1) eSports originated in the 1980s with competitive arcade gaming but truly took off in South Korea in the late 1990s with the popularity of StarCraft played in internet cafes. 2) Attempts have been made to create mobile-based and robot-enhanced eSports, but PC-based eSports remains the most commercially viable due to longer value chains and ability to engage audiences. 3) Robot-enhanced sports (reSports) involving robotic drones and autonomous vehicles is poised to become the next phase of eSports as the technology becomes more advanced and accessible. Countries like South Korea that pioneered eSports stand to benefit economically from leadership in reSports.

1. Take the red pill, see how deep the
robot hole gets
Over the past few years the world has witnessedthe advancing
march of technology’s influence on virtually every aspect of our
existence -- be it business, social, or cultural. The ongoing
emergence and confluence of evolving technologies is altering
our very notions of reality. One example of this is the explosive
growth of the entertainment phenomenon known as “eSports.”
Korea pioneered the modern version of eSports, and to this day,
remains a leader in what has become a mainstream pastime that
is now the viewing content of choice for a growing number of
millennials worldwide.
The “first wave” of eSports was originally called competitive
gaming. It was dominated by American and Japanese hardware
and software companies and players. Tracing its roots back to the
1980s, eSports were first played on standalone machines with hit
arcade games such as “Donkey Kong,” “Asteroids,” and “Pac
Man.”
While the first wave of eSports died, in part, due to the North
American Video Game Crash of 1983, like a Phoenix, it emerged
from the ashes, reborn in a South Korea reeling from the throes
of another economic crash -- the Asian financial crisis of 1997.
This time, it was reborn in the body of a PC game called
“StarCraft,” which, coupled with the period’s economicmalaise,
drove many seekers of entertainment on the cheap to PC bangs
(net cafes).These players would use networked PCs to compete
with friends and makeshift teams, and the most skilled of them

2. would eventually go on to become professionals,enjoying
massive fan bases along with lucrative salaries and corporate
sponsorships.
Today’s eSports, however, could not have flourishedin the era of
the first wave of competitive gaming, as neitherthe technology
nor the public, beyond a handful of aficionados, were ready to
make it an economically viable form of mainstream
entertainment.And this is how it remained until the
technological and social pieces came into place in the 1990s.
When I first visited a Korean PC bang, the thought that initially
crossed my mind was that it was like a modern version of the
arcades of yore. The PC bangs were, and remain to this day,
entertainment spaces where people congregate and use
technology to be entertainedwith their friends.
Recently, though, there was an attempt to create mobile device-
based competitive gaming -- eSports on mobile phones and
tablets. However, for the followingreasons, this has yet to prove
commercially viable. First, there are fewer parties who benefit
from the value chain compared with PC-based eSports. Second,
the platform does not lend itself to audience participation, and
by extension,excitement. With PC-based eSports there are live
and recorded streams of the games and arenas in which the
audience “participates.” Trying to replicate the success of PC-
based eSports business models with platforms such as mobile
devices, which neither lengthens the value chain nor boosts the
entertainment value, is unlikely to succeed. Robotics-enhanced
sports (reSports), however, overcomes all of these challenges.
ReSports will be the next growth area for technology-based
competitive gaming. It is the third wave of eSports and the
natural progression from the purely cyber realm of the screen to
the cyberphysical realm that extends to the physical world. It is
now evolving into somethingthat is not far removed from the
games seen in movies such as “Real Steel,” “Big Hero 6,” or
“Robot Jox.”

3. Both eSports and reSports share similar technological, business,
and cultural histories.In the 1980s, the TV show “Starcade”
failed to stimulate interest in broadcast eSports, while in the late
1990s to the early 21st century, the TV show “Robot Wars” was
an attempt to popularize broadcast reSports. “Starcade” and
“Robot Wars” both had a common an underlying cause for
generating little in the way of economic returns: the technology
had not reached the tipping point. Of course, eSports has since
passed its tipping point, and now, with the start of the
CyberPhysical Era, reSports is ready, and so are we.
With the rise of robotics and accelerating exodus of intelligent
technologies from the confines of cyberspace, the first green
shoots of reSports are emerging in the form of popular robot-
videogame hybrid products such as Anki, Sphero, and others. At
the spectator level, there is the highly publicized upcoming battle
between America’s Megabot and Japan’s Kuratas, two giant
“mecha” robots.
There are now professional drone entertainment organizations
such as the Drone Racing League and the FPV League, formed
with the backing of several high-profile investors.Earlier this
year, the Drone Racing League announced that RSE Ventures,
the venture-capital firm affiliated with the Miami Dolphins,
contributed $1 million to the league. The founders of the league
envision it evolving into a spectator sport similar to other racing
leagues such as NASCAR, but utilizingtechnologies such as the
Oculus Rift and streamingthe birds-eye view in VR. Indeed,
organization like the Drone Racing League and FPV League are
likely to be the catalyzers for the rapid growth of reSports.
In Motorsports, Formula1 is where the most advanced
technology is aggressively developed and tested. Although
Formula 1 cars boast the latest and greatest automotive
technologies,there remains one archaic component in the car:
the driver.

4. Roborace, a global motorsports series for autonomous vehicles is
slated to begin in 2016. Roborace promises to be more than a
demonstration of the power of technology when humans are
taken out of the circuit. Self-driving cars that compete at 300 kph
will provide lessons about how these autonomous technologies
deal with intense driving conditions, and that will accelerate the
development of consumerautonomous driving systems.
Korea’s first-moveradvantage in eSports boosted the sales and
global visibility of many of its companies. To this day, Korean
players and teams are consistently among the top players in the
global rankings. reSports would do the same for companies
seekingto demonstrate their capabilities in Robotics Internet of
Things (RIoT) hardware and software. Indeed, the development
of reSports-related businesses is already creating new business
opportunities not unlike those in eSports, with companies
creating and broadcasting content, making premium hardware
(e.g. high-end/high-margin game PCs, components, etc.).
At present, U.S. companies lead in the development of reSports,
with European, Japanese, and Chinese players close behind.
Korea has the potential to become a big player in this growth
area and has demonstrated its technological capability in other
top-tier robotics competitions such as the 2015 DARPA
Challenge in the U.S. Korea has all the components to secure a
position in this growing cultural and business phenomenon.
Taking the leading position in reSports would not only generate
national pride, but more importantly, it would also bring with it
new channels for economicgrowth in current and emerging
business areas. It would literally give form to another dimension
of new opportunities beyond the current iteration of eSports.
The Cyberphysical Era is here and with it we will see the rise and
proliferation of reSports. Those companies and individuals with
the vision to see just over the horizon can take the necessary
steps to secure strategic positions in this emerging phenomenon
and reap the benefits.

5. By Robert Cheek
Robert Cheek (Robb the Robot Guy) is an analyst at HMC
Investment Securities, the investment banking arm of the
Hyundai Motor Group. He has worked in the gaming, mobile
device, eSports, and robotics industries.He can be reached at
r.cheek@hmcib.com. –Ed.