The Global Rise of eSports and Japan’s Increasing Prominence

Japan esports Union (JeSU)
Hirokazu HAMAMURA

1. The global rise of eSports
The rising world of eSports is advancing beyond all
imagination viewed from Japan. The competitive level of players
from Japan is not low by global standards and it has not been
unusual to see Japanese player in the highest ranks in tournaments
hosted by international eSports organizations. However, wecannot yet say that the economic environment supporting players
and games in Japan has taken shape.
The global eSports market in 2019 was estimated by Newzoo
to be on a scale of 958 million dollars, but was expected to growby a factor of 11.7 in the following 5 years, to reach 1.62 billion
dollars in 2024. As an intermediate figure, it was estimated at
1.084 billion dollars in 2021. To understand the market better, weneed to break down this number further. The largest fraction of
the market is sponsorships. At 641 million dollars, this represents
59% of the whole market. The next largest part of the market ismedia rights, accounting for 293 million dollars, or 18%. Sales ofrelated goods and tickets were 66 million dollars, less than 3% of
the total. In the major physical sports, 20 to 25% is understoodto depend on sponsorship. The fact that the part dependent on
sponsorships is greater than the business part indicates that the
global eSports market is still developing. eSports can also provide
content for broadcast. The number of viewers has also become an
important KPI. This trend can be followed using the same datafrom Newzoo. The global total number of eSports viewers was
397 million in 2019. However, five years later in 2024, this figure
was estimated to grow by a factor of about 1.45, to 577 million.
Thus, the global eSports market is expected to grow greatly into
the future, in both sales and number of customers.
Overseas, eSports is recognized by nations, governments
and academic institutions, and is protected in many cases. An
example of this is in North America, where the U.S. Citizenshipand Immigration Bureau has recognized League of Legends,
an archetypical eSports title, as a professional sport. It will now
issue athlete visas to players entering from other countries. RobertMorris University in Pennsylvania provides support such as 50%
fee exemptions for students recognized as eSports athletes. The
University of California, Irvine Campus, has also offered eSports
scholarships to eSports players since 2016. The university has also
invested approximately 25 million yen to build a dedicated eSports
arena facility. In another case, the Philadelphia team in the Over
Watch league announced it had invested 50 million dollars tobuild the Fusion Arena, an eSports arena with a capacity of 3,500
people. GameStop, the most widely recognized game retailer in
America, has also announced that they have acquired namingrights for an eSports facility that opened in May, 2019.
eSports is also popular in Europe. Three high schools in
Sweden have incorporated eSports into their physical education
classes for three hours per week. Public high schools in Norway
are also using eSports as electives in physical education. York
University in the U.K. has joined with the Electronic Sports
League (ESL) to conduct research related to the eSports industry.
York University is also giving credits toward degrees to students
taking courses in eSports. In 2016, the Ministry of Sport in
Russia announced that they would recognize eSports as sports.
In the U.K., FIFA opened an ePremium League for eSports
tournaments. In France, Team Vitality, which is known as aleading eSports team, raised 20 million Euros of capital. They
announced that it was allocated for developing advanced facilities
and to strengthen the team.
In South Korea, which is recognized as an eSports Mecca
and advanced even within Asia, awareness of eSports is highand initiatives are progressing. At Chung-Ang University in
Korea, eSports are used as part of the entrance exams for the
Department of Physical Education. The exams test both skills andachievements, and university entrance is determined based on botheSports skills and achievements in past tournaments. Support for
eSports by the government is also well developed in Korea. Since
1999, eSports organizations in Korea have received support from
the Ministry of Culture, Sports and Tourism. In 2010, a law wasenacted to encourage eSports. In 2016, the city of Seoul and theMinistry of Culture, Sports and Tourism jointly built the SeouleSports Stadium.
Enthusiasm for eSports is also high in China. The numberof eSports players in China is already thought to exceed 300
million, and the government is studying ways to cultivate players.
The government recognizes eSports player as an occupation, andcolleges training players are appearing in regions throughout China.
One KPI measuring the popularity of eSports is prize money.
In tournaments hosted by Epic Games using their product,
Fortnite, in 2018 and 2019, prizes totaling 100 million dollars
were offered. In July 2019, in the final of a tournament held in
New York, the winner was a 16-year-old, who received a prize of
three million dollars. Professional league play is also popular. In
the Overwatch League, with franchise teams based in major cities
in America, China, the U.K., and Korea, teams compete in global
championships, with support from their local areas. Broadcast
rights for these events together with other IP competitions, as
released by the publisher, were priced at an astonishing 17 billion
yen for a two-year contract.

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2. eSports in Japan beginning to gain
prominence

Compared to Japan, the global eSports scene is astonishing,with large figures in administration, understanding and support
from academia, prize money, broadcast rights and other aspects.
In contrast, the eSports market in Japan in 2017, as reported by
the Ministry of Internal Affairs and Communications, was noteven 400 million yen. However, with the appearance of eSports
in an exhibition at the Pyeong Chang Olympics, and the Japan
eSports Union (the first of its kind) beginning to issue professional
licenses, the eSports scene in Japan is beginning to change. At the
Asia Tournament, held as an exhibition match in August 2018,
Japanese players and teams were selected in five matches, and sent
to East Asia qualifying matches. The “Winning Eleven” playersthat broke through these qualifying matches accomplished a great
achievement and received a gold medal. This great achievement
by Japanese players in their first international competition wasreported widely in various media. At the end of that same year,“eSports” was selected for a “New and Trending Word” prize.
Sales exceeding 4.8 billion yen had been recorded in this market,
growing by a factor of 14 over the previous year. As such, it reallyis appropriate to call 2018 the inaugural year of eSports in Japan.
Enterprise activity in eSports initiatives is also starting toincrease. Capcom, which holds the IP for another globally popular
eSports game called Street Fighter, began sponsoring a publicleague in the summer of 2019. It featured three-on-three teams
combining beginners, amateurs, and pros battling, and generated
much drama before the series ended. For the next series, expanded
team competition with franchises in regions throughout Japanwas soon announced. Just like with major sports such as baseballand soccer, it was expected that tournaments would attract strong
support from local fans in each region. An increasing number of
eSports events are also being held by organizations other than the
IP holders. Of note are some of the enterprise groups collaborating
to hold tournaments. Only a few years ago, it would have beennormal to see mainly the names of PC and peripheral device
manufacturers at an eSports tournament, but at EVO JAPAN in
January 2019, sponsors included companies having nothing to dowith eSports, such as NTT DOCOMO, Indeed, Nissin Foods,
Nissan, and Hisamitsu Pharmaceutical. The Dwango-sponsored
event, Tokaigi (“Battle Meet”), was co-sponsored by SevenEleven, Fujitsu, au, Big Globe and others, and the RAGE eSports
event held by eSports broadcaster, OPENREC, was co-sponsoredby enterprises including Nestle, Kao, PIZZA-LA and Sharp.
There have also been many tournaments for high-school
students. In March, 2019, a national high-school eSports
championship was held, sponsored by Mainichi Newspapers and
PC retailer, Third Wave. In August that year, TV Tokyo andDentsu held the STAGE: 0 high-school eSports tournament,
which concluded in great success. STAGE: 0 was supported bynames including Japan Coca Cola and Rohto Pharmaceutical.
In 2019, eSports were also used as a culture program in the
National Athletic Meet (called the “Kokutai”), held in Ibaraki.
The tournament was called the “Inter-prefecture eSports

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Championship.” This was a Kokutai for a new generation,
attended by the new Emperor and Empress. Use of eSports was
initiated in Ibaraki prefecture to appeal to the new generation ina resolution by Ibaraki governor, Kazuhiko OOIGAWA. The
same tournament was held in Kagoshima the following year andin Mie prefecture in October, 2021. The Kagoshima tournamentin 2020 was a great success, with over 85,000 people participating
in qualifying rounds.
Activity in regional eSports initiatives also jumped due to thisInter-prefecture eSports Championship. In 2017, there were only
about 14 regional eSports organizations bearing the name of aprefecture, but as of October, 2019, this figure had risen to over
60. Many prefectures also have multiple organizations. Support
for eSports by other regional administrations has also increased
sharply. In Ishikawa prefecture, the city of Kanazawa has included
promotion of eSports in its budget. In Fukuoka, the mayor worked
actively to invite EVO Japan, an eSports tournament focused onfighting games, to the city. In Tokushima prefecture, the governor
made an election promise to promote eSports and was re-elected
decisively. The Tokyo Metropolitan has also budgeted to holdeSports festivals for two years in a row. It is undeniable that
regional eSports activity has increased, which is a change since
2018, when eSports was appearing as something new in media.
Finally, in 2021 the International Olympic Committee (IOC)decided to hold its own eSports competition, called the Olympic
Virtual Series. Sports titles from Japan including Power Pros
Baseball and Gran Turismo were entered in the competitionand created much excitement. Competitions were also officiallyannounced for the Asia Games to be held in Hangzhou, China, in
2022. The IOC explained that the use of eSports in the Olympics
was part of initiatives to strengthen engagement of the younger
generation in the Olympic Movement.

3. Why eSports are attracting attention now

The “younger generation” is a phrase often heard in discussion
regarding eSports. It is what entices enterprises to support thesevarious tournaments. So, why is it that eSports attracts suchstrong support from the younger generation? We will attempt
to explain using another sport, namely baseball, as an example.
Baseball is thought to have been brought to Japan in about 1827,
and the number of baseball players, including high-school baseball(formerly middle-school baseball), university competition andmunicipal baseball, grew greatly after that. However, at that level,
baseball consisted of just the players actually using bat and ball.
This continued for nearly 60 years. The turning point was theadvent of radio broadcasting. High school baseball was broadcast
on the radio, and just a few years later, in 1934, a major team fromthe U.S. came to Japan. Two years after that, in 1936, teams wereformed that became precursors to modern pro-baseball in Japan,
including the Tokyo Giants, the Osaka Tigers, and the Nagoya
Golden Dolphins. Then, after the Second World War, television
broadcasting began in 1953. The killer content for television at
the time included professional sumo wrestling, pro wrestling, andbaseball. However, sumo and pro wrestling naturally centered on

athletes that were very large. At the time, baseball was the only
prominent professional sport with young athletes having excellent
physical abilities. Five years after television broadcasts began, in
1958, Shigeo NAGASHIMA joined the Giants, and Minoru
MURAYAMA joined the Osaka Tigers. Sadaharu OH joined
the Giants in 1959. This heralded the golden age of pro-baseballin Japan.
As shown in Figure 1, initially, there were only amateur
baseball players, forming level (1). Later, with high-school anduniversity baseball, highly-skilled but non-pro players began toappear. Soon, with radio broadcasting, the number of competitors
increased. When professional players began appearing to viewers
on television, the number of fans increased rapidly. This was
because baseball itself was interesting, but also because players
like NAGASHIMA were so cool. These were the non-player
baseball fans at level (4) in Figure 1. There is a definite difference
between levels (1) to (3) and level (4). Levels (1) to (3) consist ofpeople that actually take bat and ball and play baseball, but level(4) consists of people who watch baseball on television. Withlevel (4), baseball was attracting interest as a spectator sport,
and spectators would pay money to enter venues or buy goods.
Baseball also grew dramatically with this level, becoming a major
business and producing other businesses such as broadcast rights
and sponsorships. As such, baseball is a spectator sport that wasdeveloped by the medium of television.
So what about eSports? In fact, eSports have developedin almost the same way as baseball. Initially, there were many
game fans focused on games such as Dragon Quest and the
Mario franchise. Soon, game consoles and PCs connected to
the Internet, and video related to the games increased on video
sharing sites. Regarding game commentary, one would expect itwould only become popular with people able to say interesting
things in their commentary, and inevitably popularity would
focus on a small number of Internet personalities. But what about
the overwhelming number of other players? They also began
uploading videos of their own game play, and there were far moreof these latter game-play videos than those by commentators.
Soon, game-play video became popular on video sharing sites. In
fact, the most popular type of content on YouTube, the largest
video site, is music, but the next most popular type is game-related
video. Nearly half of the live streams on Niconico video are also
game related. Twitch and OPENREC are stations dedicated togame video. Thus, it is not an exaggeration to say game video is amajor part of video distribution sites.
Many people enjoyed game-play videos, of which there were ahuge number. Soon, videos from people with confidence in theirskills began to attract more popularity and then competitions
began being held at community events, where people could watch
these advanced players. Then, seeing the popularity of these
events and the ability of internet video to attract viewers, the IP
holders began to hold tournaments with prize money, to promote
their game IP. The success of these led to broadcasts of pro■ Figure 1: Pro baseball evolution and player hierarchy

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■ Figure 2: eSports evolution and player hierarchy

eSports players in various forms, including terrestrial and satellite
television broadcasts. As a result, another layer of people who havenot played the games became accustomed to watching eSports, notbecause of interest in the games themselves, but because they wereattracted to the players. In Figure 2, levels (1) to (3) are people who
actually play the games, while level (4) consists of eSports fansthat do not play the games themselves. It goes without saying thatgrowth of this level (4) is what has enabled the eSports industry toachieve its incredible growth.
Baseball and eSports have followed exactly the same lineage.
One clear difference is in the media that nurtured them. Baseballas a spectator sport was developed by television, while eSports arespectator sports for a younger generation that was raised without
watching television.
Most of the younger generation, who were born into theworld when the internet already existed, are not in a habit of4

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watching television; they watch eSports on a smartphone instead.
People who watch television or read newspapers and magazines
have decreased, while smartphones have spread. Based on theindispensable smartphone, eSports video and eSports fanssupporting the players in such video are growing with incredible
energy and are already forming an unstoppable trend. Advertisingfrom television and newspapers is now supporting eSports,
to reach the younger generation that it cannot reach throughtelevision. Enterprises that were sponsoring real sports are leaving
real sports and starting to sponsor eSports. We can expect thisirresistible trend to continue in the future. Soon, eSports inJapan will reach new heights in the world, expanding from justthe younger generation and becoming a movement that involves
older age-groups as well. As was the case with baseball and soccer,internet media can be expected to continue to nurture eSports.