Beyond the screen a critical analysis of the economic and social implications of esports

The most popular Esports games include League of Legends, Dota 2, Counter-Strike: Global Offensive, Valorant, and Overwatch.. Media: Esports tournaments are often broadcast on YouTube, F

INTERNATIONAL SCHOOL VIETNAM NATIONAL UNIVERSITY

Beyond the Screen: A Critical Analysis of the

Economic and Social Implications of Esports

Course name: Microeconomics

Lecturer: Déng Van Chung

Class code: INE105006 Submission date: /12/2024

Bui T Du Tran Nhat Linh

Minh Khanh

Khué

Vũ VI

Table of Contents

1 In†rOdUCTÏOFN c LH KT KH KT KT kh 3 1.1 Overview of ESpOrts na cố aa/(4aaaaaẢ 3 1.3 The Rapid Growth of ESDOIÍS LH HH HH KH kh khiết 4 1.4 Esports, a rapidly evolving industry, is poised to rival traditional sports in terms

of economic impact, cultural influence, and global reach - «cà: 4

2.1.1 Target Audience (Markel): -. - Sàn HT HT ng HE 1 ke 4 2.1.2 Influencing Í4CÏOFS - ch nh ng kg KH ng 5 2.1.3 Data AnalySÏS - LH nh ng KH TK ĐT tk kh rh 5

2.2.1 Esports Industry SOUFC@S TT HH TH HH TH 5 2.2.2 Software and PlatÍOrfS: . LH TH TH TH 6 2.2.3 TournameniS ch nh ng ng ki KH tk kh 6 2.2.4 Data AnalySÏS HH HH kg kg KH kh 7 2.3 Revenue ổ COSỈ - LH HH ng ng tk tt 8 2.3.1 Viefam ch ng HT KT TK vn ĐT it 8

FT n9 nớn.iiiaả4Ả 10 2.5 Factors Influencing the Development of ESpOor†S nhe T1 2.5.1 Role of TechnolOQy -c nh» n nh ng tk kh 11 2.5.2 Covid inflUernC@ ác LH ng KH kg kh it 12

3 DISCUSSION 0000 ằ aa 13

“hán dd 14

3.2 Future Predic†ion - cành TT HH kh tk ng tk kh 15

ca to nh Ắa - 16 bMN2i2(cddđ2diiiiiaẳiiaiiiiẢẢ 17

2

1 Introduction

1.1 Overview of Esports

Esports, a global phenomenon that extends beyond the digital realm, has transformed from a niche hobby into a major industry It is known as electronic sports, a form of competition that uses video games, or in other words, an area of sports activities in which people develop and train mental or physical abilities in the use of information and communication technologies[1] Esports events often feature organized, multiplayer video game competitions, particularly between professional players, played individually or as teams While video game competitions have existed since the 1970s, it wasn't until the late 2000s that Esports started to gain significant mainstream recognition The most popular Esports games include League

of Legends, Dota 2, Counter-Strike: Global Offensive, Valorant, and Overwatch Esports has become a major global phenomenon, with millions worldwide watching and participating in Esports events Esports events are often held in large arenas and attract large crowds of spectators Esports events are also broadcast live

on television and online, and millions of people around the world can watch them 1.2 AShort History of Esports

The roots of Esports can be traced back to the 1970s, with early video game competitions emerging within one of the first video games such as Spacewar![2] and some popular arcade titles like Pong or Computer Space However, it wasn't until the 1980s that Esports started to gain wider recognition Events like the Space Invaders Championship attracted thousands of participants, demonstrating the growing interest in competitive gaming

The 1990s saw a Surge in popularity for PC and console gaming, with titles like Street Fighter Il and StarCraft becoming iconic in the Esports scene These games were played competitively at arcades and tournaments, and dedicated gaming communities began to form

In the early 2000s, Esports began to professionalize Esports organizations were formed, and players started to earn significant salaries Online gaming platforms like Battle.net and Xbox Live enabled players from around the world to compete against each other

The 2010s marked a golden age for Esports, with major tournaments filling stadiums and attracting millions of viewers Games like League of Legends and Dota

2 became global sensations, captivating audiences worldwide Streaming platforms like Twitch and YouTube played a crucial role in popularizing Esports, allowing fans

to watch their favorite players and teams compete live

Today, in the 2020s, Esports continues its rapid growth, fueled by increased investment, diverse game titles, and a global audience Esports has become a mainstream phenomenon, with major brands and corporations investing heavily in the industry The future of Esports looks bright, with new technologies and innovative gaming experiences on the horizon

1.3 The Rapid Growth of Esports

Esports has experienced rapid growth in recent years, captivating millions of fans worldwide What started as small, local competitions has evolved into a multi- billion dollar industry In 2023, the global Esports market size reached US$ 1.8 billionj3]

Major Esports tournaments now fill stadiums, drawing thousands of

passionate fans and generating millions of dollars in prize pools and sponsorships The rise of streaming platforms like Twitch has further accelerated this growth, allowing fans to watch their favorite players and teams compete live from the comfort

of their own homes In recent years, Esports has become a global phenomenon, with millions of people watching and participating in Esports events around the world For example, the 2024 League of Legends World Championship reached a peak of 6.94 million viewers across all platforms|[4)

1.4 Esports, a rapidly evolving industry, is poised to rival traditional sports in terms of economic impact, cultural influence, and global reach

Fueled by technological advancements, increasing globalization, and a passionate fan base, Esports has transcended its niche origins to become

mainstream entertainment As the industry continues to mature, it is expected to generate significant revenue, attract substantial investments, and create new job opportunities With its ability to captivate audiences of all ages and backgrounds, Esports is well-positioned to become a dominant force in the global entertainment landscape, challenging the traditional sports industry for viewership, sponsorship deals, and cultural impact

2.1 Demand

2.1.1 Target Audience (Market):

[5]

The Esports market attracts two main groups: players and viewers

majority are in the 16-35 age group, with 70% being male and 30% being female The gender balance is gradually improving due to more diverse games like Free Fire and Mobile Legends

e Viewers: The sport attracts not only players but also hundreds of millions of viewers according to statistics in 2023, the total number of Esports viewers globally reached over 540 million and is expected to increase to 640 million by

2025

Key regions:

e APAC (57% of the global audience): A large population and a strong gaming culture are the main drivers

e North America and Europe: Concentrate on high-income audiences, creating conditions for developing commercialization forms such as sponsorship contracts, and broadcasting rights

The gaming community and audience also show a trend of consuming content

on platforms such as YouTube, Facebook Gaming, and TikTok Gaming, with millions

of views per day This proves that the demand in the industry is not only limited to gamers but also extends to viewers and fans

2.1.2 Influencing factors

[6]

Economics: Increasing average incomes make gamers willing to spend on equipment, in-game items, and tournament tickets

Society:

e Esports being recognized as an official sport at SEA Games 31 and 32 helps

to increase its legitimacy among the public

e Universities are beginning to recognize it as an extracurricular activity, which helps to raise the positive image of the field

2.1.3 Data Analysis

[6]

Audience Growth: According to statistics from Newzoo in 2023, the total global Esports audience reached 540 million, an increase of 11.5% compared to

2021

e Regular audience:

© 2021: 234 million

o 2023: 300 million (up 28%)

e Occasional audience:

o 2021: 223 million

© 2023: 240 million

User Habits

° yime spent watching Esports online: Average 100 minutes/day, up 15% over years

e Popular platforms: Twitch, YouTube Gaming, Douyu (in China) Twitch recorded 24 billion hours watched in 2021, up from 18 billion hours in 2020 2.2 Supply

2.2.1 Esports Industry Sources

[6]

Developers and Organizations: Valve (Dota 2), Riot Games (League of Legends), and Tencent (PUBG Mobile) are the key organizations driving the industry Riot Games organizes more than 800 tournaments each year, while Tencent develops the mobile Esports ecosystem in APAC

Professional Teams: TSM, Team Liquid, and Cloud9 are the top Esports teams with estimated values in the hundreds of millions of USD These teams not only compete but also sell jerseys, documentary videos, and related products These teams not only contribute to the development of the industry but also gain

international reputation through competitions

2.2.2 Software and Platforms:

Technology: The technology system is strongly developed, tools such as Garena, Steam, and Epic Games Store play an important role in supporting players

to download games and join the community

Media: Esports tournaments are often broadcast on YouTube, Facebook Gaming, and traditional television such as VTV, expanding viewership reach

2.2.3 Tournaments

[71[8][9]

a) Number of Tournaments Each Year

The number of tournaments and events held every year is a clear indication of the growth of Esports Major tournaments for Esports are held virtually non-stop, not only for big-name games you may have already heard of like League of Legends, Dota 2, Counter-Strike: Global Offensive, etc., but even also for new and lesser- known games and smaller tournaments as well (The number of major tournaments has grown much stronger, according to Newzoo (2023))

Every year, millions participate in tournaments such as the League of Legends World Championship and Dota 2's The International Along with

international tournaments, domestic tournaments are also being held nonstop, from big tournaments such as LCS (League of Legends Championship Series) to LEC (League of Legends European Championship) with a lot of teams and participants Minor Leagues are Growing: Organizations such as ESL (Electronic Sports League), DreamHack, and FACEIT run hundreds of tournaments each year, with tournaments catering to different player types and levels These minor leagues are not only large in scale but also provide opportunities for emerging Esports teams and organizations to participate, contributing to the overall growth of the industry b) Number of Participants

The number of participants in Esports tournaments is also growing rapidly Major and minor leagues attract a large number of teams and players

Dota 2 and The International: These are some of the most prominent tournaments, with over 1 5 million players competing in each season For instance,

6

involved in the qualifiers is even higher Also, since there are many global Esports

teams, this tournament shows the growth of the Esports sector

League of Legends: In similar championships for example the World Championship the number of teams that engage in the competition also rises as well Since its first organization in 2011, this tournament has attracted the

participation of hundreds of teams from all over the world, with more than 1000 teams participating in the qualifiers each year This shows the popularity and high competitiveness of League of Legends globally

Other tournaments: Other tournaments such as CS:GO, Valorant or Fortnite also attract the participation of thousands of teams and gamers (CS:GO has about 2.5 million players participating in national and international tournaments every year)

c) Total Prize Pool

The prize pool of Esports tournaments has also been growing in recent years

as can be seen from the graph and the overview of the industry and its ability to get big sponsors from around the world

e The International (Dota 2): The prize pool of The International in 2023 was the highest ever recorded, over 40 million USD This figure makes The International the biggest Esports tournament in terms of the overall prize money ever

e League of Legends World Championship: The prize pool of the 2023 League of Legends World Championship has been set at $2.34 million which

is quite higher than the previous years suggesting that more and more money

is being pumped into such tournaments

e CS:GO Major: This is because even CS:GO has also increased its prize pool year after year The CS:GO Major 2023 has a prize pool of $1 million and most of it comes from the sponsorship deals that the company has with Intel, Logitech, and Coca-Cola

e Other titles: Fortnite (Epic Games) broke records with a $30 million prize pool for the Fortnite World Cup 2019 and other championships such as Valorant Champions 2023 also offer a $2 million prize pool

2.2.4 Data Analysis

[7][8][9]

a) Annual Investment in Esports

Large corporations and organizers have spent millions of dollars on Esports tournaments to grow brands, attract players and fans, and open up new business markets

e 2020: The global revenue of Esports was estimated to be about $1.1 billion in

2020 of which about 58% came from sponsorship and advertising

e 2021: The investment in Esports increased to $1 3 billion from such sponsors

as Intel, Coca-Cola, and Mercedes-Benz

¢ 2022: Total investment in Esports reached $1.7 billion, representing a 30% | increase over the previous year Sponsors have begun to invest more heavily

in online platforms and organizing international tournaments

e 2023: The Esports industry is forecast to reach $2.1 billion in investment, with tournaments like The International and League of Legends World

Championship continuing to attract the attention of global partners

b) The Growth of Esports Tournaments Over the Years

Esports tournaments are constantly expanding in size and influence The figures below illustrate the growth of major tournaments such as The International and the League of Legends World Championship

e The International (Dota 2):

o 2011: Total prize pool of about $1 million with 16 participating teams

o 2020: Total prize pool of $40 million with 18 participating teams

o 2023: Total prize pool of $45 million with 18 participating teams

e League of Legends World Championship:

o 2013: Total prize pool of $2.3 million with 14 participating teams

o 2020: Total prize pool of $2.34 million with 24 participating teams

© 2023: Total prize pool remains at $2.5 million, with 24 teams participating

2.3 Revenue & cost

2.3.1 Vietnam

a) Revenue:

e Total Market Size: In 2024, the Esports market in Vietnam will generate $6.4 million in revenue This market is expected to grow importantly [10]

e Growth Rate: By 2029, the Vietnamese Esports market is expected to reach

$10.4 million and it will grow at a compound annual growth rate (CAGR) of 9.98%[10]

e Revenue Segments:

o Sponsorship and advertising will generate a large amount of $1.8 million in 2024 and they are the biggest segments [10]

o Revenue from tournament tickets and merchandise sales is generated

o Esports events bring in income and we broadcast them for streaming and media rights

o Fees that are paid by game publishers for the purpose of organizing tournaments are referred to as publisher fees

o Esports Betting: Many people bet on Esports events, generating important revenue

b) Costs:

e The tournament organization covers the costs These costs are for venue rental, equipment, and logistics

e Player Salaries: Payments made to professional players and teams in the Esports industry

e Inthe Esports industry, payments that are made to professional players and teams are known as player salaries and they represent an important part of the financial landscape

e Marketing involves spending money to promote events It also includes promoting teams

e Invest in gaming facilities and improve technology

2.3.2 Global

a) Revenue:

e Total Market Size: The expectation is that by the year 2032, the global Esports market will have a total market size exceeding $10 billion Many analysts believe that the growth will continue at a rapid pace leading to this important milestone [10]

e Key Regions for the Global Esports Industry: The United States, China, and South Korea are considered to be major markets that are recognized as key regions for the global Esports industry

e Revenue Segments:

© Globally, the largest source of revenue comes from sponsorship and advertising

o Media companies earn money They gain this from broadcasting rights

o Event tickets and branded merchandise generate sales, and together they contribute importantly to the overall revenue for the organization

o Game publishers pay fees to host events, and they provide financial support

© sports Betting: In the United States, developers are building stadiums for Esports events, depicting the growth of the Esports industry, like the Fusion Arena in Philadelphia Major game publishers like Riot Games and Valve invest heavily They develop their own leagues and tournaments This strategy helps them take advantage of the rising popularity of competitive gaming This segment is growing in appeal and more places are legalizing it

b) Costs:

e Event Production: High costs are incurred by many event productions for many large-scale international tournaments that are held around the world

e Team Operations covers salaries and training and it pays for travel expenses for Esports teams

e Technology: Streaming platforms and gaming infrastructure attract

investment through technology

e Marketing & Promotion: Use global campaigns to attract many viewers and sponsors

The Esports industry grows quickly It attracts important investments in Vietnam and around the world More technology and greater interest in Esports among kids are growing the Esports industry

10

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2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

@ Media Rights @ Merchandise & Ticketing © PublisherFees @ Sponsorship & Advertising © Streaming Notes: Data was converted from local currencies using average exchange rates of the respective year

Most recent update: Aug 2024

Source: Statista Market Insights

[10]

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0.00 0.00 0.00 0.01 0.01 0.01 0.01 0.02 0.02 0.03 0.03 0.10 0.10

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2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Most recent update: Aug 2024

Source: Statista Market Insights

[10]

2.4 Market type

10