Exploring How Esports Work as a Business Activity in China by Studying Riotrsquo;s League of Legends
Abstract
Esports industry have gained momentum in global popularity over the past decades, with the internet technology rapidly developing and major gaming companies incessantly expanding their markets. The purpose of this research is to systematically analyze the current state of esports markets in China, and to explore how esports games help esports companies generate profit by studying Riot companyrsquo;s League of Legends. This article will particularly look into several market factors that influence gaming industries, and examine how these factors interact with individual esports companies. Lastly, this research offers suggestions for future research and gives insights into doing business in esports industry.
Keywords：Esports market; Open systems theory; Opportunities; Threats; League of Legends.
Ⅰ. Introduction
Imagine being in an esports arena where thousands of fans are cheering avidly for their favorite professional teams; envision that you are awarded the esports scholarship in your universityhellip; With the exponential growth of esports markets these years, these scenarios have become pretty much a reality. According to Natalia Lokhman, Oksana Karashchuk and Olena Kornilova , the worldwide esports market has a growth rate of more than 30 percent each year. China, being the largest esports market in the world, is also experiencing the professionalization and commercialization of esports gaming.
Though Chinese eSports industry has gained momentum economically, academic research in the area might still be in its infancy. The objective of this research is to explore the commercial value of esports in China by identifying some key features that leads to the business success of League of Legends. To do that, giving a brief overview of the history of Chinese esports is needed. In addition, this work will use the open systems theory as the core methodology. Finally, this work will use SWOT Analysis to outline both the external and internal market environments of Riotrsquo;s League of Legends.
Ⅱ. A Brief History of the Chinese Esports Industry
In early 1970s, for young people in Europe, America and Japan, video games were among the most popular pastimes. However, at the same time, Chinese people were still suffering poverty. Later, at the beginning of the mid-1980s, vendors started to import and smuggle arcade machines and game consoles from developed cities in China (including as Hong Kong and Taiwan) into the country. Gaming centers began to appear in the major coastal cities, such as Xiamen, Fuzhou, and Guangzhou. The second half of the 1990s became a golden age for Chinarsquo;s video game industry. Arcade and console gaming centers expanded from coastal cities to smaller towns in remote regions. Based on the statistics provided by Ministry of Culture, by the end of 2000, there were more than 10,000 game centers in China.
When the Internet technology began to show up in China at the end of 1990s, Internet cafes sprouted up on streets and in alleys all over the country, and soon grew into the most common place people went to play online and offline PC games. In 2002, the First Mirinda esports Tournament was held in China. Participants played Counter-Strike in that tournament and the winning team were allowed to take home 10,000 RMB of prize money and six Philips PC monitors. Counter-Strike – along with many other video games at that time – catalyzed the emergence of the first generation of Chinese professional game players of 2000s and paved rood for the popularity of League of Legends in China today.
Ⅲ. Methodology
Figure 1. Preliminary Research Model
Figure 2. Factor Analysis
In order to study why Riot companyrsquo;s League of Legends can survive and excel in an increasingly competitive environment, the environment where esports companies incessantly interacts with one another Should be taken into account. Open systems theory purports that, business companies and organizations are heavily influenced by the environment in which they operate . Some of the common environmental factors an esports company frequently faces are economic, political, and social factors that influence the performance of this company. To be precise, the PEST model will be used to examine the impacts of these factors on sports companies.
This figure shows how the open systems theory, SWOT and PEST model was integrated and applied in our research. In other words, it shows how ideas are generated in the preliminary stage. Also, it can help readers better understand the methodology and structure of this research.
Ⅳ. Opportunities and Threats in Esports Industry
To better understand the way esports companies generate profits, this research will identify some trends and features in todayrsquo;s esports industry. In accordance with the open systems theory and SWOT, the external factors are examined firstly – the opportunities and threats in esports industry.
Ⅴ.Opportunities
A.Governmentsrsquo; Support
Governmentsrsquo; support offers a great opportunity for esports companies to grow in their own market. According to the table below, it is noticeable that Changzhou, Beijing, and Wuhan are three most funded city by the Chinese Sports Ministry. As esports becomes more and more popular in China, Chinese governments are also attaching greater importance to it and allocating a larger proportion of their funding to esports industry.
Table 1. Funding for the e-sports industry provided by the Sports Ministry
|
Year |
City |
Project |
Amount (in RMB) (million) |
|
2007 |
Beijing |
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