The esports ecosystem is often described as ‘the wild west’, due to its perceived lack of regulation and structure. Consequently esports is viewed as an easy access market; attracting both serious and curious investors alike.
Notwithstanding this apparent flexibility, there is real appetite for entrepreneurial engagement within the market. The esports market has experienced unprecedented global growth in recent years with Forbes announcing that nine global esports organisations are valued at more than $100 million with Cloud9 taking top spot with a valuation of $310 million.
One of the key contributors to this mass growth is the inherent lack of barriers to enter the market and the diverse spectrum of flexibility afforded once active within the market. As a result many successful organisations are now turning their hand to esports and reaping significant revenues as a result. This in turn has led to greater potential to secure further investment and attract mainstream sponsors; for example, Riot Games' recent sponsorship deal with MasterCard. Similarly Nike has signed its first ever endorsement deal with an esports athlete; League of Legends player Jian ‘Uzi’ Zihao. The partnership will see Uzi, star alongside NBA legend LeBron James.
It is foreseeable that the esports ecosystem will continue to reap the rewards of such high profile collaborations going forwards; for where there is money there is profile. However, it inherently common, that where there is money and profile there will be regulatory scrutiny. Given esports' current governance structure this scrutiny isn’t wholly un-welcomed. The call for further regulation is a sign of the industry evolving, which can only be interpreted as a position for esport as a whole.
The key is to ensure that regulation is introduced incrementally in order to enable the industry, community and culture to evolve and adjust to the changes. The implementation of a new regulatory framework requires significant investment both in terms of time and money in order to ensure that the necessary infrastructure in place to effectively facilitate the changes.
A regulation overhaul undeniably represents a positive change to the esports industry as it provides greater rights and protections to the players, investors, commercial partners and authorities; as with any form of sport or entertainment the industry is only as successful as the people within it. Therefore, further regulations supporting player welfare, gambling and match-fixing can only be a good thing. If top athletes are comprehensively supported in order to ensure they are always in peak physical condition to perform to the best of their ability the industry will thrive as a result. Blizzard’s Overwatch league is a great example of a league which has successfully implemented stricter regulations with player well-being as their focal point.
Unsurprisingly legal and tax frameworks are already in place within the esports industry as with all other industries, compliance is mandatory. However, a uniformed method of application is required as under the current system application varies from stakeholder to stakeholder this ambiguity is further accentuated by the cross-border nature of the industry. As a result increased governmental interest to realign esports' international standard of regulatory compliance is greatly welcomed within the industry.
Esports' expanding global profile is hoped to increase demand for a regulation overhaul which in turn should ensure the industry's longevity. Continued investment and long-term strategic partnerships are key components for sustainability and increased regulation will assist in securing this as regulatory reform provides investors with assurances and perceived risk reduction.