ANALYSES

Korean esports ecosystem and its practical implications from a geopolitical framework

Tribune
24 février 2021
By Dr. Seungbum Lee, Professor in the Department of Management of the College of Business Administration at the University of Akron, Fellow for the China Soccer Observatory (CSO) of Asia Research Institute at University of Nottingham


While not pigeonholing a scientific definition, the term of geopolitics has not been unfamiliar to Koreans. This is due to South Korea’s geographic location with neighbouring China, Japan, Russia, North Korea, and the decades of a close economic, political, and military relationship with the United States within the Korean peninsula. This unique geographic location has placed inherent structural constraints and been presenting unceasing challenges within a wide range of regional and international affairs (The Asan Institute for Policy Institute, 2019). Within academia from the 19th century, geopolitics has been a powerful lexicon for understanding international relations in and around the Korean peninsula; yet traditional geopolitical perspectives have been de-emphasised due to the diminishing territorial logics and the growing importance of new virtual borders. Presently, with the rise and influence of China in Korea, East Asia, and Eurasia and the escalating U.S.- China hegemonic competition, the traditional geopolitical approach has been revisited to define a multitude of regional and international affairs such as trade dispute, science/ technology innovation, and nuclear programs in Korean society.

From a geopolitical framework, the explosive growth of the Chinese esports industry onto the Korean esports ecosystem has been a serious yet dynamic point of discussion for recent years. Interestingly, it has been mainly based on keywords such as “challenge”, “crisis”, “risk”, “threat,” and “opportunity”. It is critically important to monitor the rising Chinese esports industry and its explosive popularity as it will provide opportunities to develop response strategies for Korean esports ecosystem in order to continuously progress. For instance, given the fact that China is the world’s largest esports market, response strategies may include marketing Korean professional esports organisations, cross-border payment systems for esports consumption, O2O (online to offline) business strategies for esports organisations, and many others for development of Korean esports ecosystem.

In 2019, the Chinese esports market was reported to be worth more than $14 billion with the potential to become the leading nation in the global esports ecosystem (Westcott & Fang, 2019). Even during the pandemic, growth in the Chinese mobile esports industry and esports viewership is evident. By 2021, esports revenue in China is projected to reach $23.7 billion (Ye, 2020). During a series of Esports Beijing 2020 events, selected discussion centred on offering financial, political, and administrative support to esports teams and arenas in order to make Beijing a global esports hub. Previous support for nationwide initiatives in the sport industry (e.g., soccer dream) from Chinese local and central government demonstrated that politically influenced initiatives received their serious commitment. Therefore, it is quite safe to assume that for years to come, China will be the leading market in a global esports ecosystem, which will generate serious multi-level concerns to neighbouring nations like Korea. For example, a trend of migration of Korean elite athletes/coaches to China to purse their careers for significantly higher economic rewards would be easily anticipated. Another risk would be Chinese esports value chain that includes global conglomerates like Tencent, Suning, JD.com, etc. because its value chain would certainly weaken the role and influence of Korean esports ecosystem to grow regionally and internationally.  As a result, it is not inconsistent to hear “challenge”, “crisis”, “risk,” or “threat” when discussion occurs as to Korean esports ecosystem from a geopolitical framework.

For example, in front of 6,000 fans in Shanghai, Korea’s Damwon Gaming (now it is called Damwon(DWG) Kia) defeated the Chinese Suning Gaming to win the coveted 2020 League of Legends World Championship, but this victory only drew somewhat paradoxical responses from the Korean esports community. While it celebrated Damwon Gaming’s success in this very challenging pandemic season, a cautious attitude was adopted by esports journalists and esports fans noting that, “Damwon Gaming winning is a mere representation of one single great Korean team’s excellence but doesn’t mean that Korean esports teams collectively are the best on a global stage”. For some, Chinese esports’ rise and influence imply an alarming future for the Korean esports ecosystem, and this may be accurate. In fact, one of the challenges is international (out)migration or brain drain of the elite Korean esports players as well as their coaches. According to the Korea Creative Content Agency (KOCCA) survey in 2020, more than 60% of professional esports players are interested in playing overseas with 72% of them preferring to play in China. Similarly, the survey found that approximately 66% of esports coaches are interested in coaching overseas and, of that number, 71% of them prefer to coach Chinese teams. Consistently, this survey showed that 70% of the next generation of players who are currently in the farm system are interested in seeking their professional career overseas with a majority of them also selecting China (78.9%). Naturally, it will not be shocking to see a growing number of top players heading to China with the motivation of being mercenaries.

However, what seems to be a fundamental concern is the possible ending of the era of Korea-dominance on the global esports stage, which would indicate a loss of pride for Korean esports as a modern birthplace and mecca of esports. Therefore, from the geopolitical framework, Korean esports ecosystem needs to explore appropriate and necessary practical implications to counterbalance these challenges. Three implications are suggested: strategic opportunities, elite-focused esports business model, and regional alliance systems, which will serve as an interactive platform to overcome geopolitical constraints for many decision makers in Korean esports ecosystem through collaborations.

Strategic Opportunities

It is important to acknowledge potential opportunities in the esports industry as its professionals in Korea seem to focus on business opportunities and their capitalisation, inspired from the success of neighbouring countries. Strategically, focusing on opportunities rather than risks or threats is a better priority for the Korea esports ecosystem. In size, the domestic Korean esports market does not compare to that of China. Acknowledging the difference in the size of the esports market and how to collaborate with other regional and international esports markets including Chinese esports market might better serve the Korean esports ecosystem in the long run.

The Korean esports industry will continuously experience challenges with the Chinese esports industry, but both nations will have further opportunities to reengage in partnerships for their mutual benefits. China recently granted a license to Korean gaming companies after putting restrictions on the Korean games held in 2017 as a political response to Korea’s decision to house a U.S. missile defence system. Though the license did not specify which games were to be allowed (e.g., PUBG), this decision certainly will open up more business partnerships for both nations

 From grassroot-focused to elite-focused esports model 

Government-led initiatives for the development of esports in Korea have been known to the public. Recently, the Korean government has invested in the construction of 4 esports-specific arenas by local governments, as a result of esports popularity. Thus far, these initiatives have been playing an influential role in revolutionising the esports industry in Korea with the formation of a grassroot-focused esports development model (e.g., amateur local tournaments, collaborations with local PC bangs, etc). Nonetheless, there seems to be an increasing demand for a paradigm shift from grassroot-focused to elite-focused esports development. Korea is recognised worldwide for their excellent infrastructure system that can amply support and promote a grassroot level esports culture and growth. What seems to be lacking is the continuous and strategic supporting systems that will advance an elite-focused business model. A paradigm shift that aggressively capitalises on China and other country’s success of elite level esports development may allow Korea to better align their esports ecosystem within a region, especially by focusing on regional nations.

Regional alliance systems

In addition to business opportunities with the Chinese esports ecosystem, additional opportunities with other regional nations should be continuously explored. In academia, due to the complexity of contemporary geopolitics, the concept of hybrid geopolitics was developed, which concerns not only physical but also virtual borders (Labban, 2009). Simply put, it refers to a combination of conventional territorial logics with capitalistic logic, which prioritise economic benefits, resources, etc (Lee, Wainwright, & Glassman, 2017). That being said, further regional strategic alliances with other nations could be of importance. These regional alliances may be forged through collaborative mind-sets of decision makers in the esports industry, not through a formal government structure, in a way to seek bilateral esports-specific economic interdependence among nations and to recognise the importance of the alliance for responding to the rise of China hegemony in esports industry. In particular, regional alliance systems where esports is growing, like the Association of Southeast Asian Nations (ASEAN), could be developed. Esports viewership in Southeast Asia which claims an audience of close to 30 million, increased nearly 22% from a year before (Weustink, 2000). With the steady growth in popularity of esports in Indonesia, the Ministry of Youth and Sports and the Indonesian National Sports Committee recognised esports as a legitimate sport. To that end, they founded the Indonesia Esports Association in 2014 and have become the largest esports market among ASEAN nations. A good indication of how esports is perceived in this country is Indonesia’s hosting of the 2018 Asian Games with esports as a medal game. Thailand has the second largest esports market among ASEAN nations with more than 11 million esports fans and a huge growth potential (Korea Sports Promotion Foundation (KSPO), 2020).

Because KSPO and KOCCA, and other governmental agencies such as the Korean Copyright Commission pay attention to the ASEAN esports markets, there exists enough informational resources to support strategic regional alliances systems. Also as noted in the Co-Chairs Report for the ASEAN -Republic of Korea Commemorative Summit in 2019, there will be more economic and socio-cultural partnerships available between Korea and the ASEAN. Therefore, it will be important to explore possible partnership opportunities surrounding esports in the near future. At the same time, healthy competition, collaboration and cooperation with the Chinese esports industry will be continuously pursued.

Conclusion

As one can imagine, game developers and publishers will be the ones profiting the most from the esports ecosystem. What has to be a priority is the development of a financially sustainable long-term business model for Korean esports ecosystem rather than trying to outplay the world in tournaments or winning all the trophies (though this helps short-term).

With regards to the geopolitical framework, the truth is that the region with complex and dynamic geopolitical logics may create volatile and unpredictable regional and international affairs. This upheaval will intensify conflicts among the nations at multiple levels, and, realistically, the Korean esports ecosystem will not escape from these conflicts. Nevertheless, the geopolitical framework undoubtedly provides an opportunity to seriously think about the challenges in order to address and create strategies for the Korean esports community.

 

Dr. Seungbum Lee is a Professor in the Department of Management of the College of Business Administration at the University of Akron and a Fellow for the China Soccer Observatory (CSO) of Asia Research Institute at University of Nottingham. His work has been published in such journals as Sport Marketing Quarterly, Sport Management Review, Sport: Business, Management: An International Journal, Journal of Relationship Marketing, Global Business Review, International Review on Public and Nonprofit Marketing, Journal of Brand Strategy, and so forth.

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This article belongs to the GeoSport platform, developed by IRIS and EM Lyon.
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