“Analysis of eSports as a commercial activity”

Natalia Lokhman
AUTHORS Oksana Karashchuk
Olena Kornilova

Natalia Lokhman, Oksana Karashchuk and Olena Kornilova (2018). Analysis of

ARTICLE INFO eSports as a commercial activity. Problems and Perspectives in Management,
16(1), 207-213. doi:10.21511/ppm.16(1).2018.20

DOI http://dx.doi.org/10.21511/ppm.16(1).2018.20

RELEASED ON Monday, 05 March 2018

RECEIVED ON Monday, 10 April 2017

ACCEPTED ON Wednesday, 17 January 2018

LICENSE This work is licensed under a Creative Commons Attribution 4.0 International
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JOURNAL "Problems and Perspectives in Management"

ISSN PRINT 1727-7051

ISSN ONLINE 1810-5467

PUBLISHER LLC “Consulting Publishing Company “Business Perspectives”

FOUNDER LLC “Consulting Publishing Company “Business Perspectives”

NUMBER OF REFERENCES NUMBER OF FIGURES NUMBER OF TABLES

21 0 5

© The author(s) 2024. This publication is an open access article.

businessperspectives.org
 Problems and Perspectives in Management, Volume 16, Issue 1, 2018

Natalia Lokhman (Ukraine), Oksana Karashchuk (Russia),

Olena Kornilova (Ukraine)

Analysis of eSports
BUSINESS PERSPECTIVES
as a commercial activity
Abstract
The article deals with eSports as a perspective kind of commercial activity. The research
urgency is determined by the fact that, given the active increase of eSports market with
LLC “СPС “Business Perspectives” growth rates of more than 30% per year, the types of commercial activities in this field
Hryhorii Skovoroda lane, 10, Sumy, and in scientific papers are not studied in an adequate degree.
40022, Ukraine
The purpose of the article is to evaluate the commercial activity development in eS-
www.businessperspectives.org ports and to determine the perspectives for its further growth in Ukraine. In order to
determine the key types of commercial activity in eSports, the main sources of revenue
in this area compared to sports were investigated, which showed a large unrealized po-
tential for increasing revenues from the sale of tickets to competitions, the realization
of broadcasting rights and merchandising. The study also showed that the largest num-
ber of income sources in eSports is at the stage of cyber-tournaments, which can be
explained by a large consumer audience at this stage. However, unlike the world prac-
tice, computer game producers and well-known manufacturers of consumer goods in
Ukraine do not finance domestic competitions, and, therefore, this stage of commer-
cial activity remains at a low level. In modern conditions, among the types of eSports
Received on: 10th of April, 2017 activities in Ukraine, only the computer games production and the cyber-racers game
Accepted on: 17th of January, 2018 are properly developed.
According to authors, to improve the eSports development in Ukraine, creating the
national system of regular eSports competitions is needed, which will form the basis
for the development of most types of commercial activities that are part of the cyber-
tournaments. To do this, one needs to create appropriate platforms, as well as improve
communications with fans in social networks and at amateur competitions. All this
© Natalia Lokhman, Oksana will make eSports a highly profitable business in Ukraine.
Karashchuk, Olena Kornilova, 2018

Natalia Lokhman, Ph.D. Keywords eSports, cyber-tournaments, commercial activities,

(Economics), Associate Professor sports organization, income, sports economics, Ukraine
of Department of Entrepreneurship
and Commerce, Donetsk National JEL Classification L83, Z21, Z29
University of Economics and Trade
named after Mykhailo Tugan-
Baranovsky, Ukraine.
Oksana Karashchuk, Ph.D. INTRODUCTION
(Economics), Associate Professor of
Department of Commercial Policy,
Plekhanov Russian University of
Computer sports (cybersports, eSports) is defined as a video games com-
Economics, Russia. petition that takes place in a virtual space. Experts from the SuperData
Olena Kornilova, Ph.D. (Economics), analytical agency show that in 2015, the total turnover of the eSports in-
Associate Professor of Department of
Human Resource Management and
dustry was USD 747 million, and in 2018 it is expected to reach USD 1.9
Business Economics, Ukraine. billion (SuperData Report, 2016). These are extremely high rates. That is,
computer games that were once innocent fun in the modern economy
are becoming the leader of the commercial sector of sports services.

However, according to 2016 statistics, in Ukraine, the share of services

of art, sports, entertainment and recreation provided to the popula-
tion was only 1.7% in the total amount of consumer services (Statistics
This is an Open Access article,
distributed under the terms of the of Ukraine, 2016). It is difficult to separate the share of sports services
Creative Commons Attribution 4.0 in Ukraine, because such information is not available in statistics. But,
International license, which permits
unrestricted re-use, distribution, of course, this figure does not exceed 1%. In Russia, the development
and reproduction in any medium,
provided the original work is properly
of sports services is also negligible: according to 2016 data, sport ser-
cited. vices accounted for only 0.8% of revenues from paid services to the

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Problems and Perspectives in Management, Volume 16, Issue 1, 2018

population (Statistics of Russian, 2017). And in developed European countries and in the USA, the share
of sports in the total revenues of the service sector is more than ten times.

Consequently, the potential for further development of sports income and profits, in particular from
cybersport, is significant in Ukraine. Identifying promising types of eSports activities that have a sig-
nificant potential for growth and capable of providing substantial profits can create the necessary data
base for entrepreneurs to further develop their business in this area.

The Newzoo research results have shown that the impetus for a sharp increase in incomes and profits
from eSports in the world has become a model of commercial approach to the activities of this market
participants (Newzoo, 2016).

Thus, the practical benefit of studying eSports as a kind of commercial activity is also practically as-
sured, and its theoretical justification requires the corresponding work, that is, reflects the relevance of
the subject chosen.

The purpose of the research is to evaluate the commercial activity development in eSports and to deter-
mine its most promising species for further distribution in Ukraine.

1. LITERATURE REVIEW actively developing in modern society, and the

market for these services is actively increasing
Modern scholars and practitioners pay great at- (Seo, 2016).
tention to determining the eSports belonging to a
particular industry. In the academic literature, ac- But the idea that eSports is a sport is the most
tive debates exist as to the place of eSports: is it a common. Thus, Hallmann and Giel note that eS-
type of entertainment, or rest, or sports? ports has five main features of sport (Hallmann &
Giel, 2017). Heere argues that cyber sports should
In support of eSports being an entertainment be considered as part of sport management (Heere,
industry, scientists argue that large-scale cham- 2017). Funk, Pizzo and Baker are of the same opin-
pionships are taking place in computer games, ion (Funk, Pizzo, Baker, 2017).
which simultaneously attract a large number of
people as spectators. PricewaterhouseCoopers In recent years there have been the first works in
has conducted a study on eSports as part of the which interest in eSports is in its study from the
entertainment industry and published the report standpoint of entrepreneurial, commercial activi-
(PricewaterhouseCoopers, 2017). ty, which is defined as activity for profit (Tsybuliov,
2011). Among such researchers Voskolovych and
Sео considers eSports as an element of the rec- Khaidarov (2016) can be identified, who found
reation field, he believes that eSports tourism is that eSports revenues are the main source of in-

Table 1. Dynamics of number of eSports-related publications for 2001–2017 (for 17 years of the 21st
century)
Source: Compiled by authors according to context search of eSports on SCOPUS
(https://www.sciencedirect.com), Web of science (https://apps.webofknowledge.com) and RISC (https://elibrary.ru) websites.

Publications by years Rate of growth in 2016–2017 as against

Resource 2014–2015, %
2001–2013 2014–2015 2016–2017
SCOPUS 12 13 18 +38.5
Web of science 1 4 31 +675.0
RISC 9 22 78 +254.5
Total 22 39 127 +225.6
Yearly average 1.7 19.5 63.5 +225.6

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 Problems and Perspectives in Management, Volume 16, Issue 1, 2018

come in this sector (Voskolovych & Khaidarov, eSports and the commercial sector symbiosis is a
2016). The authors offer a very detailed classifica- complex, multidimensional process, but consid-
tion of income from this sport. ering the ultimate goal of commerce, we propose
to analyze it in the context of identifying profit
The study of modern scholars’ publications, which sources, which will enable real and potential ac-
are contained in SCOPUS, Web of science and tors to decide on the prospects of participation
RISC, showed that in general, the number of re- and development of this area.
searches on eSports is quite small (Table 1).
To understand the main sources of income in eS-
As we see, over the past two years, the number ports, a study of volume and structure of revenues
of eSports publications has increased more than in the industry was conducted (Table 2).
three times as to the previous two years. But while
studying the content of the available literature, It must be said that different analytical agencies
one can conclude the researches on economic is- give different forecasts of expected revenue vol-
sues are artificial. umes. For example, PricewaterhouseCoopers es-
timates it at USD 327 mln in 2016 (PWC, 2017).
In addition, there is no quotation for the econom- That is, the figure is less than tree times, com-
ic researches contained in the resources shown in pared to the data in the table. But we believe
Table 1. This shows the weakness of the systemic that such a rotation in the estimates is related
scientific and economic knowledge on eSports. to the differences in the industries, to which
eSports is related. That is, if we consider eS-
That is, the practice of commercial activity in eS- ports as part of the entertainment industry, as
ports is currently far ahead of the scientific sub- PricewaterhouseCoopers does, then the proceeds
stantiation of this type of activity will be smaller due to lack of revenue from spon-
sors and other sources that are not taken into ac-
count in this area.
2. KEY RESEARCH FINDINGS
As can be seen from the table, eSports revenues are
Today, any sport has become a commercial activ- more than 160 times less than the sports indus-
ity, and in some of its forms it is a big business. try revenue. But if we take into account that there
The development of sport through commercial are about 60 summer and winter disciplines in the
enterprises and the commerce development with Olympic sport (their list and number are unstable),
the help of sport are two counterprocesses with and in general there are more than 200,000 kinds
high prospects for all participants’ profitability of sports, then the long-term benefits of commerce
(B2Blogger.com, 2008). in eSports are also practically assured.

Table 2. Revenue estimates in sports and eSports

Source: Compiled by authors based on analytical agency forecasts including sports – PricewaterhouseCoopers-based
(PWC, 2011), and eSports – SuperData-based (SuperData, 2016).

Total revenue, USD mln Share in revenue, %

Activities as to total amount
Sports (2015) eSports (2016) Sports (2015) eSports (2016)
Sponsored and promotional income 45,281 661 31 74
Sale of tickets 44,746 34 31 4
Realization of broadcast rights 35,247 * 24 *
Merchandising (use of sports symbols for goods 20,067 19 14 2
promotion)
Prize fund * 78 * 9
Betting (bets) and fantasy sites (fan clubs) * 59 * 7
Amateur competitions * 40 * 4
Total 145,341 892 100 100

Note: * Not evaluable.

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Problems and Perspectives in Management, Volume 16, Issue 1, 2018

Table 3. Sources of income according to the commercial activity stages in eSports

Source: Compiled by authors.

Activity stage Actors Sources of income

Computer game manufacturers Sale of computer games
Development and distribution Organizers of network computer Institutional fees for network access
games Technical support fee
Own funds of athletes
State support
Sportsmen Private fund grants
Donation of patrons
Sponsorship
Cyber-athletic training
Player clubs Membership fees
State financing
Player schools Sponsorship
Sportsmen membership fees
Game computer manufacturers Sales of game computers and additional components
Computer games manufacturers Sales of computer games and additional game content
Sale and rental of movies / cartoons based on popular
Film companies
eSports promotion games
Gamer clubs Festival members’ fee
Internet providers Additional services to progamers in social media
Conference organizers Registration fees
Sportsmen transfer
Team owners Reward for the right to use team symbols
Fee for the rights of athletes’ photo and video
Sports competition prize fund
Sportsmen transfer
State support
Sportsmen Patron donation
Sponsorship
Deductions from the established goods sale
Investment projects sale
Investors Fee for eSports stadiums
Additional sale of consumer goods
Sponsors Tax advantages
Conducting cyber tournament Media sponsors Means for tournament promotion and for PR
Sale of goods with sporting attributes
Manufacturers Souvenirs sale

Sponsorship
Proceeds from advertisement and merchandising
Patron donation
State support
Sportsmen registration fees
Tournament organizers Sale of tickets and season passes
Broadcast rights sale
Sale of competition records
Additional services for funs
Revenue from lotteries

Book-makers Income from betting and forecasts

If we compare the structure of income sources in practice their spectrum is much larger. Therefore,
sports and in eSports according to Table 2, then it the authors systematize sources of income in eS-
is possible to note the large unrealized potential ports in detail (Table 3).
for further growth in revenues in eSports from the
sale of tickets to competitions, the realization of As can be seen from Table 3, the largest range of
broadcasting rights and merchandising. The most income sources in the eSports industry is at the
efficient businessmen have already realized such tournament stage.
opportunities to earn significant profits and now
they are building stadiums for cyber sports. It should be noted that nowadays, the main prof-
its from eSports are obtained by computer game
It should be noted that in the table, sources of in- manufacturers and game computer manufactur-
come in eSports are limited to six types, while in ers, because they fund world-class championships

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Table 4. Useful effects of eSports by fields of activity

Source: Compiled by authors.

Field of activity Type of activity Useful effect

Game computers (game consoles, tablets, etc.), computer accessories, games,
Production Production of goods additional content, movies (cartoons), goods with attributes, souvenirs, lotteries,
bets, venues for competitions
Game computers (game consoles, tablets, etc.), computer accessories, games,
Trade in goods additional content, movies (cartoons), cybermarket goods, consumer goods and
sponsor services, souvenirs, lotteries, bets
Sales Computer services, services for competitions, tickets and tickets for competitions,
Services production access to the online games network, social networking services, transfer of
and sale players, rights of use (title, name), broadcasting rights, shooting right, betting,
additional services
Sponsorship Expenses coverage, prizes provision, advertising and merchandising
Distribution State support Subsidies, grants, financing, tax incentives
(redistribution)
Patronship Donations, funds

where they act as sponsors. Such championships Table 4 determines the types of eSports advantag-
are a platform for their main products advertise- es that may be the subject of commercial activity.
ment (Ukrainian Reality, website, 2016).
The table shows that in the turnover field, there
But in recent years, traditional business repre- is the largest range of commercial products that
sentatives are also actively integrating into the can be offered on the market for a commercial
electronic sports market as tournament sponsors. effect.
Large amounts of eSports financing are provid-
ed by consumer goods manufacturers with well- Based on the data presented in Tables 3 and 4, the
known brands, including Coca-Cola, Red Bull, development of certain types of eSports activities
Visa, Audi, and Gillette (eSport Conference, 2017). in Ukraine can be estimated. To do this, Table 5
identifies activities that are high, medium, and low
According to Newzoo reports, revenues from ad- for this industry.
vertising are the key component of the eSports
economy. According to Newzoo, total advertising As you can see, although the activities of the cy-
revenue was 71% of all industry revenues in 2016. ber-tournaments are the most profitable, as was
The rest is the proceeds from the sale of tickets and found in Table 3, but its development in Ukraine
related products at competitions (Newzoo, 2016). is low and needs to be intensified (Table 5).

Table 5. Estimation of the development level of commercial activities in eSports in Ukraine according
to their stages
Source: Compiled by authors using Tables 3 and 4 data.

Level of development
Activity stages
high medium low
Game development and Computer games production Organization of network Organization of network of
distribution national computer games international computer games
Gamer schools
Cyber-athletic training Athlete playing Gamers’ club playing State support
Realization of game Game computer production
computers and accessories Film hire
eSports promotion Internet providing
Sale of computer games and Gamers’ club work Conference organization
additional content
Construction of cybersport stadiums
Sale of tickets for tournaments
Sponsorship and
advertisement Realization of competition records
Cyber-tournaments Athlete transfer
– Merchandising
conducting Sale of souvenirs
Sale of rights (for depiction, Additional services for fans
broadcasting, etc.) Lotteries
Betting and forecasts

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Current research shows that eSports industry is 5) creation of domestic computer technology and
promising for Ukraine, as evidenced by the First expansion of the original games development;
Conference in Ukraine dedicated to investment
and integration of Ukrainian business in the eS- 6) construction of cybersport stadiums;
ports market (eSport Conference, 2017). We ac-
cede to the submission because: 7) promotion of sponsorship, advertising and
merchandising in eSports activities;
• the annual global growth of the market is
more than 30%; 8) bookmaking development.

• in recent years Ukraine ranks 5-6 in the world It should be noted that eSports development in
among the countries with the most developed Ukraine, as well as the development of any com-
eSports branch; mercial sphere, involves a social component, i.e.:
job creation, tax deduction, etc. Besides this, eS-
• it is projected that in 10 years, eSports will be- ports development makes it possible to ensure
come even more popular than football; communication between cyber-sportsmen from
different countries, the formation of computer lit-
• among the participants of the most famous eracy and eSports culture.
eSport-tournament The International in 2015,
there were 12 players from Ukraine and only Unfortunately, eSports in Ukraine is not funded
representatives of China exceeded the number. at the state level, although in 2010 the eSports
Federation of Ukraine was created. A number of
Given the research results, we determine the fol- countries, including China, South Korea, Malaysia,
lowing directions for further eSports development the Philippines, France and Russia, have recog-
in Ukraine: nized eSports as an official sport. In the UK and
Sweden, the government is working to recognize
1) comprehensive online user promotion; eSports as a sport. And in the United States, one
computer game (League of Legends) is officially
2) support for talented cyber-racers and success- fitted to sports (Shirobakina, 2016).
ful cyber-teams;
According to the authors, state regulation bodies
3) organization of cyber schools and eSports of the Ukrainian economy should pay due atten-
clubs; tion to domestic eSports and give it the necessary
support, because this branch has all the features
4) increasing the number of domestic eSports to become in the future one of the most important
tournaments, including international ones; for the country’s business and economy.

CONCLUSION
The research allowed to make the following conclusions.

1. eSports commercial activity in Ukraine is gradually developing. In this area, there are a num-
ber of actors who already receive high incomes and direct their actions to the commercial
effect growth. Computer games production and cyber-racers game demonstrate high level
development.

2. Other types of eSports activities in Ukraine are far behind, which can be explained by the lack of
active work on the organization and conduct of the cyber-tournaments, first of all – at the interna-
tional level. That is, in order for domestic eSports to develop actively, it is necessary to establish a
national system of regular cyber-tournaments at special platforms.

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3. For further eSports development in Ukraine it is necessary to expand the types of activities in this
area. First and foremost, attention should be paid to the development of the audience and com-
munication with fans, which should be developed by groups in social networks, fan clubs, amateur
competitions, etc. This will increase the level of manageability, expand the contingent of fans, and
will create conditions for further development of other, most profitable types of eSports activities,
namely: sponsorship, advertising, and merchandising.

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