Valve: Increasing eSports Popularity

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The e-Sports Ecosystem

E-Sports (also known as eSports, electronic sports, competitive gaming, or professional gaming) is a form of an organized competition that involves multiplayer video games. E-Sports encompass a wide variety of gaming genres and sub-genres, including real-time strategy, fighting, first-person shooter and multiplayer online battle arena games; all of which are eligible for game modes in eSports tournaments and leagues. According to Kiasco Research, it is more than just a competitive sport, but also a "global, young, diverse and passionate community of professional and casual gamers, enthusiasts, and collaborators."[1]

The e-Sports ecosystem is made up of 5 key segments:

  • Teams
  • Events
  • Publishers
  • Leagues
  • Channels

In the model depicted to the left, consumers and brands funnel money into the e-Sports ecosystem. Today, e-Sports is a thriving industry, and its audience size is expected to grow to 145 million by 2017.[2]

As eSports becomes increasingly popular, it will continue to captivate different audiences. Moreover, businesses will without a doubt come up with creative advertising strategies to reach and profit from the audience of this new and growing industry.



Valve's logo

From an e-Sports ecosystem point of view, Valve is a publisher, event holder, and league organizer. Valve was founded in 1996 by former Microsoft employees Gabe Newall and Mike Harrington. The firm's first success was on November 19th, 1998, with the release of their first game Half-Life.[3] Today, Valve is regarded as one of the leading game developers and game distribution companies.

According to data compiled through steam, the top three games in order of hours played from November 4th, 2016 through December 4th, 2016 were Dota 2, CS:GO, and Team Fortress 2.[4] All three of these games have a competitive aspect to them, and are all made by Valve. Because Valve creates some of the most popular e-Sports titles, they also have full control over their games. The firm's actions have had a direct and powerful impact on the nature of the e-Sports ecosystem, and will continue to influence e-Sports in the future.

Popular E-Sports Titles

Steam's Top Games December 4, 2016. Extracted from

Dota 2

Released in 2011, Dota 2 is a free multiplayer game developed and published by Valve which has a widespread and active competitive scene. The tournament prize pools from Dota 2 total to an excess of tens of millions of dollars, which make it the most popular e-Sport in terms of prize pools. From November 4th, 2016 through December 4th, 2016, players racked up over 425 million hours of gameplay.[5] In addition, the peak player count during that time frame was over 1 million.

Counter-Strike: Global Offensive

Also known as CS:GO, Counter-Strike Global Offensive is a first person shooter which costs $16.99 CAD on steam store. The original Counter-Strike was co-created by an SFU student named Minh Le and an American named Jess Cliff in June 1999. Today, CS:GO is an en extremely popular e-Sport, with 242,534,951 hours played from November 4th, 2016 through December 4th, 2016.[6] The peak player count for that time frame was 662,460.

Team Fortress 2

Team Fortress is a free team-based first person shooter game which had it's 2-month player peak during October-November 2014.[7] Today, it is considered a more "casual" game, and does not have any Valve-sponsored leagues or tournaments.

Business Model

As a publisher of some of the most popular e-Sports titles, Valve has a very relaxed work culture. There are no managers, and employees are free to work on whatever project they wish. They are also encouraged to start new projects, and are able to leave projects whenever they feel like.[8] Today, around 1/3rd of Valve employees are currently working on their Vive project, which is a virtual reality gaming device made in collaboration with HTC.[9]

Valve primarily makes money as a publisher of online games. Steam controls half to 70% of the $4 billion market for downloaded PC games, selling titles from bigger firms such as EA and Activision, as well as Valve’s own games.[10]

Additionally, Valve makes money from micro transactions. In particular, Valve's games Counter-Strike: Global Offensive, Dota 2, and Team Fortress 2 are notorious for having in-game items worth thousands of dollars. It is estimated that Valve has made $567 million in total revenue from Global Offensive alone.[11]

Although no financial statements from Valve have ever been released, to illustrate the profitability of Valve, Gabe Newall was number 134 on Forbes top 500 in 2016, up from 307 in 2015. He was also the 288th richest person in America in 2016. Moreover, Gabe Newell has been quoted saying that, per employee, Valve is more profitable than Google and Apple.[12][13]


Steam is a digital distribution platform developed to offer digital right management, social networking services, and multiplayer gaming that was released by Valve in 2002. Among other things, Steam gives users the ability to access thousands of community-run game hubs and groups, buy and publish their own games, sell virtual items, and make and chat with friends. Steam can be downloaded at no cost, and as of December 4th, 2016, has a catalogue of 12,097 games.[14] Steam also had a peak player count of 13,689,723 on December 4th, 2016.

$38,000 Pink War Dog Courier

Virtual Goods

Valve's virtual good are items that can be bought or randomly given to a player in-game and can be sold or traded to other players. Virtual goods in Valve's games do not give the player an advantage. They are purely for cosmetic purposes. On the secondary market, the price of these items are determined by forces such as rarity and quality. As of December 4th, 2016, the most expensive Dota 2 item ever sold went for $38,000 USD on a third party market.[15]

Skin Gambling

Historically, e-Sports gambling, or simply known as skin gambling, is the use of virtual goods as virtual currency to bet on the outcome of professional matches. The most popular "currency" used to e-Sports gamble are items that can be found in Counter-Strike: Global Offensive. As viewership of CS:GO and other e-Sports has grown, so has e-Sports gambling as the desire to bet on matches has increased. Today, however, many CS:GO gambling websites do not have a team-betting option, but rather have casino-type games such as roulette.

Since Valve’s introduction of virtual items in 2013, third-party gambling websites have taken advantage of Steam's API system which allows them to easily access a user’s virtual items in order to gamble. Primarily, these websites convert CS:GO’s virtual items into a value which is determined primarily by rarity and quality. Depending on the value of the items inputted, the gambling website will give the user “coins” which can be used to gamble. When the player decides to cash out, he/she is given items back which will correspond to the value of coins he/she wants to cash out.

Valve does not regulate or promote these websites. Valve is reluctant to take action against websites that promote gambling, and claims that ownership of skins and other virtual items are not worth any real money.[16]

Valve has an incentive to keep these third party websites up and running because it not only increases viewership of e-Sports, but it also increases the sale of items within Steam. Valve has sold 21 million copies of the game, and in 2015, it is estimated that 2.3 billion dollars’ worth of items were wagered by over 3 million people.[17]

Illegal and Unethical Business Practices

Since third-party gambling websites are not regulated, illegal and unethical business practices have arisen.

Underage gambling is a huge problem due to lack of regulation. According to Justin Carlson, lead developer at, which is a marketplace to buy and sell virtual skins, thousands of dollars’ worth of items are exchanged on his website by minors to be used on gambling websites.[18]

Unethical business practices in the form of customer deception have also arisen.

For example, Youtubers going by the usernames prosyndicate and tmartn were exposed by the CS:GO community to be running their own gambling website called CSGOLotto, and often created videos of them winning big bets while using their own websites. Until they were exposed, no indication on their youtube page or in their videos disclosed that they owned and were paid by CSGOLotto. Together, they had a Youtube subscriber count of over 10 million. Essentially, they could have faked results to make promotional videos and purposely tricked their audience into using the CSGOLotto website.[19]

PhantomL0rd, a twitch streamer and youtube content creator, was also exposed. He was found to be rigging CS:GO rolls on a website called CSGO Shuffle. YouTuber Richard Lewis was the first to uncover the scandal, and had Skype records that strongly suggested PhantomL0rd had ownership of CSGO Shuffle, and altered his website’s code to give himself favourable odds while live streaming on Twitch.[20]


Valve was hit with a class-action lawsuits on June 23rd, 2016. The lawsuits alleged that Valve knowingly allowed, supported, and/or sponsored illegal gambling allowing millions of Americans to link their individual Steam accounts to third-party websites such as CSGO Lounge, CSGO diamonds, and OPskins. The lawsuit further claims that Valve helped create an international gambling scene that targeted teenagers, which was ripe for scams and frauds.

On October 4th, 2016, U.S. District Judge John C Coughenour dismissed the class action lawsuit filed against Valve.[21]

Cease and Desist Letters

On July 19th, 2016, Valve sent cease and desist letters to 23 major gambling websites, ordering them to stop using Steam’s API system to facilitate gambling. The letter gave the websites 10 days to comply with Valve’s orders.[22]

On October 5th, 2016, the Washington State Gambling Association sent a letter to the Valve Corporation, ordering the firm to stop the facilitation of gambling. The Washington State Gambling Association argued that “skins” were used by third-party websites using Steam’s API to conduct illegal activities.[23]

Emergence of New Gambling Websites

As of December 4th, 2016, e-Sports gambling continues to exist. In addition to hundreds of new websites emerging after Valve's initial cease and desist, several of the original 23 websites that were ordered to shut down are still up and running. These include, CSGOLounge, CSGOCrash, and CSGOPot.

How Players CS:GO Skin Gamble

  • Step 1: Acquiring Items - In CS:GO, players acquire items by trading other steam users, buying items on the Steam Marketplace, or by opening crates. Crates are randomly dropped items in the game which can be opened with a key. Keys can be purchased from the Steam Store for approximately $3.25 CAD.
  • Step 2: Finding a Gambling Website - Typically, players can find websites easily with a simple google search. Many websites sponsor and are endorsed by CS:GO celebrities., CSGORoll, and are among some of the more popular websites. When logging into the gambling website, the website will ask the player for their steam username and password. This is done so that the website may access the steam API to get a hold of the player's items.
  • Step 3: Cashing Out - When you are ready to stop gambling, you can simply cash out. Players will receive a their items back plus or minus whatever percentage they lost or won. For example, on CSGORoll, a player can "cash in" an item that has a perceived worth of 5 dollars, and will receive five dollars worth of coins to gamble with. If at the time of cashing out the player has made a 5 coin profit or, 10 dollars worth of coins, the player will receive an item with a perceived worth of 10 dollars.
  • Step 4: Converting Items to Paypal or Bitcoins - The last step is how players make real money. Websites such as enable players to exchange their items for money through paypal or are given the choice to be sent bitcoins.

Valve Tournaments

Valve hosts some of the biggest e-Sports tournaments and leagues. For Valve's titles Counter-Strike: Global Offensive and Dota 2, there are several million-dollar-prize-pool tournaments called "majors". In 2016, Valve hosted 2 majors for CS:GO and 4 for Dota 2. Additionally, Valve hosts "The International" which is the premier Dota 2 tournament and largest tournament in the world in terms of prize pool.

To increase e-Sports popularity, Valve gives out free licences to third-parties to host their own tournaments. There are very few restrictions to running a tournament. Additionally, registering a tournament is instantaneous, given that a form is filled and the requirements are met.[24]

The International

Wing Gaming Winning the International 2016. Extracted from

The international is a yearly Dota 2 tournament that is hosted by Valve. Since it's inception in 2011, The International has become the largest e-Sports tournament in the world in terms of prize pool. In 2016, the total prize pool was $20,770,460, shattering it’s previous world record of $18,429,613. The winning team, Wings Gaming, won $9,139,002 USD, while the second place, third place, and fourth place teams took home $3,427,126, $2,180,898 and $1,453,932 respectively.[25]

The tournament is largely crowd funded, as players who play Dota 2 can buy a “compendium package” within the game. Dota 2 players are incentivized to buy the Compendium because purchasing one gives the player in game items. Additionally, players with the compendium package could “level up” their compendium by playing the Dota 2 game. Reaching certain levels would award the player with items. The compendium has a cost of 10 dollars, and 25 percent of the proceeds go towards the prize pool.[26]

Moreover, the Compendium has “stretch goals” which are prizes that are received when certain dollar targets are met. For instance, the 2,500,000 stretch goal for the compendium 2016 was an “all star vote”. Each player who purchased a Compendium package could vote for who would play in the all-star match at the International 2016, given that the 2,500,000 stretch goal was met.[27] In 2016, Valve made over 76 million dollars in revenue from the sale of compendium packages over a 4 month period.

The E-Sports Opportunity


E-sports athletes have a wide variety of revenue streams; these can be broken down into team-generated revenue and personal generated revenue. Players sign contracts with professional gaming organizations negotiating things such as salaries, living expenses or conditions, prize pool distribution, promotional obligations, and even potential ownership of said organization. They are also free to pursue personal revenue streams typically within video game entertainment such as live streaming or YouTube, but some professional gamers have started small merchandise brands or even online schools to coach others within their game.


A player is typically paid a base salary when joining a gaming organization Depending on the size of the organization, popularity of the game, and skill of the athlete this can range from a couple hundred dollars per month to thousands. Similar to traditional sports, more established and financially stable organizations have the cash on hand to go after free agents and sign them to lucrative contracts. As the E-sports scene grows, the players are seeing higher contract offers. This growth has granted many players the financial freedom to quit their regular jobs and pursue E-sports full time. This was not always the case, just a few years ago many athletes played part time as more of a passion project or hobby. Players and organizations do not discuss the terms of their contracts publically, though some have hinted at industry standards to provide the general public a good idea of what a professional video gaming contract is worth.

Riot gaming controls all aspects of their professional League of Legends scene publishing a detailed rulebook for players and organizations to comply. This is one of the only examples we have of a developer treating their games like a traditional sport by hosting seasons with consistent rules and regulations. One of the most interesting rules is rule 2.2, Player Compensation, which states that each player must be paid a minimum of $12,500/€11,250 per season (each season is 4 months long) [28]. Professional league of Legends is one of the most popular E-sport in the world and may be the true industry leader in transitioning E-sports into the traditional sport model of seasons and standardized games based contracts. Although Riot has set a minimum compensation, they also say that this rule not meant to limit compensation, implying that this is more of a protective rule than a standard. Although impossible to prove, there are reports from industry insiders that the world’s best League of Legends player, Lee ‘Faker’ Sang-hyeok, signed a contract for roughly $2.5 million in 2016, although the organization refuse to confirm the value of the contract [29].

The struggle between organizations and players over compensation has resulted in many players joining the business side of E-sports by starting their own gaming organizations to self-represent. One of the most recent examples of this is the Dutch gaming organization Astralis[1] which left the third largest gaming organization in the world over compensation issues. The players became majority owners in their new venture and hired staff to run their business while they focused on gaming. When Astralis first formed, they publically announced each player would earn $9,000[2] per month in base salary as well as tournament winnings and income from new sponsorship deals.

Gaming Houses

One of the most common forms of compensation athletes receive is a place to live and food to eat. Gaming houses have become increasingly popular as competition and prize pools continue to grow [30]. Teams are highly motivated to win and are willing to move all of their athletes into one house to allow for a better training environment. Depending on the size of the house, coaches and analysts may also live in the house, allowing around the clock training. For many players, this is the first time they are living on their own, may organizations hire out cooking and cleaning to allow players to just focus on their game. With the amount of travel involved in attending weekly global tournaments, a shared living space allows the teams to coordinate travel and accommodation for their players.

Tournament Prize Pools

On top of their salaries, players are competing for tournament prize pools which most organizations let the players keep in full as a performance bonus. The game developer and or tournament hosts typically supply prize pools, but there are also community-funded tournaments. The International has broken the record for the largest community funded prize pool in consecutive years with over $20 million up for grabs in 2016; just over $9 million for first place. Teams typically split the prizes evenly amongst players meaning this year each player won just over $1.8 million for first place at The International [31].


Some of the most popular streamers on Twitch are current or former professional gamers. Streaming may be a part of a professional gamers contract obligations, but for the most part athletes stream as a secondary source of income. While streaming, they can interact with fans on a more personal level getting to chat and interact with their fans within the digital medium. Streamers primarily makes their living off of the generosity of their viewers, fans send donations to their favourite professional players in the thousands of dollars each month as a form of appreciation. Streaming has become so lucrative that many pros retire from competitive gaming and become fulltime streamers. A former League of Legends player Michael ‘IMAQTPIE’ Santana is one of Twitch’s top earners, bringing in $2 million in donations, subscriptions, and advertisement revenue this year [32]. Many professional gamers do not have the free time to steam as frequently as IMAQTPIE, but when they do stream they receive similar levels of compensation.


Gaming organizations have seen incredible amounts of growth over the past few years. The organizations assemble and manage players throughout multiple video games, extending their reach as far as possible. Many organizations have developed loyal fan bases that will cheer for the organization regardless of the game; diversification of games is key for organizations as games rise and fall in popularity. The top gaming organizations are rivalling smaller market traditional sports in terms of value. Much like traditional sports, the organizations (teams) make a majority of their revenue through advertisement. Traditional sports teams sell advertising in their arenas, on their jerseys, and commercial breaks during broadcasts; E-sports may not have the physical space to sell advertisements, but organizations do sell space on their jerseys, social media pages, and on their broadcasts just like traditional sports. Advertising and sponsorship are responsible for the majority of earnings for organizations; teams rely on them for roughly 70% of their revenue [33]. The remaining 30% of the revenue is from selling merchandise and tournament prize pools.

In the early years of e-sports, teams were heavily reliant on game developers to provide prize pools so that they could afford to pay their players. Today organizations make enough from sponsorship that they leave the prize pools as a motivator/performance bonus for players. The top 5 gaming organizations in the world are worth $24 million to $42 million [34], and four of the top 5 are North American organizations even though e-sports are most popular in Asia in countries such as South Korea and China. These organizations are nowhere near the value of National Hockey League or National Football League teams where organizations are with billions, but they are closing in on Major League Soccer and have passed the Canadian Football League in terms of value.

E-sports organizations have grown along side their fan base and generally do a better job at reaching out and connecting with fans. Social media has played a significant role in the growth of e-sports as it has provided a free medium for player, teams, fans, and sponsors to meet. Organizations must utilize social media to reach their fans, which are made up of mostly millennials, because that is where a majority of them consume their online content. Teams can sell space on their various social medial pages through sponsored tweets and giveaways. These social media contests allow teams to give back to their fans while promoting a business partner at little to no cost to the organization.


Geico and TSM

As e-sports continues to grow in popularity, advertisers and brands are becoming more confortable spending money within the gaming eco-system. Major brands are following their target demographics’ attention away from traditional media sources such as television and print new. Millennials can be reached on a wide variety of websites dedicated to their niche hobbies or watching streaming services such as Twitch, YouTube and Netflix. By providing a direct rout to millennials, e-sports has captured the attention of major non-gaming brands such as Red Bull, Betway, Monster, and Geico. The majority of sponsors are made up of in industry brands providing gamers with the gear they need to compete such as: computers and components, keyboards, mice, headsets, desk chairs, and even cell phones.

The main reason brands are entering into such lucrative deals with e-sports organizations is the shift away from traditional media by the millennial generation. Advertisers have had a notoriously difficult time reaching them and have finally found a source to reach a large portion of this demographic. Millenials make up roughly 80% of gaming enthusiast and are increasing their total hours of viewership each year at a rate of just over 10% [1]. Sponsors can pay for a wide variety of service from organizations ranging from traditional commercials during their broadcasts to promoted meet and greets where fans and athletes at an event hosted by a sponsor. Geico’s sponsorship with TSM has shown that major brands are willing to enter this foreign market a play along with the existing norms; TSM and Geico produce joint content hosted on TSM’s YouTube channel as well as promotional meet and greets. Geico has stated that their main goal for the partnership was to go out and interact with fans and introduce them to the brand. They understand that e-sports marketing is much more organic than traditional marketing and must provide a personal connection so that fans do not feel like the relationship is fake or forced.

Third Party Tournament Hosts

Players originally hosted tournaments as a means to test their skills and prove that they were the best in their respective games. They then developed into a form of advertisement for developers to promote their games by showcasing high-level game play. Today, tournaments are still being head by game developers, but there is a new group of hosts that have recognised the profitability in broadcasting high-level videogame play. These 3rd party tournament hosts are not affiliated with a specific video game, but host tournaments usually focused around multiple video games played throughout the course of a weekend. These hosts sell the broadcasting rights to television studios or stream them online themselves on websites such as Twitch.

The organizations that host these tournaments operate similar to the Olympic organizing committee; they plan the event, invite/qualify athletes, sell tickets to fans, and then generate money through sponsorship and broadcasting rights. These events usually take place in sporting venues depending on the size, where fans can sit and watch the athletes compete on stage with gameplay footage being shown on the jumbotron. Broadcasts of these tournaments can reach millions of viewers and generate billions of hours of viewed content. At Electronic Sports League Cologne 2015, 31.6 million hours of content were viewed by 24.7 million unique viewers [2]. ESL sold the broadcast rights to the event to television stations throughout Europe and streamed the games live on Twitch. These tournaments typically have a panel of analysts and host; e-sports broadcasts maintain the look and feel of a traditional sports broadcast.

Barriers and Challenges

With any new and emerging industry, there comes obstacles and challenges. E-Sports is no different. Specifically, e-Sports faces obstacles in relation to the acceptance of the public, performance enhancing drugs, gender diversity, and ethical issues. With these challenges being significant, they impair e-Sports from seizing its true potential and its impact in becoming a world phenomenon.

Controversy: Traditional Sports vs E-Sports

Distinction of Sports

As eSports continues to grow and establishes itself as a professional sports worldwide, many people question its validity and the athletes involved within its industry. This is associated to the traditional belief that the word "sports" involves physical activity, in which e-Sports lacks significantly of in comparison to Football or Basketball.

In April 2015, the controversy was illustrated when ESPN 2 aired the "Heroes of the Dorm" eSports tournament. The tournament consisted of North American colleges and universities to compete for a full scholarship.[3] Many sports fans were upset over this airing and mocked the network channel for the choice of episode. Some questioned if it was a last minute resort, insisting that video games would never be the first option for a TV broadcast. The disagreement came from a wide audience, including sports enthusiasts, casual sports fans, and sport broadcasters and editors including Tyler Batiste.[4]

The controversy between traditional sports and e-Sports is based on an outdated definition of the word "sport". When people first think of sports, they associate images of physical exertion, such as running, kicking, etc. Often we forget to include a subset of non-physical games that are considered as sports, i.e. mind games such as Chess.[5] It is a prime example of how the definition of sports has evolved beyond more than the physical aspect, where its major emphasis is on the nature of competition. Similar to Chess, eSports requires quick reaction time, strategy, and goes even further by adding team communication; all in the name of defeating your opponent.

If we can agree that sports has evolved into something that uniquely involves competition, eSports and many other games have a much more receptive audience.

Timeline of American Football VS League of Legends

Historical Progress Comparisons

Using the history of American Football as a progress comparison to eSports, it is noticeably different.

As illustrated from the picture on the right, it took the American Football 50 years to establish the National Football League. League of Legends has only been around since 2009, but it is already growing twelve times faster than the American Football did.[6] Although easier access to information may be one of these underlying factors, it is still a significant aspect to consider when we compare traditional and electronic sports. Since the unreceptive views are due to a misunderstanding of electronic sports, this historical comparison can provide a more positive outlook for the industry.

The question of difference still remains and the answer lies within the structure of team brands. As mentioned above, many eSports organizations (i.e. Fnatic) have different subset of teams. For example, while they have a CS:GO team, they also have an Overwatch and Dota 2 team. In relation to traditional sports team, it would not be the same case for the Philadelphia Eagles to have their own basketball team.

Performance Enhancing Drugs

Similar to traditional athletes, eSport athletes also face issues with performance enhancing drugs which are used to gain a competitive edge. The need can arise from the overwhelming pressure to win a game from the team, fans, and monetary rewards. The drugs include, but are not limited to:[7]

  • Adderall: increases stamina and energy with greater ability
  • Ritalin: improves concentration
  • Propranolol: blocks adrenaline effects and keep calm under pressure

However, with misuse of any drug, there comes some serious side effects. Adderall, for example, can increase heart rate and blood pressure dramatically, as well as cause anxiety and other negative mental states. ESport Tournament hosts are strongly against using performance enhancing drugs as they do not want to suggest to other players that it is the only method of becoming good at a game. Ultimately, drugs can ruin a sport without being fully developed.

In terms of the measurements and actions taken to reduce this issue within tournaments, eSports League announced in 2015 that drug testing would be implemented randomly during tournaments to ensure that players are not violating these rules. The announcement was made shortly after a CS:GO athlete, Cory "Semphis" Friesen, admitted in an interview that he is regularly uses Adderall, along with his teammates, during tournament games.[8]

Since then, the ESL organization has coordinated with World Anti-Doping Agency (WADA) and National Anti-Doping Agency (NADA) to adopt a list of prohibited substances including marijuana, adderall, cocaine, and more. As a result of this, punishments for violation will vary from reduced prize money and tournament points to disqualification and maximum two-year ban from ESL events.[9]

Lack of Diversity

Documentary: a Female eSports Champion Speaks About Harassment

One of the biggest drawbacks from the growth of eSports as an industry is its lack of diversity in gender. It is not surprising that most of the viewers of e-Sports tournaments are male, but the problem lies within accepting and creating a welcoming atmosphere for women in the community.

In an early 2016 documentary, female eSports athlete and streamer, Hafu Chan, speaks about the treatments she receives from the gaming community and how it has affected her personally and professionally. During the video, she mentions that "it is hard to be part of something that I don't feel welcomed in", which is essentially the general opinion of female gamers.[1] Professionally, she has received various hate and misogynist comments for being a girl gamer, which can be very discouraging and often lead to depressive mental states.

Due to these behaviors, many female gamers stay hidden within the gaming community. CounterStrike veteran, Heather "sapphiRe" Mumm, claimed in an interview that she does not use voice chat unless she is playing with friends since "as soon as they see [she's] a girl, they have something to say."[2]

It is important to understand that male eSports athletes and gamers face harassment as well, but the distinguishing factor is that female competitive gamers receive them based solely on their gender rather than their gameplay.

Women being discouraged and unwelcome at such an early stage reflects poorly on the female viewer percentage of eSport tournaments and the lack of participation from them. E-Sports needs to address this issue in a way that it becomes more inclusive for women. Without doing so, its growth will be limited due to its gender dependency for male viewers.

Ethics: Match Fixing

Match fixing occurs when a player purposely loses a game for their own individual gains, specifically gambling related. It is a serious issue within the eSports community and industry as more publishers are becoming more intolerant with this behaviour.

In a 2014 CS:GO match scandal, iBUYPOWER and were accused of their match being fixed. The game, which was part of CEVO professional season 5, raised questions and speculations when iBUYPOWER did not play in their usual style and did not seem to take the match seriously.[3] The major issue in this instance was the conflict of interests by a particular athelete, Casey Foster. The player was a member of the iBUYPOWER team while also a co-founder of which initiated the interest to match fix. It is important to note that iBUYPOWER was known as the dominant and higher skilled team in comparison to, which did not help in defending the team when being accused.

There were no evidence to support the match fixing claims as neither parties would step up to confirm the accusations. However, on January 2015, former girlfriend of one of iBUYPOWER's athlete, Derek “dboorn” Boorn, posted evidence in the form of text messages that revealed that the outcome of the match was prearranged. The text messages also indicated that Boorn was instructed to bet for on an alternate account.[4]

Later that month, Valve announced a zero-tolerance for match fixing and banned the seven players on iBUYPOWER team for their involvement. The duration of the ban is a lifetime where these seven players are prohibited in competing in any Valve sponsored tournaments. The players banned were:[5]

  • Duc “cud” Pham
  • Derek “dboorn” Boorn
  • Casey Foster
  • Sam “Dazed” Marine
  • Braxton “swag” Pierce
  • Keven “AZK” Larivière
  • Joshua “Steel” Nissan

The punishment affected the whole CS:GO community as these players were considered to be at the top tier of the industry.

Valve also reminded the ethical obligation of professional players, their managers, and teams’ organization staff who "should under no circumstances gamble on CS:GO matches, associate with high volume CS:GO gamblers, or deliver information to others that might influence their CS:GO bets."[6]

Valve: Business Model Flaw

While Valve is proving its success in the eSports industry, the company's business model contains a major flaw that has set them back from the competition. To recall, Valve is a flat organization where its employees do not have a set manager that they must report to. Instead, they have the free will to start and end a project, as well as choose which project to take on. While Gabe Newall is the head CEO, he does not limit them from pursuing what they want within the company.

Although this business model sounds socially responsible and dynamic, it is not realistic. Specifically, the major drawback from this is the loss in accountability and projects will be left to be forgotten and diminish. A prime example is their game, Team Fortress 2 (TF2), which was very popular in the late 2000's and early 2010's. TF2 is a first-person shooter game with team based objectives. Players must choose from a list of characters that each have different unique abilities to achieve the team's goal. It requires intensive team communication and real-time strategy which kept gamers in love with the game for quite some time. However, one component that the game lacked and was requested by various players was the implementation of a competitive mode. Despite the major demand, Valve did not fulfill the request due to its employees abandoning the game to work on future and other existing games.

On May 2016, Blizzard (another gaming publisher) released Overwatch; a team-based first-person shooter that entailed many characteristics of Valve's TF2. The game consisted of over 20 characters, different animations and customizations for each characters, and better graphic quality. In short, Blizzard took Valve's hit game into something better and more modern. But the distinguishing factor for Overwatch was the fact that Blizzard incorporated a competitive mode where players would compete for ranks and title in the game, which TF2 desperately needed but failed to have.

Ironically, Valve's employee returned to TF2 to revise and add the competitive mode but only after the release of Blizzard's Overwatch. At this point, it did not make a significant difference as most people had already converted to Overwatch due to the modern feel and look of the game. Moving forward, Valve should revise their business model in a way that ensures that projects are continuously monitored in order to avoid losing more consumers to competition.

As of December 2016, Overwatch is now one of the most played games and a qualified eSport game for tournaments. Furthermore, at TwitchCon 2016, Overwatch was crowned as the most popular game of the year by Twitch which speaks volumes of its success.[7]

The Future of E-Sports

The future of eSports remains very bright as it gains more traction and begins be to recognized by the international community as well as reach a larger audience and viewership. In terms of future business opportunities and economic activity: new revenue streams will be created as advertisers, developers and other stakeholders continue to evolve their position, reassess current trends and capitalize on new opportunities. As consumer tastes change, so will the games and playing field. New technology will be utilized such as virtual reality and there will be an expansion to others platforms such as mobile, which will create a new generation of fans.[8]

Olympic Games

eTeams for Rio De Janerio 2016 Olympic games

The International eSports Federation has corresponded with the International Olympic Committee to include eSports in the 2020 Tokyo Summer Olympics and has taken first steps to get eSports recognized as a legitimate Olympic sport and be accepted into the union for international sports federations.[9] In 1995, the IOC formally recognized Bridge as a sport and a few years later Chess was recognized as well under the category of "mind games".[10] Furthermore, there is some precedent for sports that don't fit the traditional definition of sports making it onto the Olympic stage. If eSports are successful in this effort, it will no doubt open the sport up to millions of previously uninformed viewers as well create a great deal of new economic opportunity and interest.


In an effort to legitimize this bid for the Olympics, the International eGames Committee was created in the UK to setup a pinnacle global competition based around inspiring national pride and not about winning prize money. During the Rio De Janerio 2016 Olympic games, a two-day showcase event was held at the British House in Parque Lage. The main aims of this event was to promote competitive video gaming to the non-gamer population and to positively shape the future of eSports.[11]

International Expansion

eSports are becoming more popular worldwide as the general population becomes more informed through either tournaments, events or online media about competitive gaming. The physical location of the arenas in which major eSporting events are held have largely been located in South Korea, China, and mainland United States. This has been changing as illustrated by the creation of the Mexican eSports League in Mexico, European Gaming League (competition in Europe and the UK), and the trend of hosting tournaments internationally. This is especially important because many advertisers, partners and other companys use live audiences as a benchmark to compute the growth of the market. As a show of international expansion, the first tournament (North American region of the League of Legends Championship Series)in Canada took place at the Air Canada Centre this August in Toronto. The atmosphere was compared to that of a Toronto Raptors playoff game which exemplifies the utmost fanaticism fans have all around the world, even in countries where physical events have never been held at before.[12]

Another reason for increased international interest and the spread of popularity has been live broadcasting, which has helped cross international borders with relative ease. Twitch, a live-streaming platform is at the forefront of eSports broadcasting with over 9.7 million daily active users, over 2 million unique streamers per month and an average of 106 minutes of content watched per person per day.[13] Traditional media has also started to cover eSports, ESPN, a cable network broadcasted in many countries, broadcasted the finals of Blizzard’s Heroes of the Dorm tournament which was viewed by 100, 000 people.[14]

Financial Outlook

Deloitte Report

In an annual "Technology, Media & Telecommunications Predictions" report for 2016 by the multinational consulting firm Deloitte, eSports received a favorable and optimistic outlook for the future. eSports are expected to generate global revenues of $500 million in 2016 compared to $400 million in 2015, this is a 25 percent growth rate which is much higher than that of traditional sports even though overall revenues are just a fraction of theirs. In terms of audience size, it can also be stated in some ways that eSports are already larger than some traditional sports such as basketball, since an individual event may attract up to 40,000 live viewers and millions of web viewers. eSports are even expected to overtake football in terms of viewers by 2020. The full report can be accessed at: Deloitte Report

Major League Sports in $ Billions

Advertising Goldmine

There is a huge opportunity for investors and advertisers in the eSports market because eSports events and tournaments are attracting an exceptionally large audience base (even comparable to that of traditional sports). Because of this, the average revenue per fan is expected to continually rise and ultimately increase the economic activity and revenues generated in the coming years. Newzoo a global market intelligence firm specializing in eSports with cliens such as Disney, Red Bull, and Cinaplex, has released a projection outlining this scenario in the 2016 global eSports market report:[15]

Esports Revenue per Enthusiasts

eSport Enthusiast Profile

eSports is also being referred to as an advertising goldmine because of the lucrative habits of eSports viewers: they are more likely to make in-game purchases, buy more apparel and buy more branded peripherals than other gamers. The demographics of those who watch eSports are also narrow and appealing because 75 percent are millennials aged 18‑34, and 82 percent are men.[16] Furthermore, because of the huge growth potential of this valuable audience, it has become a relevant market segment for many different types of business and companies.[17] This is further illustrated by the fact that there has been a rush of firms trying to capitalize on this opportunity, such as Coca-Cola recently becoming a leading sponsor of Riot Games' League of Legends tournaments in the US, and Cinaplex investing $15 million in eSports to bring competitions to its theaters and movies.[18]

Rise of Crowdfunding

Matcherino Funded Event

There has been considerable interest in the eSports community about the value and utilization of crowdfunding to help fund tournaments and other competitive gaming events. One of the leading and breakthrough platforms in this category is Matcherino. A simple to use website, it has become a popular resource for both fans and competitors looking to set up a tournament. Users simply log-in with their Twitch account, crowdfund (donate to the prize pool) of a specific eSport event or streamer (or create their own) and simply deposit and cash out with paypal.[19] Crowdfunding is helping generate new revenue streams for both pro and amateur gamers in an otherwise extremely competitive industry.

Because of the success of crowdfunding and the sudden rise platforms like Matcherino, Riot Games also has its own plans to incorporate this type of funding in the future for their prize pools. The current plans are to crowdfund parts of League of Legends world championships and other partnership deals. To ensure teams have a consistent and guaranteed prize pool, Riot Games has promised their will be a guaranteed minimum payment to each team.[20]

Diversification of eSports Games

Most eSports tournaments have been largely dominated by specific genres and games with massive followings, allowing little room for titles with smaller fan bases to be played as an eSport event. Crowdfunding is allowing fans to spectate and enjoy games in a competitive gaming event that otherwise would not have gotten the opportunity to before, either because of the lack of funding from major tournament holders, advertisers or the interest from the audience at large. An example of this occurring can be illustrated on the Matcherino funded tournaments page where events for games such as "Pokemon Go", "Super Smash Bros.", "Paragon" and many other smaller titles.

Expansion to Mobile

There has been a long impending expansion to mobile that has been beginning to take place in 2016 and will do so at an increasing pace in the coming years. Mobile eSports have been termed the new "blue ocean" because of the sheer size of gamers (2.1 billion people play mobile games) that are in the market that have yet to experience structured and organized competition.[21] Mobile games offer built-in simplicity, such as eliminating the need for external controllers and require little setup compared to their PC counterparts, therefore it has the ability to revolutionize gaming as well as the eSports industry.[22]

One example of the recent success of a mobile eSports game has been Vainglory Developed by Super Evil Megacorp, the first mobile multiplayer online battle arena game. Its popularity and widespread adoption led to a tournament being set up by Korean league OGN and was watched by 1 million fans with $80, 000 in prizes that were won. According to Kristian Segerstrale, COO and executive director of Super Evil Megacorp, one of the games biggest selling points has been the fact that “There are 700 million gaming-capable PCs out of a global install base of 1.5 billion PCs. In contrast, by the end of 2016, there will be over 3 billion touch screen devices that can run Vainglory.”[21]

One of the biggest limitations in adoption that has been facing mobile games is the perception that they are only used to kill time and/or are less serious than games on other consoles/PCs.[23] However, there have been games developed and launched that are changing this perception, they exemplify that mobile games can also have more content as well contain the technology to support eSports competitions. Some of the newest titles gaining popularity are: Hearthstone, World of Tanks Blitz, Fates Forever, Modern Combat 5, The Ember Conflict and Super Smash Bros. for Nintendo 3DS.[24]

Virtual Reality

Virtual Reality is being seen as the next frontier for eSports as technology evolves and VR headsets become more mainstream and commercially successful. Virtual Reality in eSports is estimated to become anywhere from a $30 billion to $150 billion market by 2020 and has started to attract attention from investors, developers and the eSports fans.[25] In terms of business, this will also create new opportunities for generating revenue and advertising such as product placement or branded signage. Other monetization models such as selling analytics or sponsored content may also play a big role in how marketing campagins are rolled on this type of technology.

Valve: HTC Vive


Valve has taken the initiative to penetrate the VR market by creating its own virtual reality experience, and has done so by creating a top of the line product with impressive features that set it apart from its competitors. HTC Vive is a virtual reality headset, coupled with input handsets, a tracking camera and laser basestations which create a 360 degree room experience. It runs on the software platform SteamVR which is also used to download and play games. [1][2] From April 2016 to October 20016, 140, 000 HTC Vive headsets have been sold which is impressive considering it's high price point at $700 USD. [3]

Project Arena VR eSport

For Gamers

With the introduction of VR technology to eSports, there will no doubt be the creation of new types of games as well as the blending of traditional sports and video games, creating a genre called eSport Sports; with project arena being an example of this. Virtual reality will also help to create more fans of competitive gaming as well as gaming in general as it is more comparable to traditional sports since it requires more hand eye coordination, focus and stamina. Numerous VR games have already been created and there are hundreds already in development, with a high probability of some becoming major eSports titles in the future.[1]

DOTA 2: Spectating in VR

For Spectators

Viewing games and eSports events using a VR headset will create a more immersive experience for fans and spectators, which will also open up eSports to more casual gamers and the general population that finds the traditional way of viewing games to be uninteresting and boring. DOTA 2 is one example that has added VR spectating capabilities built into the game. One platform for viewing games in VR is, which can be used to record, view, and stream eSports games in fully immersive, 360° cinematic VR video. It has raised over $6.2 million in seed funding from investors and is attracting attention from numerous stakeholders in the eSports community. [1] VR headsets have also become a more economically feasible purchase for the general population, some cheaper models such as Google Cardboard, Homido, and Gear VR can be bought for under $100. The powerful high-end models with more features and capability such as Playstation VR, Oculus Rift and HTC VIVE come in the $400-$800 price range.[2]


  1. Cite error: Invalid <ref> tag; no text was provided for refs named VR
  2. Robertson, A. (2016). The ultimate VR headset buyer’s guide. Retrieved December 03, 2016, from
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