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TM206 eSports Industry Sector Study

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TM206 eSports Industry Sector Study

  1. 1. eSports Industry Sector Study TM 206 Marketing Dinno Sandoval Meirin Negapatan Nikka Lao Daine Cabrera Neil Andrew Mendoza
  2. 2. TM206 - eSports Industry Sector Study 1 of 47 Table of Contents Executive Summary ................................................................................................................. 3 1.0 Industrial Structure........................................................................................................ 7 1.1 Industry Background...................................................................................................... 7 1.2. The Degree of Concentration within the Industry..................................................... 9 1.3 Content Distribution ..................................................................................................... 11 1.4 Sponsorships and Partnerships................................................................................. 12 2.0 Macro Environmental Trends......................................................................................... 13 2.1 Social, Cultural, Demographic and Environmental Trends.................................... 13 2.2 Political Trends............................................................................................................. 14 2.3 Technology Trends ...................................................................................................... 15 2.4 Economic Trends ......................................................................................................... 17 3.0 Industry Value Chain ....................................................................................................... 18 3.1 Primary Activities.......................................................................................................... 18 3.2 Support Activities.......................................................................................................... 20 4.0 Porter’s Five Forces......................................................................................................... 24 4.1 Threat of New Entrants ............................................................................................... 25 4.2 Bargaining Powers of Customer................................................................................ 25 4.3 Threat from substitutes................................................................................................ 25 4.4 Bargaining Power of Suppliers................................................................................... 25 4.5 Industry Competition.................................................................................................... 25 5.0 Market Segment............................................................................................................... 26 5.1 Geographical Segmentation....................................................................................... 26 5.2 Demographical Segmentation.................................................................................... 28 5.3 Psychographic Segmentation .................................................................................... 30 5.4 Behavioral Segmentation............................................................................................ 31 6.0 Emerging Technology and Products............................................................................. 34 6.1 Existing and Emerging Technology........................................................................... 34 6.2 Products......................................................................................................................... 35 7.0 Opportunities and Threats .............................................................................................. 35 7.1 Opportunities................................................................................................................. 35 7.2 Threats........................................................................................................................... 37
  3. 3. TM206 - eSports Industry Sector Study 2 of 47 8.0 Recommendations........................................................................................................... 39 8.1 Push for the Passage of Government Policies Related to eSports...................... 39 8.2 More Collaboration with the Government................................................................. 40 8.3 Changing Negative Perceptions towards eSports .................................................. 40 8.4 Partnership with Major Media Platforms to Reach Mass Market.......................... 41 8.5 Positioning as an Official Sport.................................................................................. 41 8.6 Continue to work together to promote the industry................................................. 43 9.0 References........................................................................................................................ 44
  4. 4. TM206 - eSports Industry Sector Study 3 of 47 Executive Summary The main purpose of this report is to examine the state of eSports broadcasting in the Philippines and to determine its huge potential as a booming industry. A brief history of competitive gaming is presented to understand how eSports captured the global market. The team found out that games that have intense gameplay like First Person Shooters (FPS), Real Time Strategy, and Multiplayer Online Battle Arena (MOBA) are more likely to be played and watched by the viewers. In this analysis, the team have gathered data and included a detailed look on the major players in the competitive gaming industry in the Philippines -- Mineski, TheNet.Com, Rappler, Inquirer, and TV5. The industry is heavily concentrated, Mineski being considered as the dominant force and thought-leader. The firm is taking advantage of being the first mover in this new category, the company invested on crew, equipment and talents to provide quality coverage for their audience. TheNet.Com is a very distant second in terms of followers and viewers while Rappler, Inquirer, and TV5 act as media partners. eSports’ emerging nature gives these first movers the chance to be trendsetters in the market. There is no real competition thus far, as these organizations focus more on the promotion and acceptance of eSports in the mainstream market because their performance and acceptance rate is still relatively low as compared with the global leaders. Contents are distributed mainly on two major channels, YouTube and Twitch. The latter quickly gained popularity after it was bought by Amazon and became the leading platform for eSports streaming while YouTube launched “YouTube Gaming” to cater this emerging niche. Content-makers like Mineski and TNC produces videos with the use of basic production equipment like camera, microphones, and switchers combined with more modern tools like technology- advanced capture cards and Wirecast. Recently, major brands like Smart, Globe, World Balance, Viewsonic, and Asus are recognizing the potential of the eSportscasting Industry. These brands are partnering with eSports event organizers to sponsor and co-brand. Aside from the support from the major brands that the industry leaders are getting, the macro environmental, technological, and political developments that materialize are also encouraging for the first movers in this new industry. The Macro environmental trends of the country also looks to be favoring the growth of the eSports industry. The population of the Philippines being the youngest directly impacts the high number of consumers for the industry. The young population being very technologically connected is the primary driver for the industry.
  5. 5. TM206 - eSports Industry Sector Study 4 of 47 The technological trends happening in the country is also favoring the eSports industry. Smart phones are now being used as the primary access points of Filipinos to gain access to social media. In recent studies mobile phone data usage will eventually overtake the data usage of fixed lines. Mobile phone prices are also getting lower and lower. Since the introduction of smartphones by big named companies, small local companies have been manufacturing phones sourced from Taiwan or China. The trend is giving rise to cheaper phones entering the market providing Filipinos access to social media and online content For political trends, there are many different initiatives that may change the landscape of the eSports industry. One of which is the clamor of politicians to drive changes in the IT infrastructure of the country. A good internet infrastructure is one of the requirements in order for the companies that livestream content. Senator Recto and the other lawmakers are pushing for minimum internet speed across the country and public wifi. The public wifi may be seen as a good attempt to provide internet access to Filipinos. It provides them access to social media and to eSports content. Having wifi in public areas will be a huge boost for the eSports casting viewership. The minimum internet speed is another bill that will give huge benefits to this industry as sportscasting as it is right now is heavily dependent on internet speed. Overall, these trends happening in the country looks favoring the emerging eSports industry. eSports is steadily picking up steam from customers and Filipinos being heavily engaged in social media is fueling up this new industry. The global eSports audience is 134 million strong and growing (Superdata, 2015). Investment in innovative business models, platforms and derivative businesses further spurs growth in competitive gaming. In addition to traditional marketing efforts, organizing events and streaming content improve awareness and retention. Having said that, establishing such business in the Philippines and positioning itself in the market provided with targeted customers will be a good step to institutionalize eSports industry in the country. In this study, the team determines the set of activities that an eSports organization carries out to create value for its customers sets the value chain. The value chain activities performed determines costs and effects on profits. The tool can help us understand the sources of value of the organization. Linkages in the activities coincides in the margin that implies the organization realized profit which depends on the ability to manage the linkages between all activities in the value chain.
  6. 6. TM206 - eSports Industry Sector Study 5 of 47 For this study, we include primary activities that can be classified into product or service related and market related activities. Product/Service related activities include content creation, content packaging and content distribution. In this activity, all production and development are incorporated as well as process and other activities that contribute to the transformation of the service. Whereas, market related activities include marketing and sales, advertising, channel selection, product and brand promotions, merchandise selling and product pricing. The activities are performed to make sure that the products are transferred to the targeted customer groups and making sure that the service is efficiently delivered. Also, support activities linkage to primary activities perform to assist the latter to gain the competitive advantage. These include system infrastructure, human resource management, technology development and procurement. Michael Porter's Five Forces of Competitive Position model is also considered in this study to provide a simple perspective of assessing and analyzing the competitive strength and position of the business organization. Part of this sector study are the suggested points under industry competitors, threat of new market entrants, bargaining power of buyers, power of suppliers and threat of substitute products, by which you can develop a broad and sophisticated analysis of competitive position, as might be used when creating strategy, plans, or decisions in the business. Strategies require another input for it to be effective. Market segment inputs are normally incorporated in strategies to broaden the view. The sector study discussed ways on which the market maybe segmented. In the eSports industry, the market may be segmented based on geographical segmentation, demographic segmentation, psychographic segmentation and finally behavioral segmentation. This paper highlighted behavioral segmentation, where the target market is divided based on how they consume the product. In delivering content to the market, eSports companies often rely on existing and emerging technologies. eSports broadcasting companies make use of tools that are already in the industry. To deliver content, some companies use a combination of Twitch, Youtube, Xsplit and other software for delivery. Content being delivered by these eSports companies often are eSports competitions or guides which serves as their main product. In any industry, there will always be threats and opportunities. For the eSports industry, this paper will touch on the several opportunities that companies under this industry may choose to exploit. Some of the opportunities discussed by this paper is the creation of Philippine eSports Association (PeSPA), a governing body for the entire industry, the potential of eSports as a
  7. 7. TM206 - eSports Industry Sector Study 6 of 47 marketing vehicle, the opportunity of eSports to venture into broadcast TV, the rise of mobility and the young population of the country. The eSports industry however also faces several threats, on the political level, the industry lacks government policies to support it, Local LGUs also enacts regulations against some of its components but the biggest threat is the perception of customers against eSports as a whole. To exploit and mitigate the opportunities and threats, this paper recommends several steps for the industry. This study recommends that the industry make full use of PeSPA in collaborating with the government to push for government policies in support of eSports, the industry is also expected to work on changing the perception of the masses against eSports and attempt to push for the recognition of eSports as an official sport activity. All in all, it will take huge amount of effort and cooperation from the eSports firms, media partners, sponsors, and the government to push the industry into the mainstream market which can contribute to the our country’s economic growth and global status in eSports in general.
  8. 8. TM206 - eSports Industry Sector Study 7 of 47 1.0 Industrial Structure 1.1 Industry Background Competitive gaming has existed almost as long as video games themselves. The arcade games of the 80s encourage competition in the form of posting high scores, inventing the ‘versus’ option, or by simply outlasting a co-player. In the 90s, the rise of PC games that require quick reflexes, twitch skills, coordination, and organized strategizing like Quake, Diablo, and Starcraft gave way to the birth of eSports. Games may be categorized into genres such as first person shooter (FPS), Real-time Strategy (RTS), Fighting, and Role-playing Games (RPG). These games laid the foundation of what competitive gaming is like today -- fun to play and enjoyable to watch. eSports flourished after the turn of the millennium because of the popularity of major tournaments like World Cyber Games, Electronic Sports World Cup, and Major League Gaming (MLG) that offer huge lump sums for the winners. In 2006, USA Network covered MLG’s “Halo 2” tournament making it the first tournament to be televised in North America. MLG’s Spring Championship was huge a success when brought more than 4 Million viewers, out-doing established sporting events like the NBA All-star game in 2012. (Edwards, 2013) As eSports became more popular worldwide, other major tournaments in different parts of the globe were established. The most notable tournament is the Korean league called Global Starcraft II League (GSL). It is considered as the most prestigious Starcraft 2 competition and it has doubled its viewership every year since its launch in 2010. In 2014, they reached a massive 100 million figure taking them arguably at the pinnacle of the gaming world. (Edwards, 2013) Video games are now more popular than ever because of the intense gameplay and spectator-friendly nature of the Multiplayer Online Battle Arena (MOBA) genre. This genre includes games like Defense of the Ancient (DOTA) and League of Legends (LoL) that dominate the gaming world. As games like LOL and DOTA become more popular, so do too the potential of eSports. The eSports industry is now a multi-million industry in other countries such as South Korea, China, United States, and in some parts of North America and Europe. Viewership has been growing exponentially and is now beginning to change views -- it is now being compared to the mainstream sports like football and basketball. In the Philippines, the gaming population is growing with over 25 Million engaged Filipinos in different games like DOTA, League of Legends, CS:GO, Warcraft, Dragon Nest, Heartstone, and Starcraft. Events and tournaments are also a now constant thing in major gaming hubs in the metro, contributing to the popularity of Esports all over the archipelago. As the pace and volume of activity increases, a small number of innovative firms are now gearing up in a more mature and far-
  9. 9. TM206 - eSports Industry Sector Study 8 of 47 sighted manner which give rise to a whole new subcategory, eSports Broadcasting or eSportscasting. eSports broadcasting industry is still at its infancy and the major players are complementing rather than competing with each other to support the promotion of eSportscasting industry. Mineski Corporation, TheNet.Com (TNC), TV5 Network, Rappler, and The Inquirer are the early movers of this new market. Mineski Corporation, a company that manages a network of cyber cafe that caters to the gaming community, is the primary mover and promoter of Esports in the Philippines. They organize their own tournaments and manage the largest Esports portal in the country (Mineski.net). More importantly, the company is the pioneer in the new subcategory by creating a content-creation arm, MineskiTV. The company now covers events, produce videos, and stream tournaments for the eSports fanatics. It has its own group of professional e-Sportscasters to make the content more entertaining. Having e-Sportscasters helped Mineski gain competitive advantage and became the thought-leader in the industry. The casters coin terms and relate these terms to the Filipino pop culture to make the content more relatable to the target audience. The owner and founder of Mineski, Mr. Ronald Robbins, is considered by many as the “Father of Philippine eSports”. (www.mineski.com) TheNet.Com (TNC), one of the biggest Internet Cafe Company in the Philippines, founded an organization called TNC Gaming to promote the eSports in the country. Its purpose is to give every aspiring gamer the chance to partake in high-level tournaments in different fields. The organization has a vision of unifying and improving Philippine Electronic Sports by providing up to date news and happenings in the competitive eSports scene. To help solidify this vision, the firm went beyond their boundaries and started to stream both local and international games to their followers who are eager to learn new techniques, follow their favorite teams, or simply want to be entertained. (www.TNCgaming.com) Rappler and Inquirer, two of the Philippines’ leading media outlet and social media news distributor, recognize the potential and the importance of eSports in today’s culture. Both firms cover the happenings in the eSports industry and feature replays of fights and highlight reels from recent tournaments. In 2014, through the partnership between Philippines eSports Organization (PeSO) and Inquirer.net, they launched eSports by Inquirer.net. Their main objective is to bring eSports news and stories not only to the fans and to the people who enjoy them but to the mainstream as well, bringing insightful and in- depth feature stories about eSports and gaming culture both in the Philippines and beyond.
  10. 10. TM206 - eSports Industry Sector Study 9 of 47 Rappler on the other hand focuses in organizing tournaments and in creating their own content. The recently concluded Rappler Gaming League (RGL) Dota 2 tournament was a resounding success wherein 8 teams from Southeast Asia joined the tournament. Rappler streamed all the fights live on their website from May to July 2015. They followed it up with RGL: League of Legends intercollegiate tournament, all fights can be accessed from their website and livestream channels as well. The Cojuangco - owned television network, TV5 is also positioning itself to be the first mover in eSportscasting among the major television networks. At a press conference, TV5 Sports Division Executive Chot Reyes announced their newly- formed alliance with Mineski. He claims that this is the start of their long-term investment in the eSports industry and that they will eventually provide coverage of the Mineski Pro-Gaming League. The network will also provide select airing slots for GG Network, a program that aims to showcase the best eSports talents that the local scene has to offer. All of these channels support each other in one way or another to promote the eSports industry here in the country and to put gaming in a positive perspective in the mainstream market. The support and dedication of the Filipino gaming community is going to be the biggest factor to push eSports in the Philippines forward. 1.2. The Degree of Concentration within the Industry eSports can be a huge industry, not only in terms of prize money but also in terms of the number of viewers. With the huge bulk of the market considered to be heavy computer users, it is only practical that content makers use the internet as its main channel for content distribution. Content makers use video sharing and streaming websites like YouTube and Twitch to reach a wider audience. Twitch Interactive (www.twitch.tv) was launched last June 6, 2011 as a streaming platform for playthroughs of video games and broadcasts of eSports. It was a spin-off of the then popular general-interest streaming website, JustinTV (www.Justin.tv). It was basically a non-entity in both the streaming and gaming platform until Amazon saw its potential and bought it for a reported $1.1 billion in 2014. According to a 2015 study, Twitch is now the leading video platform and community for gamers with over 100 million Unique Viewers per month, 1.5 Unique Broadcasters per month, 16 billion minutes watched per month, and is considered as the fourth largest source of internet traffic peak in the US. (Siglin, 2015) MineskiTV and TheNet.Com both have active Twitch accounts wherein they stream their live contents. MineskiTV shows its dominance in the market by registering 18,143,172 views and 22,319 followers while TNC have 217,659 views and 362 followers.
  11. 11. TM206 - eSports Industry Sector Study 10 of 47 In YouTube, MineskiTV is still the dominant player by means of their 10,036,542 views and 22,319 niche-identified followers, followed by TheNet.Com with their 1,135,698 views and 2,914 followers. Understandably, both of the media outlets are in the bottom with Rappler recording 3,624 views while eSports by Inquirer only have 1,485. Rappler may have 86,999 subscribers but this is due to its news casting nature and social media standing. TV5 concentrates more on the promotion of the eSports as an industry by reviewing the fights, discussing on the updates, and broadcasting the highlights to the mainstream market. TWITCH Company Views Followers MineskiTV 18,143,172 22,319 TNC 217,659 362 YOUTUBE Company Views Followers MineskiTV 10,036,542 35,957 TNC 1,135,698 2,914 Rappler 3,624 86, 999 eSports by Inquirer 1,485 3 These numbers are very low if compared to the international scene. The Riotgames channel dominates the international scene with a whopping 1,983,408 followers (2nd) and 777,799,939 channel views (1st). Starladder1 is a very distant second in terms of channel views with 207,608,960 with only 293,464 followers. The Syndicate channel is the leader in terms of followers with 2,271,004 and 37,789, 539 channel views. According to www.superdataresearch.com survey in 2013, US viewers watch eSports 19 times per month and it lasts for 2.2 hours on the average. These numbers show that there is a huge market in eSportscasting. The more people play games, the more potential fans of eSports there are. And as game developers innovate resulting in more advanced outputs, games become more exciting for spectators.
  12. 12. TM206 - eSports Industry Sector Study 11 of 47 Top 10 Twitch Streamers - Filtered by Most Followed Source: www.socialblade.com Top 10 Twitch Streamers - Filtered by Most Viewed Source: www.socialblade.com 1.3 Content Distribution Contents are distributed in these channels with the use of traditional and modern media technology. Cameras, lights, and microphones are a must in covering the
  13. 13. TM206 - eSports Industry Sector Study 12 of 47 casters and the players. A reliable PC set-up with a capture card is needed to capture in-game feeds. All video and audio feeds are connected to a switcher wherein the technical director and the producers will control which video/audio will be aired. The switcher is connected to a Wirecast that will encode the final output for internet streaming via Twitch or Youtube. 1.4 Sponsorships and Partnerships On the global stage, companies are already taking notice that people are actually watching these video games. This is the reason why big brands like Coke, Intel, Nissan, American Express, Red Bull, and of course, computer-related brands are already gravitating towards eSports. The industry can give them access to a hard to reach a large participant base that does not usually watch television. On the local scene, brands are also becoming more aware of eSports. Smart and Globe are already diving into the scene by sponsoring eSports events. World Balance, Viewsonic and Asus are all pushing for co-branding with the Mineski team to be visible to the niche as well. Overall, the future looks bright for the eSports industry as all signs point towards the positive side. The first movers will keep on complimenting each other, hoping to cross the mainstream market and to get the attention of major brands.
  14. 14. TM206 - eSports Industry Sector Study 13 of 47 2.0 Macro Environmental Trends 2.1 Social, Cultural, Demographic and Environmental Trends High number of Millennials The Philippines is one of many countries that have high number of population that is young. The average age of the country based on a recent study of the government is around 22 to 23 years old. Overall the country has 9.7 million at ages 15 to 19, 9.5 million at ages 20-24 and 8.8 million at ages 25-29. (NCSB, 2015) In a recent study, millennials are said to be the generation that is shaped by technology. Millennials at young age were more exposed than the other generations to technology. it is said the Filipino millennials are hyper engaged and tend to stay connected to social media longer. Hyper Engaged Filipinos Internet accessibility is a major trend in Filipino households and has been picking up since the late 2000s. In a recent study it is said that Filipinos spend an average of 4 hours per day accessing social media. A good percentage of the population is considered as “hyper-engaged” or “hyper-connected”. In the Philippines alone, there are 42 Million active social media accounts and around 36 Million are connected via their mobile phones. (GSMAIntelligence, 2015) Hyper connected Filipinos spend much time accessing social media websites and follow multiple interests. Interests that Filipinos follow could a local artist, a cooking show or anything else that is worthy to follow. Filipinos in the internet actively comment, review and engage in online activities with these interests. eSports as an official sport eSports is a rising trend in the Philippines. In recent years the Philippines were able to produce teams that competed in other countries as eSports athletes. The athletes who went to compete brought home with them fame and cash rewards. News about the athletes spread quickly within the country and fostered the desire for others to compete internationally. Filipinos have been hooked to eSports since the introduction of games where multiple players can compete with each other. Small competitions have been organized by local computer shops which eventually turned over the years into more formal competitions. Currently, some of the well-known competitions are National Cyber Collegiate League (NCCL), eSports and Gaming summit (ESGS) and eSports league summit (ESL). Competitions often have big named partners that sponsor the event and provide prize money for the competitors
  15. 15. TM206 - eSports Industry Sector Study 14 of 47 In 2013, the Philippines had a delegation in the TankAsia Masters Season 2 league where the game is about controlling historical tanks in teams and combating with other teams in either a death match or by capturing objectives. The delegation that competed won first place and brought home with them $60,000.00. Over the years, there have been several Filipinos who claim to be professional eSports players and have been focusing in improving their gameplay. There are also those who are selected by teams that get paid by playing for the team. Several organizations are pushing for the recognition of eSports as an actual sport. Rise of eSports in the Philippines In recent years the Philippines encountered a steady increase of local companies hosting huge eSports events. In 2015, there were several big name competitions that opened to cater to Filipino eSports players. Smart telecom opened its Philippine Clash 2015 with prizes of around Php 2 Million and the grand prize of Php 500,000. Another competition in the Philippines is the National Cyber Collegiate League where teams from different universities are matched with one another until a champion is determined. The competitions in the Philippines didn’t start out as organized as it is right now. Several started from creating small competitions that are organized by local computer shops to small group of friends. Eventually the rise of the eSports in the Philippines gave birth to more formal and organized competitions that cuts across the archipelago. 2.2 Political Trends Philippine eSports Association The Philippine eSports community recently gained public recognition from the government in the establishment of Philippine eSports Association (PeSpa). PeSPA is an organization that aims to promote eSports awareness in the country and to educate the general public. It hopes to remove the negative perception by society on competitive gaming. Another mandate of PeSPA is to consolidate all of the competition dates in order to prevent overlapping competitions. At the same time it's establishing a quasi- court where it will help resolve conflicts within the eSports community. It also will help prevent the exploitation of players and solve any complications. Bilis Konek Act of 2014 Bilis Konek Act of 2014 by Ralph Recto if passed will require all ISP companies in the Philippines to have a minimum of 10 mbps for wireless connections and 20 mbps for fixed line connections. The senate act filed by Senator Recto will have a big impact in the internet infrastructure of the country. The bill if passed will more
  16. 16. TM206 - eSports Industry Sector Study 15 of 47 than triple the country’s current average speed. The bill is also hinged on a study by Ericsson that doubling the internet speed increases the national GDP.(Recto, 2014) Free Public Wifi Act of 2015 Another bill filed by the senate is the Free Public Wifi Act of 2015 by Senators Recto, Villar and Escudero. The bill was originally filed by Senator Recto to provide free wifi access in public establishments. Senator Recto likens the internet to roads, bridges and other infrastructure explaining that these are all relevant to stimulate the economy. The Free public wifi act and Bilis Konek act if both passed will be a huge boost in the way Filipinos access the internet. Both will eventually give passage to more content being distributed in the country and more access points for Filipinos. (Recto, 2015) 2.3 Technology Trends Smartphones as primary access device to content The Philippines currently has a trend where smartphones are becoming cheaper and cheaper. The trend is being led by local companies especially myphone and cherry mobile that sells smartphones at the cost of feature phones. With the amount of smartphones being purchased by Filipinos, smartphone numbers are expected to overtake the number of feature phones in the market. The price of smartphones is also decreasing drastically as more and more players are entering the market. (Cisco, 2015) Smartphones is a new channel for content distributors as it allows images, ads and videos to be delivered to customers. Smartphone features since 2010 have also been on a steady increase as more and more developers have shifted to developing new applications for this media.
  17. 17. TM206 - eSports Industry Sector Study 16 of 47 Internet Households The Philippines currently has a population of 104 million. In a recent study by International Telecommunications Union(ITU) and United Nations Population Division around 39 million Filipinos has access to the internet in their homes. Although short from the international standards of internet penetration versus other countries, the Philippines may boast of high growths in terms of households acquiring access to the internet. In 2011, around 4.2 million Filipinos gained access to the internet through their homes and in 2012 the Philippines gained 7.4 million more. (internetlivestats.com, 2015) Mobile Internet as access to content 3G mobile-broadband coverage based on a study of ITU will cover 29% of the world’s rural area and 89% of urban areas by the end of 2015. Since 2007, mobile data penetration has increased 12 times and is now covering 69% of the world’s population.[2] In a study of Cisco Networks, Mobile internet traffic in the Asia Pacific region will grow 10 fold until 2019. At the same time, mobile internet connections will outgrow fixed data connections by three times during this period. (Cisco, 2015) In the Philippines, 3G internet has an average speed of 1.5mbps and 4G internet has an average speed of 4.5mbps. (opensignal, 2015) Throughout the years, telecommunications companies have lowered the cost for Filipinos to avail of mobile internet service and increased internet covered areas. It is expected that local telecommunications company are continuously striving to have 4g coverage all throughout their areas.
  18. 18. TM206 - eSports Industry Sector Study 17 of 47 2.4 Economic Trends Rising Economy In the past 5 years, the Philippines experienced a steady GDP growth averaging around 6%. A good GDP growth is often associated to a healthy economy. The healthier the economy is, the more jobs there are for the people. For 2015, the inflation rate of the country also dropped from 2.4% in January to just 0.4% in October. Lower inflation rate means that the value of money of the population is higher which have a higher purchasing power. A high inflation rate affects the population greatly as basic goods and services increase in prices. (NEDA, 2015)
  19. 19. TM206 - eSports Industry Sector Study 18 of 47 3.0 Industry Value Chain This section will give us an understanding on how the eSports industry creates its value in the market through series of activities. In this marketing principle introduced by Michael Porter, it suggests that the more value an organization creates, the more profitable it is likely to be. And when you provide more value to your customers, you build competitive advantage. Determining the set of activities that an organization carries out to create value for its customers sets the value chain. Porter proposed a general-purpose value chain that companies can use to examine all of their activities, and see how they're connected. The way in which value chain activities are performed determines costs and affects profits, so this tool can help us understand the sources of value for our organization. 3.1 Primary Activities Content Creation One of the most fascinating aspects of the digital revolution is how it has enabled new content forms and consumption models to develop and thrive. For decades, video content came in standard packages – a 30 minute episode, a 90 minute film and so on – and from traditional providers, be it your local broadcast affiliate, movie theater or corner store. Today, however, video entertainment defies standardization. And it has captured Electronic Sports that is rapidly developing as a content and has defined its position in the market. One of the big differences between traditional sports leagues and eSports is the popularity of user-generated content. In a nutshell, creating content in eSports industry is to create interesting, engaging and relevant content and provide it to the customers. This is worked by game publishers and developers that produce games used to create content. Examples of these are League of Legends by Riot Games, World of Tanks by Wargaming, SMITE by Hi-Rez Studios, Call of Duty by Activision Blizzard and DotA 2 by Valve. The game publisher and developers are responsible for licensing the rights and the concept on which the game is to be based as well as for the product development and creation of new content. These gaming contents serve as the core of the eSports industry. Content Packaging In eSports industry, the leagues and game tournaments serve as the content packaging. Organizers host a variety of competitive gaming events both on and offline and broadcasting tournament wherein several professional online gamers will compete for different online games produced with players which are essential resource for tournament organizers. For instance, Electronic Sports League (ESL) is an eSports league, which is operated by Turtle Entertainment in Cologne, Germany. Today it has more than 5,000,000 registered members and consists of over 1,000,000 teams, which have played over 22.5 million games in
  20. 20. TM206 - eSports Industry Sector Study 19 of 47 addition to leagues and tournaments. The ESL supports over 50 games in different genres through various national and international leagues. Other leagues are The Summit (International League) and Mineski Pro-Gaming League or MPGL (Local League). They all promote and organize eSports events in return for a share in advertising spent by brand holders and advertisers. In addition, league organizations also generate revenue via merchandise and ticket sales for live events. Content Distribution This is how the content package distributed through different platforms: Content distribution facilitates the live broadcast of competitions and professional player videos. In the eSports industry, Digital technology has made it easier for developers to distribute their games via the Internet, and thereby lower the barriers for entry into this link of the value chain. One of the world’s largest live- streaming site for game content is Twitch.tv of Amazon. Twitch is designed to be a platform for video game-related content, including e-sports tournaments, personal streams of individual players, and gaming-related talk shows (Miller, 2011). There are other live-streaming sites for game content like Azubu, YouTube, MobCrush and Hitbox. Using live streaming and eSports as a central component of a game’s marketing strategy changes the design requirements. Broadcasting digital video content live over the Internet, called live streaming, has become so huge to competitive gaming which generates millions of online viewers during most recent championship. The job of the distributor involves handling packaging and broadcasting and in some cases providing user support. In such cases, the distributor owns no rights to the product, but helps in making it available on the market. Marketing and Sales Brand holders and advertisers that pay broadcast channels in exchange for displaying their logos, products, or naming a competition is part of the eSports Casting revenue. Brand owners and advertisers are adapting to emergent forms of entertainment, which will grow sponsorship deals across the segment. The total figure includes sponsorship deals, advertising on digital channels like Twitch and YouTube, publisher-incurred marketing expenses and other forms of eSports advertising. Advertisers from different segments like consumer packaged goods, automotive and technology brands are now participating in eSports event as part of brand promotion. Examples are Coca-Cola, BENQ, NVIDIA, SK Telecom, American Express, Nissan and HTC to name a few.
  21. 21. TM206 - eSports Industry Sector Study 20 of 47 Service The eSports casting serves as the service. It has servicing eSports viewers over hundreds of millions around the world through different broadcast channels. Viewers also spend for their monthly gaming budget on additional content and peripheral devices like headphones and controllers. eSports videos have rapidly transformed from a niche activity into a widely-watched, global, cross-platform entertainment category. The end – users patronizing the service are called the Audience. In the Philippines, eSports have been growing exponentially. Currently, the uniqueness of online gaming has attracted younger viewers, including teenagers that are more immersed in online video content. However, as generations grow up with video games, eSports appeal as well in the older demographics (Superdata, 2015). 3.2 Support Activities Human Resources a. Management Team This may consist of the Owner/Manager, Marketing Director and Content and Social Media Manager. They handle most of the operations and managerial tasks, marketing, product development and process improvement. b. Public Relations This is the eSports’ casting presence on social media, people’s impression of your organization, and any possible news that goes public (wanted or unwanted). This can be handled by the PR Managers and PR Officers. As part of the Public Relations, they should foster relationships with editorial publications, bloggers, and other media outlet and identify and report on digital/social media trends, tactics, and technologies while developing strategic recommendations that inform PR programs in the eSports industry. With this, they can develop relationships with both traditional and digital media outlets, enthusiast and mainstream, and create and execute successful PR strategies that will help bring eSports to more players across the local and international market and create connections to the publishers, developers, online players and stakeholders. Fan engagement is key to the success of the organization, as you might not have realized, but tournaments are not the only source of funding for you. Your company might choose to sell merchandise such as clothing and small accessories. There are 3 big sites for social media in eSports: Facebook, Twitter, and Reddit. aily, PR Officers must monitor and note all news that comes
  22. 22. TM206 - eSports Industry Sector Study 21 of 47 out about the company along with what the company posts online (Peaches, 2015). i. Facebook  Great for lengthy posts which highlights new additions and events  Has a lower following base  Several guides on how to market yourself  Uses the analytics to see when your consumers are online  Create posts that encourage engagement ii. Twitter  Short and quick to the point  Great quick conversations  High Engagement Rate iii. Reddit  Recognized posts get high traffic which means more engagement  Free advertising (Be careful of this as it could warrant unwanted news) c. eSports Casters and the Casting Process Basically, an eSports caster role is to give commentary, suggestions, gaming analysis and describe live actions in an online gaming live stream. Just like a sports commentator, an eSports caster should be knowledgeable enough about the online gaming for better appreciation of the information being delivered. Often the casters have professional players as their co-caster who has even more in - depth knowledge of the game. As an eSports caster, you should know which kind of commentary best suits your personality. There are two types casting that you can work on (Lee, 2014): Play by Play Casting, involves giving a running commentary of the action as it happens in real-time. The nature of great play-by-play casting requires a quick mind, articulate speech, and strong knowledge of what’s going on. Color Casting, also known as analytical casting, fills the gaps when there isn’t much play-by-play action. Many color commentators are experts who can provide in-depth analysis of strategies while other forms of color commentary exist in the form of statistics, background information, and humor. In real life scenarios, most casters tend to pair a play-by-play with a color caster.
  23. 23. TM206 - eSports Industry Sector Study 22 of 47 Systems Infrastructure In eSports casting business, you have to consider the right casting medium to be used. Choosing the right software for live streaming and recording gameplay videos should be considered. Example of software is Open Broadcaster Software for live streaming and recording gameplay videos. Live streaming video requires quite a bit of CPU and GPU strength, especially if you want good quality (at least 720p). For Open Broadcaster Software, you can use their settings estimator to see how well you can stream. You’ll also need a fast Internet connection that’s at least 1.5 Mbps upload. Lastly, you will need a microphone or headset with good audio quality. At the very least, captured audio should be crisp and clear without any static, buzzing, or other artifacts that are harsh on the ears (Lee, 2014). For other tools, livestreaming can use TriCaster, a product that merges live video switching, broadcast graphics, virtual sets, special effects, audio mixing, recording, social media publishing and web streaming into an integrated, portable and compact appliance. TriCaster has changed the way producers cover and distribute live events. It set a new business standard as an innovative, easy-to- use appliance for portable live production and streaming. It has become the option for video producers worldwide. Production crews from one person to small teams can set up rapidly and create from confined spaces where production trucks can't go. The tools you anticipate to find in a live Television truck are included in TriCaster, from multi-camera switching and audio mixing to titles, clip playback, live streaming and even network-style virtual sets on most models (Cherry, 2011). Technology Development To maximize the eSports live streaming business, producing new videos and streaming content that are relatable to eSports will be desirable to give your audience more options to watch that are live, social and interactive. Another part of the development is the mobility of the business to be accessed. The accessibility of the content streaming aside from desktops or laptops can also be viewed via over-the-top (OTT) and set-top boxes (STB) available for audiences. Over-The-Top (OTT) means the delivery of video content via the Internet, without requiring users to subscribe to a traditional cable or satellite pay- TV service. Whereas, Set-top boxes (STB) is an information appliance device that generally contains a TV-tuner input and displays output to a television set and an external source of signal, turning the source signal into content in a form that can then be displayed on the television screen or other display device. It’s a set-top box that streams broadcast TV to mobile devices. Realizing the massive eSports broadcasting market was totally energized by this capability and that providing these technically savvy and hugely popular audience and gamers, these tools could democratize broadcasting over the web.
  24. 24. TM206 - eSports Industry Sector Study 23 of 47 Procurement Every eSports platform or distribution channel acquires a game agency as an external source for them to be able to deliver additional reliable and fascinating content to eSports fanatic. In this sector study, we will treat the game agency as the one producing teams, represented players, managed tournaments, created content, and brought numerous advertisers into the gaming space. And this game agency serves as the procurement as we are acquiring their services in order to create value. This also supports our mentioned primary activities. One example is when Twitch acquired GoodGame, an eSports agency that specializes in sponsorship sales. GoodGame has also grown into one of the gaming industry’s most progressive talent and content companies. They are all- in-one talent and content company focused on gaming and eSports. The acquisition will allow Twitch to harness GoodGame’s unique service package, as well as its staff’s industry expertise and community leadership, in order to offer an even broader array of support and monetization opportunities to the greater Twitch community (Twitch Official Blog, 2014). The figure below shows the summary of value chain model for eSports Casting based on analysis patterned to Porter’s Value Chain Model. Porter’s Value Chain Analysis for eSports Casting The linkages between the activities in the value chain are very essential. It is crucial for the success of the business. The linkages are flows of information,
  25. 25. TM206 - eSports Industry Sector Study 24 of 47 goods and services, as well as systems and processes for adjusting activities. For instance, only if marketing and sales function delivers what particular brand should be shown during the livestream delivers sales forecasts for the next period to all departments in time and reliable accuracy. If procurement will be able to do the job and forwards the needed service to the content distributor, then operations will be able to livestream in a timely and effective manner, as predetermined by marketing. In effect, the linkages are about to execute seamless cooperation and exchange information between the value chain activities. Within the whole value system, there is only a certain value of profit margin available. This is the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the service. Each member of the system will use its market position and negotiating power to get a higher proportion of this margin. Nevertheless, members of a value system can cooperate to improve their efficiency and to reduce their costs in order to achieve a higher total margin to the benefit of all of them. 4.0 Porter’s Five Forces This section of study will give us an understanding of where power lies in the business situations. It will help us to determine both the strength of the company’s current competitive position and the strength of a position we are considering to move into. With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps.
  26. 26. TM206 - eSports Industry Sector Study 25 of 47 4.1 Threat of New Entrants Competitive Rivalry This is low since the eSports casting industry is new in the Philippine local setting and this is something that is being capitalized as of the moment. Economies of Scale This is low since eSports casting is currently offered online thereby removing premium on the physical operations or activities. Product Differentiation Brand identification and customer loyalties stemming from past advertising, product positioning, or longevity within the industry is less a factor since professional eSports are a relatively new phenomenon. Government Policy Betting also becomes a form on the outcome of eSporting events is not yet uniformly legal. No government policy is legislated on this as of the moment. 4.2 Bargaining Powers of Customer Differential advantage (uniqueness) of industry service Demand of style is high. Casting involves a great deal of skill in order to make it known. You must have at least a basic understanding of the game you are casting, you must be articulate, you must be able to display charm and strike the ideal level of enthusiasm. 4.3 Threat from Substitutes Availability of close substitute They can choose from the existing eSports casting services such as Twitch (Amazon), Azubu, YouTube, MobCrush, or Hitbox. 4.4 Bargaining Power of Suppliers Strength of distribution channel This is set to be high for the international event leagues and tournaments and set to be low for local leagues and tournaments. 4.5 Industry Competition Since the eSport industry is very new in the Philippines, it is set to be low. Mineski and TNC (The Net.Com), eSports companies catering eSports services are helping each other in promoting the eSports business in the country so it could increase awareness in the market. Currently, they are expanding their business by opening several branches and franchise.
  27. 27. TM206 - eSports Industry Sector Study 26 of 47 5.0 Market Segment Market segmentation aims to help identify the market that are different from one another in terms of behavior, age range, occupation, buying power, and archetype. Segmenting will allow the group to get a firm grasp of each type that can help satisfy the demands of specific target markets therefore maximizing customer’s potential. By understanding and meeting the market’s demands, and anticipating the different needs of different people, the group can adapt certain strategies and treatment based on the segment. The group took into account the requirement to identify market segment. First, they must be identifiable, accessible, substantial, has unique needs, and durable. By also considering that the segments should have differentiating attributes to be measurable, and yet at the same time similarities, with age also a factor in which the needs vary. Accessibility is also looked into as reachable through communication and distribution of channels. Internally homogenous as gamers and eSports fans and externally heterogeneous in that age also plays a factor to their behavior. Aside from that, the group also took into account whether to look into geographical, demographical, psychographical, or behavioral characteristics. The group aims to illustrate how these segmentation can be tackled and how to choose the most appropriate to use and identify which one can predict the rise of viewership in eSports. 5.1 Geographical Segmentation To define geographical, the group looked into the places where the organizations operate. Since competitors and spectators come from different countries and the tournaments are hosted online, it breaks the borders. Locally, viewership can be categorized per city and collecting pubstomp attendees. It can give one a general idea on how many are concentrated in Manila area versus the provinces. Researching online, the group found a sample of the eSports fans viewership numbers since June 2015.
  28. 28. TM206 - eSports Industry Sector Study 27 of 47 Another example of looking at it geographically is to look at the owner and player of a sample game. In this illustration, Dota2 is used as the sample game to look into how many potential viewers a firm can get per country. With the total number of 58M owners of the game, averaging 750,000 concurrent users, that is just one slice of the pie. With League of Legends that have nine times the user base, and with other eSports game coming online, it’s only a matter of time that this emergent stage transition to reach the explosive growth stage of the industry.
  29. 29. TM206 - eSports Industry Sector Study 28 of 47 5.2 Demographical Segmentation As for the demographical segmentation that is easily discernible that eSports is a niche, and those who watch it is another niche within a niche. Majority are male with an overwhelming 90:10 male-to-female ratio in the local market versus the 60:40 in the international scene. Also, if one compare last year’s 70:30 ratio of viewership based on gender, the study shows that the female enthusiasts are getting into the scene as well. However, the market can be segmented in numerous ways if demographic factors such as age, gender, life-cycle, educational accomplishments, and income level are considered. A study by Newzoo yielded these results below.
  30. 30. TM206 - eSports Industry Sector Study 29 of 47 In comparison, the local scene surprisingly yielded a lot of well-educated viewers; international study shows that there are potential big spenders to be tapped locally being that majority are working full-time jobs with access to steady income. Additionally, majority are single and does not have any familial responsibilities, hence the segment’s spending habits will be for their own luxuries.
  31. 31. TM206 - eSports Industry Sector Study 30 of 47 5.3 Psychographic Segmentation For psychographic segmentation, the team looked into the activities, interests, opinions, values or attitude of the gamers. For this one, the group can take into account the reasons as to why gamers participate and watch the tournaments. Amongst the reason cited, majority would claim that they want to feel and be part of the gaming community, some would want to watch their favorite teams and players, connect with friends that they play with by discussing live games, others would love seeing their “idols” and celebrity players that they look up to. Others watch pro-players game in order to become a better player by learning their movement. Comparing the international eSports questionnaire to the local scene where the team conducted its own market survey, results indicated that there are differences in behavior. People locally have a different priority in contrast to the overall eSports scene. This can be attributed to the values Filipinos have as a gaming community. Giving more importance to analytical viewership to improve their game play and less on following their favorite players/teams. A contributor to the fact is that the country does not have a national representative until recently. Hence, the lack of a united team banner to support during the tournaments. The market research’s goal is to know “Why do people watch eSports?”. See the image below for the local market responses:
  32. 32. TM206 - eSports Industry Sector Study 31 of 47 5.4 Behavioral Segmentation In the end, the team decided to go for behavioral segmentation, which is based on how people react towards the product. The study took into account their decision making ability, purchasing power, level of enthusiasm towards the game, their educational attainment, their marital status, their reason why they watch the games, and how active they are within the eSports community. In this case, the product is eSports (digital sports). Looking at it cumulatively and on the global side of things, 54% are from Asia, with occasional viewers as a majority. For this market segmentation study, the team focused on Massively Online Battle Arena (MOBA) players in order to quantify the local gaming community. Comparing Live views to Overall viewership locally, the majority are regular viewers compared to the global numbers. This is probably due to the fact that while eSports is not as accessible here versus other countries that have dedicated TV channels. Here in the local scene, avid fans consume the content voraciously and fanatically. In this scene, viewer consumption is synonymous to customers purchasing as the things they are accessing are content which can be a money- generating component of the eSports industry. Surprisingly, women are split evenly across all 4 categories ranging from 20- 30%.
  33. 33. TM206 - eSports Industry Sector Study 32 of 47 Regular eSports Enthusiasts (Participant/Viewer)  These are the viewers who watch and buy tournament tickets, follow all their favorite pro-teams, and join eSports competition. They would stream games and cast, moonlighting as volunteers in events.
  34. 34. TM206 - eSports Industry Sector Study 33 of 47  6% worldwide, 8% locally  Usually have gaming peripherals, each with over $100 budget, have a full time job, owns a top of the line technology (mobile, tablets, PCs or laptops), in the high income bracket.  Would own a Youtube or Twitch channel and may have some fan following and watches to learn and improve their play style  Majority of this group are males whose age range between 18-32 years old  20% of the females who watch livestream are in this category  30% of the professionals locally only earn meager allowances (unless they make big winnings) Occasional eSports Enthusiasts (Participant/Viewer)  These are the viewers who occasionally watch and buy tournament tickets, follow some pro-teams, and at times, join eSports competition. Some would do occasional casting for teams they like or games they’d love.They would sometimes moonlight as volunteers in events.  ~9% worldwide, 22% locally  Average income  Still dominated by the males  28% of the females who watch livestream are in this category but they’re in this scene as managers, casters, promoters, or volunteers Regular eSports Enthusiast (Viewer)  These are the viewers who regularly watch amateur and pro competitions.  ~27% worldwide, 40% locally  Demographic are high school students to young adult professionals  Frequent computer shop visitors  Low to average income  Regular watchers are majority dominated by the males  Majority would watch from the streams at home and would rarely drop by live games provided the access is within reasonable reach  22% of this females who watch livestream are in this category and enjoys watching matches from the comforts of their home Occasional eSports Hobbyist (Viewer)  These are the viewers who occasionally watch amateur and pro competitions. Sometimes even chancing upon the game by accident.  57% worldwide, 28% locally  May not even players of the game itself but watches for fun/entertainment  Has more male than female but the bulk of female fanbase will be in this category (58% male, 27% > 35 years old)
  35. 35. TM206 - eSports Industry Sector Study 34 of 47  The remaining 30% of the females who watch livestream are here watching for entertainment  Only watches the majors and not really keeping up with the schedule  Usually has friends who are Regular Enthusiasts to keep them updated to the latest trends and happenings in the eSports scene 6.0 Emerging Technology and Products 6.1 Existing and Emerging Technology Technology is really fast-paced for eSports. There are a lot of tools and platforms out there to help make the eSports ecosystem viable and sustainable in the long run. Organizers make use of better programs to run better tournaments, broadcasters have come to the point where they can match or even surpass the quality of the more recognized TV format since technical expertise is valuable when presenting content, and finally competitive teams always innovate themselves when it comes to tracking their own statistics to always come out on top in world championships. This sector study will focus on eSports Livestreaming content and distribution. Twitch had long been a platform known for allowing players to livestream their video gameplay and viewers can watch and chat in real time with each other, with the option to rebroadcast content. Due to the influx of eSports enthusiasts and hobbyist, YouTube recently launched its gaming-specific channel called “YouTube Gaming” this summer of 2015 to strengthen its user base. Along with a strong content stream and deep pockets available at their disposal, more and more users are migrating to the better technology and user-friendly service that YouTube Gaming offers compared to Twitch. With regards to technology used by local companies to do live streaming using their own content, they would usually need a switcher. The best switcher to use is called Tricaster, worth approximately 3 million Philippine Peso (PHP). So far Mineski’s rival, TNC (TheNet.com) cannot yet afford one. The only one so far to have this rig is Garena who handles Riot’s League of Legends tournaments. Similarly to work hand in hand with Twitch, XSplit Broadcaster is a livestreaming application currently under development. Livestreaming technology that works well with games is still something that needs to be developed. To date, XSplit technologies are in version 2, it does not have the sophistication needed to fully showcase the gameplay content to its potential. Nevertheless, the more known and established game live streaming content provider in Twitch are doing their best to hold on to their throne and will not let YouTube Gaming easily topple them down.
  36. 36. TM206 - eSports Industry Sector Study 35 of 47 6.2 Products The main product in this industry is the eSports content it delivers. Event franchise are now picking up to host gaming tournaments such as ESGS(e- Sports and Gaming Summit) or partner up with multiple content provider such as computer shops. These computer game shops such as Mineski and TNC have their own local eSports team and organize a tournament to get their names out. In line with that, income generation will come from a more established scene which can provide merchandise or franchise during the tournaments, box-office tickets, and pay-per-view. 7.0 Opportunities and Threats 7.1 Opportunities Creation of a National Governing Body for eSports The eSports industry in the Philippines has now gained support from the National Government. This has been proven by the creation of The Philippine eSports Associaiton (PeSPA) on September 2, 2015. The event was officiated by Senator Paolo Benigno “Bam” Aquino. PeSPA will serve as the the official governing body of eSports in the country much like the Korean eSports Association (KeSPA) in South Korea. KeSPA along with the Korean government supports the eSports scene in their country, from amateur leagues to professional tournaments. Patterned with the structure of KesPA, PeSPA shall coordinate with game developers and handle the rights of professional players in the country. PeSPA should also create a unified calendar of events to avoid schedule conflicts in future eSports events, protect players and manage conflicts by creating a quasi- E-sports court of law. The E-Sports court of law aims to make eSports in the Philippines a more established industry. It will likewise help avoid exploitation of players and solve complications through due process. Having a National governing body will allow the whole local eSports community to have more structured initiatives towards the promotion of digital sports to a larger audience in the country. eSports as a Key Marketing Vehicle and Revenue Driver Gaming in the Philippines is promising but has yet to reach the business activity of countries like South Korea where gaming is treated not just a promotion platform or revenue stream for brands but a marketing strategy in itself. In North America, for instance, corporate sponsorships total at $111 million. (Superdata, 2015).
  37. 37. TM206 - eSports Industry Sector Study 36 of 47 eSports has truly opened more diverse opportunities when it comes to brand marketing. Products such as Red Bull and Coca-Cola are now hosting their own white label tournaments and leagues all over the globe. In turn, these companies are now opening their own Esports Divisions within their offices so they can understand the industry better. In the Philippines, more and more brands are also using the popularity of eSports events to advertise their products. Advertisements are not limited to tech-related products and companies such as Samsung, MSI and Smart Communications but also attracted companies in the food industry like Nissin and sports apparel manufacturer, World Balance. eSports casting can drive revenue by offering/allowing companies to advertise their brands during livecasts and by attracting companies to sponsor live events like the abovementioned brands. eSports on National TV TV5 announced in November 9, 2015 the start of their long-term investment into the Philippine eSports industry by partnering with the most decorated eSports organization in the country- Mineski-Dota. The Mineski Organization has been a huge part of Philippine's Dota 2 history. It managed to build its own empire and have become one of the most recognized team names in South East Asia. Aside from supporting Mineski-Dota’s tournament campaigns, The network also expressed its intentions to cover eSports events. As an initial move towards broadcasting eSports, TV5 provided a televised broadcast of the League of Legends Season 5 World Finals in October 2015 - the first fully-televised eSports championship event in the Philippines. This partnership between Mineski-Dota and TV5 is a good opportunity to reach more viewers including non-eSports enthusiasts. With TV5 launching their gaming-focused media platform, Good Game Network, Mineski Pro-Gaming League (MPGL) may soon reach audiences both online and those sitting in front of their television sets. PesPA Chairperson Joebert Yu has also expressed his support on this partnership. Yu is positive that TV5’s confidence to work with Mineski as well as the network’s willingness to partner with other eSports organization will bring more opportunities to those involved in the industry. News Companies Venturing into eSports Casting Inquirer- one of the leading news print companies in the Philippines now has a page dedicated to posting updates on the local esports industry and to streaming and covering eSports events. Rappler has also engaged into live streaming of eSports events. The social news network uses live video streaming app for mobile phones to capture and
  38. 38. TM206 - eSports Industry Sector Study 37 of 47 share video broadcasts which now includes eSports tournaments. Rappler also entered into organizing eSports competitions in 2015 . They brought in teams from South East Asia to compete on the Rappler Gaming League First DoTA 2 tournament. News companies can help popularize the industry because they have more followers and have better capacity to fund and organize eSports competitions. Increased Mobility - More Viewers Online As seen in the previous chapters, statistics would prove that more and more people are utilizing the internet to express multiple interests. Growing interests include watching eSports related contents. Fans access these contents via their mobile phones and in most case, using mobile apps. In the United States alone, seven out of ten fans watch eSports on-the-go, preferring YouTube Gaming. In the Philippines, there is greater potential to increase viewership and the eSports fan base by attracting the growing number of smartphone users and mobile data subscribers. Young and Hyper-engaged Population Having 28 million Filipino people from ages 15-29 really opens a bigger opportunity for a new industry such as eSports to grow in the Philippines. These young people which we refer to as millennials are said to be the generation that is shaped by technology. They are believed to be more exposed to technology as compared to other generations. Filipino millennials are hyper-engaged and tend to stay connected to social media longer. Young people love to stay connected. Hyper connected Filipinos spend much time accessing social media websites and follow multiple interests. You would expect them to actively comment, share and participate on online trending news and activities.Tapping this market can be the best way for the eSports sector to grow. 7.2 Threats Lack of Policies to Support eSports There are policies in Congress that are essential for the growth of technology related industries including eSports in the country still pending to be passed and implemented. Two of which are the Bilis Konek Act of 2014 and the Free Public Wifi Act of 2015. The Bilis Konek Act will require all Internet Service Providers (ISPs) in the country to deliver better internet speed. The Free Public Wifi Act on the other hand aims to provide free wifi access in public areas.
  39. 39. TM206 - eSports Industry Sector Study 38 of 47 The Philippines, given its current economic state may not be able to provide as much support to the game industry as shown by experienced economies who have already institutionalized eSports like Korea, but developing and implementing regulations to allow tech-related industries to flourish should be one of the country's top priorities in the next few years. Enactment of Policies/ Regulations against eSports Local Regulation Against DOTA- Barangay officers of Salawag, Dasmariñas City in Cavite approved a resolution restricting all internet cafés from including DotA, the hugely popular online game in their services. The passage of this local ordinance would mean that none of the 75 computer shops in the barangay will offer DotA games to any of their residents and new customers. The Barangay Chairman believed that the village council had to use its law-making power to regulate all internet cafés within its jurisdiction and had to require them to take down the DotA program from their servers. House Bill 4947, also known as Video Game and Outdoor Media Regulation Act - A bill that would extend the powers of the Movie and Television Review and Classification Board (MTRCB) to rate video games in terms of the age of their audience. Proposed by Valenzuela congressman Sherwin Gatchalian, House Bill 4947, The bill would allow the MTRCB to classify video games based on age- appropriateness. The congressman filed the bill in relation to the banning of DotA in Barangay Salawag, Dasmariñas, Cavite. As a member of the house committee on trade industry, Gatchalian said that the MTRCB is lagging behind other media regulators abroad, who already included video games in their monitoring list since the late 1990s. The congressman also claimed that the MTRCB should update and improve its regulations since the board was established before the advent of video games. Under HB4749, five video games experts is recommended be added to the current 30 members of MTRCB to execute the extended functions allowed by the bill. The experts would be tasked to classify video games as “Adults only”, “Parental guidance recommended”, “ Not for public viewing”, and ”For general patronage” similar to the functions of the other MTRCB experts focused on the movie and television industry.
  40. 40. TM206 - eSports Industry Sector Study 39 of 47 Perception Towards eSports Gaming has always been attached to negative things like addiction, violence and that it destroys the students’ academic priorities. The general idea that “Gaming is a bad influence” affected how people in the Philippines respond to professional gaming. It is also perceived that earning money out of something that’s bad is something you should not be proud of. The negative points of views on eSports were not just about the players becoming violent but also about learning how to trash talk other players and also partaking in gambling. In fact, any competitive activity could turn into something violent and bad without regulation, for example two people punching each other in the street is seen to be something bad but with proper regulations, a ring, a huge crowd, a pair of gloves, a referee and an arena is called boxing and is considered a Sport and is celebrated by millions of people the Philippines. As seen in televised professional sports competitions, violence could really happen. It is evident in basketball, soccer or any other sports without proper guidance. Even if there were set rules known to players, there were still uncontrollable circumstances that leads to violence. The negative perceptions towards eSports would continue to be a challenge to the industry and changing the judgments and beliefs of the general public towards eSports would be very complicated tasks for those who envision to further expand eSports viewership. 8.0 Recommendations 8.1 Push for the Passage of Government Policies Related to eSports The implementation of government policies and laws that were favorable to eSports like the pending policies such as the Bilis Konek Act of 2014 and the Free Public Wifi Act of 2015 would significantly help the industry to flourish. These policies plus a strong push towards having government subsidized new technologies, especially those involved with the Internet, had become fundamental basis for the growth of the eSports industry in Korea. The Korean government had also explicitly endeavored to make Korean technology-driven businesses the cornerstone of its national market. An important step in this development was the enactment of the “Long-term Promotion Plan of the Game Industry” in 2004, with the goal of increasing Korea’s market size in the sector to $10 billion, and employing 100,000 people. The Korean government spends over $100 million annually to promote and develop the gaming industry.
  41. 41. TM206 - eSports Industry Sector Study 40 of 47 Korea’s promotion strategy may seem too ambitious for the Philippines but the abovementioned policies made us realize how much government support is needed in order for a budding industry to grow. Not as ambitious, but PeSPA’s initiatives should at least include pushing for the passage of the abovementioned policies. Implementing both will allow more content to be distributed in the country and more access points for Filipinos. 8.2 More Collaboration with the Government PeSPA is expected to collaborate with the national government to further develop eSports in the country. With this newly-formed alliance, the PeSPA members and the government are expected to work together to create an enabling environment for those who are involved in the eSports industry. Sen. Bam Aquino has been actively supporting and pioneering development programs not just for MSME’s but also for burgeoning industries like eSports in the country. Having the senator as a champion in government to push forward eSports related reforms, policies and initiatives is highly substantial to the growth of the industry in the Philippines. PeSPA should also tap other government agencies like the Philippine Sports Commission (PSC) to be recognized as a formal sport. PSC has set rules for national players which PeSPA can adopt to develop better training guide for eSports athletes. The Commission also gives financial support (although very minimal) to the national players competing here and abroad. National institutions like PeSPA, PSC, and PeSO must have a unified approach to promote “fair gaming,” in the same way that had been done for conventional sports. These institutions should also vouch for the credibility of eSport by likening it to other established sports, and should argue that eSports could be a major component of the future of public entertainment to get recognized. 8.3 Changing Negative Perceptions towards eSports eSports is an inevitable innovation that the older generation may not understand but the youth will keep on playing it given that we are in the digital era. It is one of the most innovative and most cost efficient way for a regular kid to enjoy a time with their friends and also get a chance to make friends. Sometimes parents think that the kids who are in front of computers are just playing with computers, but no, they are playing against actual people who are beside them inside a computer cafe enjoying the camaraderie, laughing, joking and playing with 9 other players in the game. This is the modern chess of the new generation, and as adults we have to accept the fact that it is here to stay.
  42. 42. TM206 - eSports Industry Sector Study 41 of 47 To reduce negative views on eSports, there should be proper guidance, regulated tournaments and proper activities for players and for the viewers. The local eSports governing body should also look at creating a code of ethics for players to follow. The code should not only encourage sportsmanship but also promote respect among players. Traditional sports have always been regarded as a tool to avoid worse things like drugs, crime and such.This is also possible with eSports. PeSPA together with numerous organizers in the Philippines should host and develop eSports events that would promote responsible gaming, time management and sportsmanship. 8.4 Partnership with Major Media Platforms to Reach Mass Market Gaming and eSports have rapidly grown into a multi-million industry. Global e- sports is now valued at $ 612 million, with an audience of 134 million. (Superdata, 2015) TV5 is attempting to seize the opportunity by being a pioneer in offering eSports content in National TV. There may be limited data in the Philippines, but Superdata also revealed that in 2015, Asia is the leading the e-sports market with $374 million, or 61% of the total global share. Moreover, TV5 believes that there will be an increase both in popularity and business interest in the eSports industry in the Philippines starting 2016. GG Network- the name of the segment, which stands for “Good Game” – a polite remark among gamers for a good fight, has already started scouting content creators for both video and stories. It envisions to operate more as a platform that will not own the content but will earn indirectly, giving Filipino creators the freedom they deserve. Moreover, TV5’s partnership with Mineski is a great start since the organization has already gained popularity among Filipino DotA players. The network expects Mineski’s followers to be the future viewers of their upcoming eSports contents. 8.5 Positioning as an Official Sport The internet has allowed gamers from all over the globe to compete with each other. What started out as a one or two player game can now become multi- player tournaments. Videogames slowly evolved to include a competitive ingredient. Advancements in the online infrastructure worldwide has Also allowed players from different parts of the world to come together and compete. The abovementioned developments in eSports are some of the reason why eSports should be among the other sports. Esports tests the player’s’ wits, teamwork and their indomitable will to victory. It affects not just their mental well-
  43. 43. TM206 - eSports Industry Sector Study 42 of 47 being but also their physical well-being, for a sound brain can only do so much in competitive eSports. There are those that still find it difficult to accept eSport as a concept, let alone consider it as a sport. But, researchers and gaming enthusiasts are finding a way to let others see a clearer connection between eSports and traditional sports. Organizations like Korean eSports Association (KeSPA) was successful in working with the Korean government in championing eSports as a legitimate athletic activity. Together, they have provided a set of rules that govern the whole of eSports in Korea, from the player’s rights and health, to the regulations of tournaments being held. In line with this, the International eSports Federation (IeSF) aims to do the same thing worldwide as it espouses the addition of competitive videogames as Olympic-level events. If eSports will be considered as a sport, it becomes easier for it to achieve stability and governmental recognition. This is important as an emerging industry, there are many issues that arise from the informality of the industry that are hampering its overall growth. Since eSports, or any virtual-related subject, is still finding its way into the law there is no proper jurisprudence that can cover important industry issues. eSports needs to experience the same legal benefits as sports such as the grant of an Athlete’s Visa for players competing in the international scene much like the Olympics or the World Cup. Visa rejection has been one of the main problems of professional eSports players. Taking for example, Korean-based team Rave who experienced difficulties in securing their visas for the Dota MLG Pro League LAN Finals and was even stopped by the Philippine Bureau of Immigration from leaving the Philippines while on their way back to Korea for training. eSports needs a strong foundation that can supervise its changes and developments. It would be safe to say that it is easier to work on the acceptance of eSports as a sport rather than to work on the acceptance of eSports as eSports. More so, a lot of process also needs to be done to change legislation and it takes years of discussions and paperwork in order for something to be fully acknowledged by the Philippine law. In 2013, The United States announced their acceptance of professional gamers as athletes. This allowed pro gamers to acquire an Athlete’s Visa. This signified progress towards getting recognized as a sport. The question now is when other countries including the Philippines would follow suit.
  44. 44. TM206 - eSports Industry Sector Study 43 of 47 Countries like Korea and the United States have already shown different strategies on how the eSports industry can get officially recognized and how players can be supported. Some maybe too ambitious but there are some strategies which are replicable. It is now up to the institutions in the Philippines which ones to adapt and prioritize. 8.6 Continue to work together to promote the industry Major League Gaming, DreamHack, and the Electronic Sports League have started collaboration back in 2012 to unify and align DreamHack, ESL and MLG’s eSports activities on a global basis to further competitive activity, benefit players and spectators, alleviate the taxing event schedule, eliminate confusion about global standings and help nurture the development of North American and European players. In addition to the creation of a master tournament calendar to eliminate conflicts (scheduling is a major issue in the eSports world especially for StarCraft competitions back in 2012), the partnership also lead to the development of standardized practices across the leagues. This coopetition or strategic alliance between major eSports leagues paved way to the establishment of a universal ranking system for seeding and qualification, and a unified competition structure for the major tournaments they organized. This also allowed the three leagues to cross-promote and utilize a shared roster of commentators and broadcast talent. In 2013, Sendi Mutiara Multimedia (SMM)- the pioneer local PC gaming company in Malaysia has extended its business operations in the Philippines to further push the budding eSports community and its stakeholders. SMM Philippines has two focuses: the internet café owners and the gamers. The primary focus is for the internet café owners’ benefit and profitability and to unite all internet cafés nationwide as an organization. For the gamers, SMM will organize tournaments and events in cooperation with the internet café owners. The SMM Philippines Cyberslam 2014 which is a two-day non-stop action gaming event brought together hundreds of players of different genres (namely WC3 Dota, Dota 2, Hearthstone, Starcraft 2 and Assault Fire) and different places in one event to compete and share appreciation for e-Sports. The success of Cyberslam 2014 truly demonstrated how cooperation even in the local Philippine gaming arena can contribute to the popularization of eSports. The above successes exemplified by both international and locally organized competition shows how cooperation between local and global eSports industry players can be advantageous not just to them but also to the players. More of these unified approaches and partnerships are needed to further popularize eSports in the Philippines.
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