficulty
collaborating, which would give birth over the next decade to federations, which were supposed to fur-
ther harmonize the common functioning of eSports leagues. Their vision was borrowed from traditional
professional sport. From then on, the first tournaments organized online or in LAN (network) was done

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with an audience (Jenny et al., 2017; Wagner, 2005). And everything accelerated in the next decade. At
this point, the eSports industry is forming and evolving over the next decades.

The 2000s: The Start of Growth and Professionalization

This decade marked the rapid growth of professional gamers. It became possible to distinguish ama-
teurs from professionals, and tournaments began to be broadcast on South Korean television (Sahoon
& Thomas, 2015). Quickly leagues developed worldwide while organizing more tournaments. Asia,
Europe, and America had their significant associations (i.e., the Korean e-Sports Association in Korea,
the Cyberathlete Professional League and the Major League Gaming in the United States, and the AL-
TERNATE aTTaX in Germany) and the first world tournaments appeared (i.e., the World Cyber Games
Challenge, the World Cyber Games and the CPL World Championship in 2001, the Evo Championship
Series in 2002, the Electronic Sports World Cup in 2003 and the World Esports Games in 2005). The
Major League Gaming (MLG) was born in 2002. This league launched a point system (i.e., the MLG
Pro Points Ranking Systems), making it possible to determine global players’ performance (Edge, 2013).
MLG organized numerous tournaments in the United States and Canada, but it networked in links with
game developers. This organization relied heavily on television broadcasting and began to upload vid-
eos on Justin.tv, a website that allowed anyone to broadcast video online (Gerber, 2017). Because of
the bandwidths, the quality was not necessarily there, but gradually, this approach started to reach an
increasingly larger audience.
This audience growth allowed tournament organizers to increase associated prizes resulting in a
rapid escalation of rewards to attract the best professionals. At the start of the decade, the rewards for
the winning team were generally below $ 75,000, with $ 70,000 for Worlds Cyber Games in 2001 or
Starcraft with $ 35,000. In the mid-2000s, tournament prizes were around a quarter of a million for
winning teams. During the CPL World Tour, this was the case with a check for nearly $ 250,000 for
the team that won it. In 2007, the $ million mark (Esportsearnings, 2021) was announced in prizes for
an eSports tournament (i.e., Championship Games Series). The professional leagues that organized the
tournaments chose the games in concert with the developers who saw through eSports commercial and
marketing aspects to selling their games and the publicity surrounding them. Major developers such as
Blizzard were waging a relentless war to impose their games on tournaments, and at the same time, for
revenue, branding, but especially notoriety. In 2003, Dota was launched by opening the door wide to
MOBAs (multiplayer online battle arena). But at the very end of the decade, in 2009, Riot Games released
League of Legends (LoL), which would take off a few years later (Keiper et al., 2017). This type of game
would slowly take an essential part in tournaments due to its experiential side and professional teams’
enhancement. Also, tournaments offering MOBAs would see the audience increase. We were witness-
ing an internationalization of tournaments by leagues and tournament organizers. For example, in 2003,
the South Korean company Samsung founded the World Cyber Games, a global event comparable to
the Olympic Games. The first actual World Cyber Games had overall prize money of $300,000 and 430
players from 37 nations. It could be called the first real international eSports tournament (Syrota, 2011).
A few years later, in 2005, the CPL World Tour was a tournament for the game Painkiller and consisted
of nine tour stops (Istanbul, Barcelona, Rio de Janeiro, Jönköping, Dallas, Sheffield, Singapore, Milan,
and Santiago), culminating in a final tournament in New York City. The prize money was $1,000,000,
the largest ever for the CPL. Most importantly, the last game was televised by MTV (Kane, 2008).

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Also, slow but steady approaches were made to create a specific governance structure. For example,
federations were founded, culminating in the International eSports Federation (IeSf) as an international
governing body in 2008. However, due to legitimacy issues, many national federations had difficulty
collaborating with this global entity, slowing down somewhat the structuring of the eSports industry.
By the end of the 2010s, eSports had become established in many countries. Prize money had increased
dramatically quickly, and events were getting more critical. Until there, the eSports industry was boom-
ing from a relatively limited niche market. However, investors were poised to engage significantly in the
face of the growing interest of the audience. Indeed, television networks and traditional media did not
seem ideal for communicating and maintaining links with the many communities of players. The target
audience draws its informational research on eSports via the Internet and clearly displayed the desire to
follow the tournaments live or delayed. Online video via IPTV (Internet Protocol Television), a form of
television broadcast over a network using the Internet Protocol, appeared to be a relevant solution to sup-
port the development of the industry by reaching the audience more easily considering the link between
video games and the Internet. But, the technological solution was expensive and untested. Additionally,
advertisers did not understand this new media. From the beginning of the 2010s, streaming distribution
platforms would emerge to overcome this problem (Burroughs & Rama, 2015).

The 2010s: The Arrival of Streaming Platforms and League of Legends (LoL)

The financial crisis hit at the beginning of the decade. Like many other industries, the financial crisis
had an important impact on eSports and the companies involved. Primarily due to the fact that eSports
was mainly sponsor-driven at that time, everything was downsized. The sponsors slowed down the in-
vestments in tournaments, and consequently, money prizes were largely cut down, several tournaments
were canceled, raising fears of a major crisis in the industry. The financial crisis led to a shift in mindset,
especially as only those who had already tried to create a sustainable business model survived and stayed
in eSports. These years showed that building an audience may be an approach to foster organic growth
in eSports by making the games accessible, watchable, enjoyable, and entertaining.
The development of eSports further accelerated thanks to the Twitch broadcasting platform. Based on
the exponential growth, it was understandable that more prominent companies may become interested
in eSports. The acquisition of Twitch by Amazon for $970 million (Brustein, 2014) led to a buying
frenzy that continues today. More and more companies from outside the endemic eSports ecosystem
became interested in eSports and contributed to shaping the business model network we observe today.
The eSports industry seemed to have found its Holy Grail in communication: streaming (a technique
for streaming and streaming online and streaming multimedia data, which avoids downloading data and
allows live broadcasting (or slightly delayed). This technology offered tournament and league organizers
the possibility to broadcast competitions and professional players to display their achievements. Quickly,
the platform reached 5 million users in 2011 and then 45 million in 2013. YouTube would follow quickly
(Zagala & Strzelecki, 2019) to not fall too far behind.
Also, although developed in 2003, smartphones took off in this decade. Many applications and games
were designed for these devices. The era of the mobile game was here (Fallis, 2014). In 2019, the most
prominent and visible eSports platform was the PC, thanks to streaming platforms and live tournaments
with lots of media coverage. But eSports on the mobile platform was booming. Mobile phones are ubiq-
uitous, inexpensive, and usage was rising rapidly, and the economies of mobile apps were more directly
monetizable for eSports than PC games. This increase in spectators gave way to an increasingly attractive

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market and was accompanied by sponsors’ significant arrival (Ke & Wagner, 2020). For a long time, the
sponsors present in the eSports industry were limited to companies in the IT sector (Intel as an example)
or companies manufacturing sports products (Nike or Adidas) or specific products such as the Red Bull
brand. Today, sponsors come from all industries (Banking, fast food, traveling, etc.) Developers were
a big part of the industry; but, some sponsors started to donate a portion of the tournament money. PC
retailers, energy drinks companies, and computer software were in the game (Edge, 2013).
The games were fighting a bitter trade war. Dota 2, League of Legends, and Starcraft formed the top
podium for much of the decade. The developers finally realized the potential of eSports and included
the eSports title in their strategy. Companies like Riot Games understood it and created a league system
around their game. These developments show the first tendencies of the eSports business model network
in which every stakeholder is highly intertwined with other stakeholders to reach the audience and make a
profit from the audience. All this culminates in the situation that “eSports are suddenly the golden goose
everyone is chasing” (Popper, 2013). Developers innovate to get closer to gamers. Valve, a developer,
introduced a fundraising element for the prize pool. The audience could buy a digital compendium, and
the profit from that was added to the prize pool. It also gives the buyer information about the event and
the teams, lets them play against other viewers, provides them with the chance of special in-game item
drops, allows them to vote for the tournament awards, and allows predictions. Most importantly, 25%
of the $10 cost of the compendium goes into the prize pool (Gera, 2014). We are now talking about
co-production with gamers, which follows the new philosophy, which consists of basing the business
model on the audience and the interconnection between the ecosystem actors.
The end of the decade was marked by the emergence of a new type of game: Battle Royal (i.e., Play-
erunknown’s Battlegrounds or Fortnite). Apex Legends will follow in 2018. Fortnite, a true globalizing
and multicultural phenomenon, has become part of the top three a year after its release. Most-watched
games in the world, especially among those aged 18 and under (Marlatt, 2020). This rivalry in the market
led to an escalation in the prizes awarded during tournaments. In 2019, Fortnite was hosting a world
cup, the Worldcup Fortnite, with over $ 30 million at stake. The winner gets $ 3 million (Pickell, 2019).
Dota 2 responds immediately with its tournament, The International, which offers the winning team the
tidy sum of $ 15.8 million. Despite this inflation of the amounts provided, the League of Legends and
Counter-Strike games are the most followed on the planet (Petermeier, 2020). Game developers actively
participate in the evolution of the eSports industry. Their notoriety is vital since it is synonymous with
the audience, and therefore potential income, which is their primary objective.
In 2016, under the leadership of several eSports organizations, the World Esports Association (WESA)
was born. It started as an open and inclusive organization that will further professionalize eSports by
introducing elements of player representation, standardized regulations, and revenue shares for teams.
WESA will seek to create predictable schedules for fans, players, organizers, and broadcasters, and for the
first time, bring all stakeholders to the discussion table. For the first time, many international ecosystem
players seem resolutely motivated to cooperate to ensure the development of this industry.
This decade is marked by the arrival of Streaming, which rapidly established itself as the commu-
nication medium of eSports, and significantly impacted the increase in audiences. Any gamer can now
follow their league and favorite teams (Burroughs & Rama, 2015). This innovation is also causing a
significant impact on the industry. Sponsors are now investing in leagues to support the rollout of major
tournaments. The sponsors rely on professional teams that fund. Sponsors are becoming critical players
in the eSports industry. This is the decade in the history of eSports where the industry seems so peren-
nial and stable. Will the pandemic endanger this development?

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The 2020s: Affirmation and the Pandemic

The pandemic had hardly slowed the course of eSport, and the 2020 decade seemed promising (López-
Cabarcos, Ribeiro-Soriano & Pineiro-Chousa, 2020). The majority of the competitions had been played
online, such as the World Championship of League of Legends, Overwatch League, and so on. And this
was where eSports set itself apart from other entertainment industries. Everything happened online.
Some authors (Ke & Wagner, 2020) even thought that the time had come for some organizations to
take advantage of the harsh reality of the pandemic to make brand extension by digitizing/virtualizing
their products, such as sports clubs or the entertainment industry. However, the main issue remained
that eSport was still not completely comparable to real offline sport in that it did not involve the same
level of physical activity (Ke & Wagner). Despite that, today’s top eSports athletes, professionals earned
millions and enjoyed envious notoriety (Huston, Cruz & Zoppos, 2021). 4,300 professional players were
registered in the United States (Newzoo, 2020), more than 4,300 professionals, far from the number of
athletes in traditional professional sports. Leagues were thoughtfully structured; the competitions were
highly publicized. Industry stakeholders also appeared to be well organized. Games like League of
Legends attracted more than 100 million players monthly (Tassi, 2016). In short, everything seemed to
ensure the development of the eSports industry, which appeared to be propelled to the top.
As mobile gaming slowly overtook PC and console markets, mobile eSports tournaments leveraged
application integration and mobile ecosystems to cater to consumers as participants in addition to being
spectators. This was a sea-change moment in the history of eSports. Mobile eSports tournaments focused
on mass-market participation and engagement, creating a larger audience for eSports and generating
new opportunities to monetize around increased participation. Mobile games had lower barriers to entry
and higher install rates in comparison to PC and console games. This allowed for better economics and
higher dollar-to-player value in producing tournaments (Stubbs, 2020).
With the growing enthusiasm of players and fans and the arrival of more investors and sponsors, it was
not risky to think that the eSports industry would continue to grow at the same rate as in the next 4 to 5
years. However, as highlighted by some authors (Cranmer, Han, van Gisbergen & Jungt, 2021), several
challenges were still awaiting the eSports industry and needed to be overcome to foster eSports growth.

THE eSPORTS INDUSTRY IN A FEW FIGURES

Although the eSports industry saw its emergence more than half a century ago, its growth is more recent,
and it has mainly accelerated in the last decade. This section will cover five themes: the development of
the eSports industry, the distribution of eSports revenues, the structuring of the eSports industry, eSports
audience, as well as player motives and typology.

Development of the eSports Industry

The revenues of the eSports industry have multiplied in recent years (Figure 1). 2020 marked a crucial
turning point as the industry crossed the symbolic milestone of $ 1,000 million with $ 1,100 million.
From 2014 to 2020, this represents a sharp increase of almost S906 million or approximately 467%. In
2020, China was the largest market in terms of revenue, with around $ 385.1 million, followed by North
America ($ 252.8 million). Europe ranks third ($ 232 million), just behind North America. But some

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emerging markets are experiencing significant growth, such as Latin America, the Middle East, Africa,
and Southeast Asia.

Figure 1. eSports market revenue from 2014 to 2023 (Newzoo, 2017, 2020; Statista, 2020)

The outlook seems to be just as good if we look at the projections for 2023, where revenues are ex-
pected to reach around $ 1,598 million, up 45.7% from 2020 or $ 398 million. And over the period as
a whole, the industry jumped by $ 1,404 million to around 723.7% over ten years. The numbers speak
for themselves. The eSports industry is experiencing exceptional growth, and there are no signs of any
slowdown. Few, if not any other industry, can boast of having such numbers.

Distribution of eSports Revenues

While in 2020, the revenues of the eSports industry crossed the one thousand million-dollar mark: $
1,100 million, those revenues come from several sources (Figure 2).
Sponsorship occupies an essential place with more than half (57.9%) of the revenues of the eSports
industry or $ 636.9 million. Media rights follow with $ 185.4 million in revenue or 16.8%. Merchandise
and tickets are around $ 121.7 million, which is 11% of the entire industry. Publisher fees account for
about 10% of the revenue breakdown, or $ 116.3 million. Finally, digital and streaming come up short
with 1.9% each ($ 21.5 million for digital and $ 18.2 million for streaming). All of these are expected
to increase in the coming years (Soto Reyes, 2021).
The sponsors’ enthusiasm should continue to grow as many of them have already announced the
signing or renewal with major teams or leagues. Among the most important is Red Bull in the lead, fol-
lowed by Comcast Xfinity, Intel, Honda, Pepsi’s Mountain Dew, Coca-Cola, US Air Force, The Kraft
Group, Disney’s Marvel, and Mercedes Benz (Sportytell, 2021), but also other brands all over the world
(Studholme, 2020). Recently, Steve Borenstein, chairman of Activision Blizzard’s eSports Division and

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Figure 2. 2020 eSports revenue streams (Newzoo, 2020)

Former CEO of ESPN and NFL Network, said, “I believe eSports will rival the biggest traditional sports
leagues in terms of future opportunities, and between advertising, ticket sales, licensing, sponsorships
and merchandising, there are tremendous growth areas for this nascent industry” (Sanders, 2020).

The Structuring of the eSports Industry

To better understand an industry, it is important to know the stakeholders (actors) who operate within
it. The eSports industry comprises several stakeholders (Table 1) that are more or less influential, as the
authors Finch et al. (2019) present in their book Implications and Impacts of eSports on Business and
Society: Emerging Research and Opportunities.
It is essential to keep in mind that stakeholders change dynamically over time. One stakeholder can
have a big impact on the eSports industry like developers do now, but they might lose that influence to
another stakeholder in the future.

eSports Audience

As presented in Table 2, of a world population close to 8 billion (7,795 million), just over half, or 4,397
million people (56% of the total population), have access to the Internet. However, over 1,955 million
people are aware of eSports, representing a quarter (25%) of the world’s population. This category in-
volves individuals who do not watch eSports or participate in it but have heard of it before.
The total audience was about 495 million people in 2020. From this number, approximately 223
million people are described as enthusiasts: gamers who participate and play via computers, consoles,

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Table 1. eSports industry stakeholder groups (Finch et al., 2019, p. 31-32)

These organizations own the intellectual property of the • Riot Games Inc.
Publishers video games which eSports leagues, clubs and players • Valve Corporation Very High
compete in • Activision Blizzard
These organizations are the creators of the games on • NetherRealm
Developers Very High
which play occurs • EA Sports
Organizations or groups who organize and host eSports • ESL Medium to
Event Operators
events • FACEIT High
• eSports Championship
The competitive set of events or tournaments, where Series (ECS)
Leagues High
teams compete for an overall title (championship) • The American Collegiate
eSports League (ACEL)
• Fnatic
Sets of players who compete as a group, as an identified Medium
Teams/Clubs • Astralis
team, in an eSports league To High
• Complexity Gaming
Organizations who offer, manage and develop platforms • Twitch
Streaming Platforms Very High
for online media and streaming by fans • YouTube Gaming
Traditional cable broadcasters who also offer streaming • ESPN
Broadcasters High
and other media services and outlets • Turner Sports
• Intel
Brands who invest resources into eSports in return for Medium to
Sponsors • Red Bull
marketing rights to achieve their own objectives High
• Coca-Cola
• Fatal1ty
The athletes/participants who compete as individuals or
Players • NaDeSHoT High
members of teams in leagues or competitions
• Ninja
Federations and The governing bodies who are responsible for the • International eSports Medium to
Associations stewardship of eSports, its rules and its development Federation High
Fans Followers of eSports leagues, clubs, and/or players. Very High

or mobile devices and regularly spend on eSports products. If we consider the eSports income and the
number of esports enthusiasts, it is possible to find the average expenditure per eSports enthusiast, which
is $ 4.93. This suggests significant growth potential. In fact, the strategy that seems the most interesting
is to target the segment of occasional viewers to switch them as eSports enthusiasts in order to increase
potential revenue. And it is by making more content available to them that the strategist should pay in
the medium term.

Table 2. Global overview in 2020 (Newzoo, 2020)

Population 7 795 millions

Online population 4 397 millions
eSports awareness 1 955 millions
Total audience 495 millions
eSports enthusiasts 223 millions
eSports revenu $1 100 millions
Average revenue per enthusiast $4.93

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When we look a little more specifically, the numbers are even more interesting for the eSports in-
dustry (Figure 3). Although we can count around 223 million regular players (eSports enthusiasts) in
2020, there is also a slightly higher number of occasional viewers: 272 million in 2020, representing
about 55% of the total audience (495 million). These individuals spend most of their time watching,
sometimes playing, without necessarily spending money, and they do so on an irregular basis. They thus
represent a large segment that can switch to a more regular basis at any time, as eSports enthusiasts, and
are therefore likely to generate additional income (InfluencerMarketingHub, 2020).

Figure 3. Occasional viewers versus eSports enthusiasts (Newzoo, 2020)

Based on forecasts over the next few years (2020 to 2023), these two consumer segments will increase
in both cases. The amount of eSports enthusiasts will reach 295 million, an increase of approximately
32%. As for occasional viewers, they will be 351 million, a jump of 29% compared to 2020. The increase
in the use of games on mobile devices should benefit the entire eSport industry (Lewis, 2020). In terms
of audience, mobiles are now overtaking consoles and PCs combined, influencing industry players in
the years to come, and more specifically, publishers and developers (Rubio, 2020).
The eSports industry appears to be on the rise with no sign of slowing down. Interestingly, a recent
study (Macey, Tyrväinen, Pirkkalainen, and Hamari, 2020) shows a link between watching eSports,
gaming intentions, and consequently, buying intentions.

Player Motives and Typology

The eSports audience is receiving more and more attention from the academic community, and more
specifically, researchers have looked at the motivations and creation of a typology of players. This is the
case recently with Hedlund (2020), who, based on a study involving more than 1,165 players, developed
a typology forming five groups to identify these consumers better:

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1. Competitive Players represent 28% of gamers. On average, they are 28.38 years old, 64% male /
36% female, play 3.52 hours per day, and have played for 7.13 years. They are motivated by com-
petitive reasons and prefer first-person shooter (Call of Duty) and sports (FIFA) games (Hedlund,
2020, p. 9, column 2).
2. Casual Players represent 15.4% of gamers. On average, they are 31.32 years old, 59.8% male /
40.2% female, play for 2.07 hours per day, and have played for 11.02 years. They are motivated
by casual reasons and prefer first-person shooter (Call of Duty) and real-time strategy (Warcraft)
games (Hedlund, 2020, p. 9, column 3).
3. Casual-Social Players represent 28.4% of gamers. On average, they are 29.85 years old, 71.3% male
/ 28.7% female, play for 2.98 hours per day, and have played for 7.72 years. They are motivated by
casual and social reasons and prefer first-person shooter (Call of Duty) and sports (FIFA) games
(Hedlund, 2020, p. 9, column 4).
4. Casual-Fun Players represent 14.7% of gamers. On average, they are 33.3 years old, 66.7 male /
33.3% female, play for 1.95 hour per day, and have played for 14.99 years. They are motivated by
fun and enjoyment reasons and prefer first-person shooter (Call of Duty) and real-time strategy
(Warcraft) games (Hedlund, 2020, p. 9, column 5).
5. Casual-Competitive Players represent 13.4% of gamers. On average, they are 29.08 years old,
71.8% male / 28.2% female, play for 3.1 hours per day, and have played for 11.26 years. They
are motivated by competitive and casual reasons and prefer first-person shooter (Overwatch) and
multiplayer online battle arena (League of Legends) games (Hedlund, 2020, p. 9, column 6).

This typology demonstrates different player profiles, which allows the industry to craft specific eSport
marketing strategies based on the profiles and needs of different player types. Watching eSports is sug-
gested by Macey, Tyrväinen, Pirkkalainen, and Hamari (2020) to lead to playing and buying (consuming).
And, in practice, the reverse also seems to be true. You can also consume (buy) to play and ultimately
watch through viewing platforms such as Twitch or YouTube (Taylor, 2018, p. 5).

CHALLENGES AND FUTURE AVENUES IN eSPORTS

The eSports industry has grown tremendously over the past ten years. This sustained growth brings its
share of challenges and issues that need to be acknowledged and addressed for further developments
of eSports. The authors present below two areas of concern: eSports venues and regulatory concerns.

eSports Venues

Over the years, eSport events have attracted growing crowds. While this has undoubtedly motivated venue
managers to host eSports events, there remain significant challenges for non-eSport-specific venues to
provide the proper infrastructure for eSports (Hill, 2013). The equipment needed for eSports events has
been suggested to resemble basketball (Howell, 2016; Tassi, 2013). In fact, eSports and basketball are
played in arenas of similar size and with comparable lighting and seating requirements (Howell, 2016;
Tassi, 2013). Moreover, the equipment needed in the competition sites of basketball and eSports is quite
similar (Howell, 2016; Tassi, 2013). eSports events require headsets, gaming chairs, computers/gaming
consoles, cables to connect player devices through a Local Network Connection (LAN), and large-scale

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monitors for the audience. Since 2013, many eSports events have taken place in existing venues that
have been adapted to host eSports, including Air Canada Centre in Toronto, Canada, Rotterdam Ahoy
in Rotterdam, The Netherlands, Sang-Am World Cup Stadium, in Seoul, South Korea, or Stapes Center,
in Los Angeles, United States (Jenny et al., 2018). In addition to technical adjustments, these venues
needed an increasing presence of technical staff and specialized game managers acting as referees (Jenny
et al., 2018).
For some time, existing sport or multi-sport venues were used and are still used for eSport events.
For example, the Leipzig Messe is a long-standing trade fair venue adapted to host the DreamHack Open
Leipzig 2020 (CS: GO). The Copper Box in London, the United Kingdom, is a multi-sport venue that
hosted the CDL London Homestand event (Call of Duty: Modern Warfare). Other conventional venues
adapted to host eSport events include the Place Bell in Montreal, Canada, the Anaheim Convention
Center in California, the United States, or the Pudong Football Stadium in Shanghai, China. This option
avoids the risk of building dedicated eSport-specific venues necessitating continuous improvements and
reengineering (Social Tables, 2020). This is all the more facilitated because most significant venues, like
those listed previously, comprise already much of the needed technology requirements to host eSports
events (Hill, 2013; Maddox, 2016). However, this option does not necessarily solve the issue related to
continuous technological advances (Jenny et al., 2018). The studies reporting adequate infrastructure
(e.g., Hill, 2013; Maddox, 2016) were published at the beginning of the 2010s when virtual reality or
mixed reality was unknown. But this has undoubtedly changed quickly in less than a decade. This issue
might be even more relevant in non-eSport-specific venues, which might be even less well technologi-
cally advanced than dedicated venues.
Therefore, several cities have started to build eSport venues primarily designed for eSports, mainly in
China, South Korea, Western Europe, and the United States (Akers, 2017; Brinkley, 2016; Cano, 2017;
Gatto & Patrick, 2016; Makuch, 2014). These specially designed venues (e.g., Yongsan eSports Stadium
in Seoul, South Korea, Blizzard Arena in Los Angeles) allowed for more comfortable facility usage for
eSports and broadcasting but remained small in size (i.e., 3,000 to 20,000 feet square, on average) and
seating capacity (i.e., 100 to 1,000 seats, on average) compared to traditional sporting venues size (i.e.,
4,000 to 900,000 feet square, on average) and capacity (i.e., 3,000 to 55,000 seats, on average) (Elder,
2017; Jenny et al., 2018; Kresse, 2016). At the turn of the 2020-decade, larger venues have started to
emerge, such as the OMG Headquarters (22,000 feet square), in Shanghai, China, or the 100 Thieves Cash
App Compound (15,000 feet square) in Los Angeles, the United States (One Sports, 2020). The eSports
Stadium Arlington in Texas, the United States, built in 2019, even became the largest eSports and gaming
facility in North America with 100,000 feet square and a capacity of 2,500 seats (eSportstadium, 2021).
With the pandemic, some municipalities and engineering firms realized that physical facilities are
not an absolute necessity since scalability can be easily reached with online tournaments (Duran, 2021).
Some tournaments such as the 24 Hours of Le Mans Virtual or the eNASCAR Pro Invitational Series
events involved remote venues (24 virtual, 2020; eNASCAR, 2021). Therefore, some venues, such as
the Gaming Stadium, in Vancouver, Canada, implemented a hybrid model mixing online with physical
tournaments (Duran, 2021). This new model allows for higher flexibility and resilience in the face of
crisis by enabling tournaments to quickly switch to online tournaments or return to physical events when
the situation gets back to normal.
Overall, eSports venues will require further substantial updates following the rapid shifts and eSports
changes such as hardware, game advancements, and software. For example, as emerging technologies are
integrated into eSports, additional equipment will be needed for eSports involving mixed reality (MR)

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eSports

or virtual reality (VR), such as virtual reality headsets for all and possibly VR controllers for the players.
The broadband width will also need to be drastically increased to ensure high-quality streaming. Invest-
ments will also be highly contingent upon the evolution of the market. This means that eSport-specific
venues would need to adapt to every technological update continuously.

REGULATORY CONCERNS AND INTEGRITY ISSUES

One of the first issues in eSports refers to the standardization and regulation of competitions. In con-
ventional sports, “no sport belongs to anyone,” so a centralized and global entity can easily implement
that standardization and regulation. In eSports, there is a proprietary particularity in that the publisher
of a game owns the game, while the manager of the tournament or event can also manage the competi-
tive scene of the game (Carrillo-Vera & Aguado Terron, 2019). For example, CS: GO has been created
by the game developer Valve. Yet, the first CS: GO championship took place in 2013 in Sweden while
it was hosted by DreamHack, a Swedish production company that specialized in eSports tournaments.
This proprietary particularity of eSports created two models. The first one is the “centralized man-
agement model” (adopted by Riot Games for League of Legends [LoL]), where the publisher directs the
whole evolution and functioning of the eSports aspect of the game (i.e., events, tournaments, competi-
tions, income, participants) (Blum, 2016). The second refers to the “decentralized management model”
(adopted by Valve for Counter-Strike: Global Offensive [CS:GO] or DOTA2) in which the competitions
are delegated to organizers of events/competitions (Blum, 2016). If the centralized model prevails, then
regulation becomes easier and standardized but poses serious issues regarding the publisher’s authori-
tarianism. On the other hand, while the decentralized model allows for more freedom and flexibility,
it dampens effective structuring and coordination of competitions similar to eSport. The creation of an
“independent body” that would be set up to “accommodate all of the actors in the industry in a similar
way to some of the traditional major sports” (Carrillo-Vera & Aguado Terron, 2019, p. 16) seems particu-
larly promising in this regard. However, additional research will be needed to fine-tune the organization
of such a body. Would it be utterly similar to those existing for conventional sports? What specificities
might eSports require for such a body to function optimally?
Besides, as in traditional sports, eSports face integrity issues, which might further determine its
sustainability, such as match-fixing, gender-related disputes, and drug use (i.e., doping) (Jenny et al.,
2017; Li, 2017; Segal, 2014). Other specific problems to eSports include the use of proxies, players
cheating, and the possibility of hardware or software advantage (Sylvester & Rennie, 2017a, 2017b).
Another integrity issue of particular interest is gambling. Gambling issues can be traced back to the
emergence of organized eSports tournaments (Holden et al., 2017), while the eSports gambling market
has surpassed the total legal sports wagering market, at least in the United States, but the same might be
found in other countries (Holden et al., 2017). Consequently, eSports faces many integrity challenges
and corruption-related threats that are “internal” (i.e., match-fixing, performance-enhancing drugs) and
“external” (i.e., pressure from the large gambling industry in both regulated and unregulated markets,
increased scrutiny and control over eSports from various regulatory and observatory bodies) (Holden
et al., 2017, pp. 236-237). While damaging the image of the industry and its prosperity, gambling and
sports betting also induce addiction, social isolation, violence (Jonasson and Thiborg, 2010), and more
broadly, severe psychological problems (Peter & al., 2019).

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One example of a significant gambling threat is skin betting (i.e., a cosmetic element which changes
the look of an item in a video game). In Counter Offensive: Global Strike (CO: GS), the same gun can
have different “skins.” Skins don’t increase the item performance or the gameplay but fulfill players’
desire for recognition and reputation because others can admire players with rarer skins. Because skins
are so valuable, they can be used to bet or gamble, which can become highly addictive and harmful for
younger players (Videogames, 2021). Skin betting occurs when “players use virtual items earned or
purchased within video games to wager on games” (Sylvester & Rennie, 2017a, p. 628). These have been
significant hindrances to the evolution of eSports, and tackling illegal skin betting remains challenging
as it mainly occurs online and offshore. Unlicensed skin betting sites may simply shut down and reopen.
There is more need to explore the possibility of ensuring greater security around platforms, enforcing
sanctions for illegal betters, or merely removing virtual currencies from platforms.
With those rising integrity issues in eSports, the eSports Integrity Coalition (ESIC) has been created
and has issued an “anti-corruption code” (ESIC). These are mere guidelines that cannot be enforced since
they have no coercive value. The creation of international regulatory bodies will therefore be needed to
ensure fair and ethical eSport practices worldwide. Meanwhile, excessive regulation might hinder eSport
development. In fact, “the challenge for game developers, tournament organizers, and trade bodies is to
work with gambling regulators to ensure that they do not stifle this nascent industry, which is the likely
result of unnecessary and disproportionate regulation” (Sylvester & Rennie, 2017a p. 629). Consequently,
more research is needed to find the right balance between appropriate regulation to secure the eSports
industry and excessive laws and regulations dampening the sector.

CONCLUSION

Since the emergence of the first video games that marked the 60s and the 70s, the eSports industry has
evolved and transformed significantly, to the point of asserting itself as an established industry. The
unbridled growth over the past decade has recently broken the symbolic $ 1100 million mark in 2020.
Audiences keep pace following the competitions live or via online platforms such as Twitch or YouTube.
Challenges that the industry needs to address include the need to develop dedicated and flexible
stadiums and arenas that can provide flexibility in event organization and adapt quickly to fast-paced
technological advances. Eventually, while the industry is still fraught with several integrity concerns,
eSports development is highly contingent upon laws and regulations, which will need to evolve to for-
malize the eSports industry and ensure its proper governance without being too restrictive.
Esports seem to be a lever for professional sport. Many professional teams and leagues have already
started to “virtualize” their franchise and diversify their activities to switch to eSports. In the United
States, the top professional leagues (NBA, NFL, NHL, and MLS) are starting to switch to eSports mode.
These organizations now offer virtual tournaments: the MLS with eMLS, the NFL with the Madden NFL
18 Club Championship, the NHL with an unnamed NHL 18 league, and the NBA with the NBA 2K League
(Ho, 2020). The strategy of these professional organizations is to reach similar segments and play in the
short term on the sale of derivatives. This consists of proposing a different and complementary offer to
change the business model in the long term. Esports will probably see a transformation of professional
sport in the next decade. And on this question, professionals (Oh, 2021) and academics (Ke & Wagner,
2020) seem to agree. The next few years are likely to show continued growth in the eSports industry
and a gradual interweaving of this industry with professional sports.

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Maddox, T. (2016). How the NFL and its stadiums became leaders in Wi-Fi, monetizing apps, and cus-
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Scholz, T. M. (2019b). Conclusion: The Future of eSports. In T. Scholz (Ed.), eSports is Business (pp.
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Zagała, K., & Strzelecki, A. (2019). eSports evolution in football game series. Physical Culture and
Sport Studies and Research, 1(83), 54–66.

ADDITIONAL READING

American Esports Publisher. (2019). The History of Esports. https://americanesports.net/blog/the-

history-of-esports/
Ducheneaut, N., Yee, N., Nickell, E., & Moore, R. J. (2006, April). ” Alone together?” Exploring the
social dynamics of massively multiplayer online games. In Proceedings of the SIGCHI Conference on
Human Factors in computing systems (pp. 407-416). 10.1145/1124772.1124834
Filchenko, M. (2018). A Comparison Between Esports and Traditional Sports. ART 108: Introduction
to Games Studies, Spring 5-1-2018. https://scholarworks.sjsu.edu/cgi/viewcontent.cgi?article=1011&
context=art108
Johnson, J. (2017). Esports get physical in VR challenger league. Intel. Cambridge, MA: MIT Press
Rosa, J. (2018). Esports: What Is It and Is It Real. http://blogs.ci.com/harbour/jeremy-rosa/esports-
what-it-and-it-real
Taylor, T. L. (2012). Raising the Stakes: E-sports and the professionalization of computer gaming. The
MIT Press. doi:10.7551/mitpress/8624.001.0001

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KEY TERMS AND DEFINITIONS

Battle Royal: A type of video game in which a fight is made up of numerous combatants confronting
each other simultaneously and from which only one winner can emerge.
Collapsology: The study of the risks of imminent collapse.
eSports: A form of sports where electronic systems facilitate the primary aspects of the sport; the
input of players and teams, as well as the output of the eSports system, are mediated by human-computer
interfaces.
FPS (First-Person Shooter): A type of video game whose gameplay involves shooting enemies and
other targets and in which a player views the action as though through the eyes of the character they are
controlling.
LAN (Local Area Network): A term for a local computer network connecting computers in a limited
area.
MMOG (Massively Multiplayer Online Game): An online game with usually hundreds or thousands
of players who are playing on the same server.
MOBA (Multiplayer Online Battle Arena): A video game in which two teams of players compete
against each other on a predefined battlefield.
MR (Mixed Reality): Merging real and virtual worlds to produce new environments and visualiza-
tions, where physical and digital objects co-exist and interact in real-time.
Skin: A skin is defined as a cosmetic element that changes the look of an item (i.e., a gun or an
armor) in a video game.
VR (Virtual Reality): A simulated experience that can be similar to or completely different from
the real world.

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