A Brief Exposition into the World of eSport: Opportunities for Nigeria and the African Continent1

  1. Introduction

In 2018, CNN's A.J. Willingham produced a special feature on eSport, highlighting the industry as an explosive billion-dollar industry. Three (3) years after, the explosiveness of this industry is kicked into higher gears both in worth and participation.2

Satista, a German data company reports that the market value of the global eSport franchise in 2021 was over 1.08 billion US dollars, a 50% increase from the previous year. Additionally, it projects a global market value increase for the sector by the year 2024 to be over 1.62 billion US dollars.3

The continents of Asia and North America reportedly form the largest markets in terms of revenue for the eSport, with China alone accounting for about one-fifth of the market.

This article attempts an abridged review of the enormous market of eSports, its history and development, in hopes that it will stimulate interest in the potential of the eSports industry in Nigeria and Africa and draw attention to this technology goldmine. Also to present the opportunities that this industry presents which cuts across several sectors, from tech content creators to software engineers, advertising companies, lawyers, gamers, broadcasters, etc.

  1. What is eSport?

eSport or electronic sport, simply put, is a competition in video games. Its nature is usually that of an organized multiplayer video game competition between players either individually or as teams. The term “eSports” is characterized by regional or international video gaming events in which professional and amateur players (gamers) compete against each other.4

eSports are electronic sports played in a highly organized and competitive environment. They could be team-oriented multiplayer online battle arenas (MOBAs) or single-player first-person shooters or survival battle royales and virtual reconstruction of physical sports.5 These games require skilled gamers, electronic gaming gadgets and the internet, even though they could be offline in some cases.

In eSports, participating competitors are drawn from different leagues or teams that face-off. The games are usually popular with at-home gamers. Some of these games include Fortnite, League of Legends, Counter-Strike, Call of Duty, Overwatch and Madden NFL. These gamers are watched and followed by millions of fans all over the world, who attend live events or tune in on TV or online. Streaming services like Twitch allow viewers to watch as their favourite gamers play in real-time, and this is typically where popular gamers build up their fandoms.6

  1. History and Development of eSports

The rise and development of eSports can be traced to the early 2000s in South Korea. It is said that the South Korean State at the time was faced with a severe financial crisis that had a sustained ripple effect on the economy, employment and livelihood of its citizens. The government in responding to the situation channelled its developmental attention to internet and telecommunications infrastructure. This, the government believed would provide an environment for entrepreneurship to thrive and cushion the effect of its financial crisis to address the other ailing sectors of the economy. The result of the South Korean government strategy gave birth to social spaces which are now popularly known as PC bangs.7 These spaces were at restaurants and bars. It also saw an upsurge in the setting up of gaming centres/clubs.8 These centres/clubs became popular and widespread like neighbourhood football fields, basketball courts, table tennis hubs, places where gamers and spectators would gather together, play games, show off their gaming skills to each other, and develop acquaintance over a shared love for video gaming. Soon these centres began to organize formal competitions and within a short while, individual gamers formed and played in teams. Seeing how rapid and incredible the market created by these spaces and centres/clubs, the South Korean government got involved and set up the Korean Esports Association (KeSPA), the first government body created to cater specifically for games and esports in the world. The same period saw the establishment of affordable television stations owing to the Korean government's telecommunication development investment in the country's economy. One of these stations was Naver TV. It was founded for the sole purpose of covering esports activities in Korea. The fusion between popular, competition-fostering social spaces and free-access live streaming services dedicated to highly skilled players helped esports grow into a popular part of the Korean society and by consequence, Asiaand the world at large.

The recognition of eSports as a regular sporting event has grown in many countries across Asia, Europe, North & South America, the Middle East and just a few in Africa.9 Many of these countries also have eSports administrative/regulatory bodies. Later this year, China is set to be the first country to host eSports as an official medal event during the upcoming 2022 Asian Games in Hangzhou.

Apart from the national government recognising eSports, there are avalanche of eSports federations as well, established by groups (countries) and individuals to develop the sport and reap from the huge economic benefit it can produce. Some of these federations include the International Esport Federation10 (IESF), the Global Esports Forum11 (GEF), the World Esports Association (WESA), World Esport Consortium (WEC), eSports World Federation (ESWF) and others.

In Africa, there have been several eSports championships through tournaments like the Africa eSports Championship which fielded competitive matches in FIFA19 and Tekken 7, and the African Esports League via games like League of Legends. The beauty of eSports in Africa is that countries participate like teams; this means that they can pull a huge fan base just like the national teams of that country in other sports like football, rugby, cricket and basketball. Countries usually organize national leagues to select the team to represent the country in the different eSports competitions.

The creation of the African Esport Development Federation (AEDF) by the GEF is surely birthing a new dawn in the level of participation in eSports by African countries. The AEDF led by Mr. T. A. Ganda Sithole (from Zimbabwe), a seasoned and vastly experience sports administrator and Mr. Sayo Owolabi (from Nigeria), a vibrant and experienced communications, technology and sports lawyer as the Secretary-General, is expected to galvanize the potential in the Africa market for eSport and raise its awareness amongst the populace & government. Predictions in the gaming industry place Africa as the fastest growing market owing to the increase in the use of technology, the population and the willingness to venture into gaming with electronic/crypto/virtual currencies.

In Nigeria, the leading light for eSports is the Lagos Esports Forum (LESF). It is a wholly private esport organization that organizes eSports gaming competitions and tournaments for gamers to participate and win. The LESF is led by Sayo Owolabi who is a member of the GEF and recently got the nod to organize the qualifiers for Nigeria's representatives to the December 2021 Global Esports Games (GEG) that was held in Singapore. Though the qualified Nigerian contingent could not participate owing to Covid-19 restrictions at the time, the LESF is a breath of fresh air in the world of eSports that has come to stay and to thrive. They must be encouraged by the government, investors and industry players, if Nigeria is ever going to benefit from this goldmine called eSports.

  1. Players in the eSports Industry

There are numerous players in the eSports industry ranging from gamers to sponsors, software engineers, lawyers and many more. Most people would recognize names like Austin Jay-jay Okocha, Kanu Nwankwo, Smauel Eto, Tiger Woods, Micheal Shumacar, Lewis Hamilton, Frank Lampard, Cristiano Ronaldo, Neymar, Lionel Messi, Jose Mourinho, Tom Brady, Lebron James, Kelvin Durants, Step Curry, Novak Djokovic, Rafeal Nadal, Micheal Phelps, Anthony Joshua, Vladimir Klischo etc, these persons are often seen as faces of their respective sports. Names like Luka “Perkz” Perkovic, Kim “Doinb” Tae-sang and Lee “Faker” Sang-Hyeok though not popular yet, represent the global superstars of eSports.

The first set of players in the eSports world is the gamers. Without them, the entire infrastructure of eSports gaming is like a wonderfully sophisticated car without a man on the wheel. The gamers are integral and indispensable members of the eSports industry. Their display of skills at different levels of the game draws viewership for the particular competition and even patronage. Faker, Doinb and Perkz are all professional players of the world's most popular computer-based video game: League of Legend. League of Legend is one of the many gamers that host competitions of increasing fanfare and popularity, part of the rapid genre of electronic sports.12 Teams like Cloud9, G2 Esport, FaZe Clan, 100 Thieves, Natus Vincere, and Team SoloMid usually made up of professionals participate in such competitions.

Another set of pivotal players in the eSports industry is the game developers, interchangeably referred to as software engineers and game creators. They are the brains behind the content the gamers play. Without them, there is essentially no gaming. Examples are Microsoft, Nintendo, Riot Games, Game Loft, Valve Corporation and Activision Blizzard.

Furthermore, there are platform providers. The platform providers create the platform for the marketing of eSports. Gaming fans can watch, stream and follow their favourite gamers and competitions/tournaments through these platform providers. The platform providers create the audience traffic that makes eSports events and teams attractive for advertising, sponsorship and endorsement. They are equally as important as the gamers and the game developers because these platforms are mostly tech-created. Some of these platforms allow fans to watch for free and generate income from the website traffic or task viewers to pay to watch. Twitch owned by Amazon is a good example of such a platform. YouTube and Facebook provide such platforms as well.

  1. Where's the money in eSports?

Gaming is the fastest-growing form of entertainment globally, with revenues increasing at 9%+ per year. By 2022 the global video game market is expected to surpass $190 billion in revenue. According to Newzoo, esports revenues were $856 million in 2018 and are expected to grow to $1.79 billion by 2022. These numbers include media rights, merchandise and ticket sales, advertising, sponsorship, and game publisher fees.13

As stated in the introduction to this article, the eSports industry is sumptuous in cash, but the question is how do eSports teams/Industry players make money?

  1. Sponsorship

Sponsorships represent a key channel of revenue for the industry, currently the largest at roughly 40% in 2018 according to Newzoo. In 2019, sponsorships generated $456.7 million. For endemic brands, sponsorships have an amplified effect. As with any sponsorship, they help create brand awareness around the company's products. The messaging is further strengthened, in most cases, when the team competes using the sponsor's gear. Endemic sponsors include Razer, MSI, Bilibili, Huya, AfreecaTV, and NetEase - among several others.14

Non-endemic brands sponsor eSports events in much the same way they sponsor traditional sports. This includes product placements, direct sponsorship of teams or events, rights to use IP in marketing, and more. The virtual nature of eSports allows for additional opportunities in many cases. Think branding on a player's jersey and the player's avatar's skins. For example, Samsung partnered with Fortnite to offer the exclusive Samsung Galaxy Fortnite skin, which was originally only made available to gamers who pre-ordered the Samsung Galaxy Note 9.15

  1. Advertising

Advertising revenues are those generated from content presented to viewers of eSports events. Given the consumption patterns of eSports viewers, where linear television makes up a considerably smaller portion of views compared to traditional sports, the majority of this revenue stream is generated from ads served on streamed content. As such, “advertising” revenue for teams could be reclassified as “content” revenue, or revenue generated by deals with streaming platforms. These deals also include rights to advertise on players' individual streams.

  1. Merchandise Sale

Just like in traditional sports, this is another avenue for revenue generation in eSports. Teams or organizers can partner with products or sportswear manufacturing companies to float different designs for the market.

Team Liquid partnered with Marvel in 2019 to bring exclusive superhero-themed merch, like a Captain America-styled jersey. Perhaps most surprising - and brilliant - of all was Fnatic's clothing collaboration with Hello Kitty.

In eSport, these merchandises can either be physical or digital. Sometimes fans make in-game purchases of virtual or digital merchandise.

  1. Winning Tournaments

The final revenue channel is tournament winnings. Many will have read about the 2019 Fortnite World Cup winner, Bugha, and his $3 million first-place prize. What many may not realize is that a portion of his winnings ultimately go to his team, the LA-based Sentinels.16

While there is no doubt that team organizations value their teams succeeding in competition, it is not universal for a team organization to take a cut of tournament winnings. Many of the larger team organizations prefer instead to benefit indirectly from the success their teams have in competitive play when it comes time to negotiate new sponsorship deals, which are more valuable if the team is performing well, thus making this a less significant channel for most teams.17

  1. Opportunities in eSport

The nature of eSports and how it is not limited to national or continental borders shows how enormous its gains can be to a nation like Nigeria and Africa at large.

It is fact that technology is the future and would determine the economy and security strength of nations in the world. The advent of artificial intelligence in the market of service delivery, the metaverse for tourism and renewable energy to power lays credence to the fact that technology will be, if it is not already, the mainstay of sterling future economies. Just as in the era of intellectualism when industrialization swept the world and nations with competitive advantage became world powers, technology will become key to the level of influence nations will have regarding economic prosperity and political power. Hence, the need for Nigeria and the African continent to maximize the advantages that eSports present and seize the opportunities it provides.

The population of Nigeria and Africa is a huge advantage. Even more, is the percentage of young people. Nigeria and indeed, Africa cannot let the rest of the world maximize profits from eSports while we stand and idly by.18

Esports presents several potential opportunities in different fields ranging from investment to many gainful employments. The opportunities discussed in this article are by no means exhaustive; they are rather an eye opener to the treasures in this industry.

  1. Gamers

The average young person in Nigeria and many African countries with access to a phone (whether Java, Android or iPhone) has at least a game on it. Children generally these days somehow know how to locate the gaming icon on a phone and begin to play it once they have access to a phone. The expertise in knowing how to play these games seems to get better and better with more practice. Video games are now becoming one of the regular electronic devices found in the home of young families in Nigeria and Africa.19 Many see video game playing as a hobby to do when relaxing, trying to have fun with friends and so on. The availability of internet connectivity means access to gaming and viewership continues to grow at a geometric progression.

The advent of eSports means you can at your leisure play games and earn money. Simple phone games like candy crush, temple run and the likes can become avenues to compete, finish a mission faster and earn cash.

There are also opportunities for those who are skilled enough to compete as professionals. They can take game playing as a career and grow to the highest level. Thereafter become coaches and teachers of the subject themselves.

  1. Game Creators/Developers (Software Engineers)

The advent of eSports also provides a market for software engineers and innovators to carve a foundational space for themselves in Nigeria and Africa. “Tech-preneurs” who can build platforms to accelerate the floating of gaming competitions can with the appropriate sponsorship/investment generate lots of revenue from the gaming internet space in Nigeria and Africa. For instance, Twitch owned by Amazon has almost become synonymous with gaming. It has dominated such a prominent share of the streaming market that there is barely any competition for them. Alternatives are finding it hard to convince gamers to migrate to their platforms.

Recently, payment platform software companies such as remita, paystack and flutterwave have had an astronomical rise in worth. The investors of these companies are smiling regularly to the bank. This shows the projected growth possibilities for gaming software creators, platforms providers and investors.

The Securities and Exchange Commission in Nigeria (SEC) recently issued a guideline on crowd-funding, giving start-ups and emerging companies a viable market to raise funds for sustainable business. Game creators and platform providers can now source funds to finance their sojourn to this potentially viable industry. It is clear that once investors see the early profits, the sector will be overcrowded with an avalanche of investors.

There are generally two types of eSports developers. On one hand, you have the “hands-off” developers and on the other hand the “hands-on” developers. The hands-off developers are those who design the games but eschew organizing competitions or events of their own. They allow a community or body or association to organize competitions and tournaments provided that their approval is sought and given. Examples of such developers are Microsoft and Nintendo. The hands-on developers design the games and organize their events, tournaments and competitions. Examples are Riot Games, Valve Corporation and Activision Blizzard. The record shows that the hands-on developers are popular and are growing faster, most likely because the organizers are also the sole intellectual property rights owners to the game.

Nigerian and African tech companies can look to developing eSports games as either hands-off or hands-on developers to stimulate the market with choice and spark up a surge in eSports activities in Nigeria and Africa.

  1. Legal Practitioners

Where there are human interactions, it is necessary to have a framework guiding such interactions, especially when such is a business venture. A legal practitioner is essential for all the players in the eSport industry.

The gamers need the lawyer; the game creators need the lawyers as do the platform providers, investors, advertising corporations who want to market the products and services on the popularity stream of the industry; the competition itself require lots of legal guidelines to ensure fair play and guarantee the earnings and economic security of the participants.

First, there is the issue of intellectual property rights to the game by the game developers/creators. This is important because these games when developed might be played in any competition anywhere in the world. As a game developer, you want to protect that right to enable you legally earn when your brain-child is at work.

Furthermore, when a developer also organizes a tournament, especially the hands-on developers, the creator will be said to have ultimate control over how the game is played. If the developer decides to shutter an online game or put an end to the game, it is gone. Hence, competitions and tournaments will need building regulations, such that the absolute control of developers is checked. The companies advertising sponsoring such tournaments and players (or teams) participating will need to get their lawyers to ensure the regulations protects their expected gains from the tourney and provide for a viable means of sufficient compensation where there are breaches.

With regards to the participating gamers, there are potential issues of employment, workplace hazards and injuries compensation. This is so, especially for those who are recruited by teams. The scope of the welfare package for players, the provided for health covers and buffers, where gamers sustain injuries during tournaments, training sessions or off-seasons. There has been a lorry load of reports of how eSports gamers retire early in other to deal with one form of health issue or the other. One example of this is the popular Chinese League of Legends gamer Jian “Uzi” Zi-Hao who explained in an interview that he has struggled chronically with shoulder and lower back issues from being forced to sit for seven or more hours a day to practice.20 Other gamers like ex-Cloud9 player Hai “Hai” Du Lam, have already retired due to shoulder and wrist problems.21 In other cases, mental disabilities have manifested and proven disastrous. Former Korean League of Legends gamer Heo “PawN” Won-seok was diagnosed with Obsessive Compulsive Disorder in 2018; he could not play the game unless his setup was arranged perfectly. While he competed in the 2018 season, the strain became too much, and he retired halfway through the 2019 season.22

There is also the potential issue of gambling and game-fixing in tournaments. Gambling in eSports is unregulated and could give chance for match-fixing by players or third parties. There needs to be in place appropriate measures to ensure the game is not polluted by match-fixers. Closely related to the issue of gambling is doping. This has been a concern in the eSports realm. Gamers are said to be taking a lot of performance-enhancing drugs. Anti-doping measures must the put in place to arrest the peculiar nature of eSports and ensure fairness in the industry.

The advent of relating generally means there is a likelihood of friction and clash of interest and misunderstanding. The legal practitioner becomes necessary to aid minimize such frictions, clashes of interest and misunderstandings or help address them when they arise without the gamers, developers, investors or platform providers being distracted away from the goal.

All of the above and more demonstrate the opportunities for legal practitioners (sports lawyers) as indispensable pieces of the puzzle of eSports.

  1. Corporations with Products/Services to Advertise

Imagine a significant portion of the African young population on a platform during a tournament; what platform can provide a company eager to put its product or service on the map for patronage such publicity without having to pay the fees it would have paid several traditional media houses or even website.

eSports tournament provides a potentially enormous and wide scope platform of advertisement for companies desirous of doing so. So far, events like the FIFA World Cup and the Super Bowl in the USA provide something close to what eSports in Africa with respect to viewership can offer.

  1. Conclusion

While this all serves to highlight that esports are fundamentally a different beast than traditional sports, esports also share significant similarities with traditional sports. Professional leagues are increasingly franchised, and esports teams are building sizable, and in some cases nearly cult, followings — looking at you TeamSoloMid. There are seasons where teams play scheduled games that culminate in playoffs and major international events. More and more players now have contracts, and teams are increasingly investing in training facilities and headquarters. And there are even fantasy esports leagues.23

Esports are dynamic creations, which are rapidly becoming a cultural phenomenon that attract thousands of eager viewers. eSports have had international coverage at inception, yet it has been hugely overlooked in Nigeria and Africa. Not only recently that some attention has been given to it.24

It is hoped that Nigeria, the most populous black nation in the world and Africa will seize this opportunity to invest and let eSports thrive. An explosion of eSports in Nigeria and Africa will make the sky the starting point and not the limit for Africa in regards to economic prosperity.

Footnotes

1 Jerry Ombugadu Musa, LL.M, CDRS, Junior Partner, J-K Gadzama LLP, Abuja, Nigeria.

2 https://edition.cnn.com/2018/08/27/us/esports-what-is-video-game-professional-league-madden-trnd/index.html accessed on March 16, 2022.

3 https://www.statista.com/statistics/490522/global-esports-market-revenue/#:~:text=Revenue%20of%20the%20global%20eSports%20market%202018%2D2025&text=In%202021%2C%20the%20global%20eSports,billion%20U.S.%20dollars%20in%202024. accessed on March 16, 2022.

4 Ibid.

5 https://hir.harvard.edu/esports-part-1-what-are-esports/ accessed March 16, 2022.

6 Ibid (n 2).

7 PC bang is a PC bang is a type of LAN (local area network) gaming centre in South Korea, where patrons can play multiplayer computer games for an hourly fee. The average cost an hour ranges from 500 to 1500.

8 In Nigeria, there are lot of gaming centers where gamers play variety of games ranging from Mortal Kombat, Pre-evolution soccer (PES), TekKen, Car Races to adventures like God of War, Grand Theft Auto etc., however, the state of insecurity coupled the surge in computer-scammers (popularly known as yahoo-yahoo) in Nigeria hampered the growth of these centers. Maybe, Nigeria would have experienced something similar to that of South Korea.

9 In addition to South Korean and China, the United States of America and the United Kingdom have equally recognized eSprots. Also, Finland, Germany, Ukraine, Pakistan, Russia, Thailand, Italy, Brazil, Nepal, Indonesia, Turkmenistan, Macedonia, Sri Lanka, South Africa, Serbia, Uzbekistan, Gerogia, United Arab Emirate, India, Singapore have all recognized eSports as regular sports officially.

10 With a total of 123 member nations cutting accrose Africa (19), North and South America (19), Asia (38), Europe (45) and Oceania (2). The Federation also have affiliate members comprising of the eSport Middle East, Fighting Esport Group Korea (FEG) and ADRIA Esports Federation.

11 The GEF is non-governmental and a registered association converging the esports community world over. With its headquarters in Singapore, the GEF is a 103 members Federation. It also has two (2) development federations, namely the Africa Esports Development Federation and the Pam Am Esports Development Federation with the aim of developing eSports in these regions of the world.

12 https://hir.harvard.edu/esports-part-1-what-are-esports/ accessed March 16, 2022.

13 https://www.roundhillinvestments.com/research/esports/how-do-esports-teams-make-money#:~:text=According%20to%20Newzoo%2C%20esports%20revenues,sponsorship%2C%20and%20game%20publisher%20fees. Accessed on April 11, 2022.

14 Ibid.

15 Ibid.

16 Ibid.

17 Ibid.

18 According to the United Nations Data, Africa has the youngest population in the world, with 70% of the sub-Saharan Africa under the age of 30. See https://www.un.org>ohrlls>news Young People's Potential, the Key to Africa's Sustainable Development.

19 Subject to the availability of resources to buy it; those who cannot afford it are most likely to do so if their opportune to have the resources.

20 https://hir.harvard.edu/esports-part-1-what-are-esports/ accessed March 16, 2022.

21 Ibid.

22 Ibid.

23 Ibid.

24 Ibid.

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