Esports Governance and its Failures

Most sports saw governing Global Sports Organisations form naturally while they grew. They were an important part of the standardisation and professionalisation process. This did not happen in esports, which leaves the industry with some unique challenges moving forward.

Picture by Steelseries

This article is an edited and summarized version of the thesis with the same title submitted to Leiden University College t he Hague on 19 May 2017 .


Table of Contents

Introduction
1 | The most Important Issues in the Esports Industry
2 | The Role of Tradtional GSOs Translated to Esports
3 | What Attempts at GSOs have there been?
 — — 3.1 | International e-Sports Federation (IeSf)
 — — 3.2 | World Esports Association (WESA)
4 | The Future of Esports Governance
Conclusion
Bibliography


Introduction

The popularity of esports has risen massively in recent years. With viewership at record highs and the increased amount of available sponsorships, revenue in the industry has risen immensely. Increased revenue has allowed more people to work and earn money in the industry. More and more publishers seem to want to create esports leagues for their games. Overall, the future of esports seems very bright.

Amidst all this growth, it seems like the governance aspect of esports has been largely forgotten. This article aims to be the first step towards a solution to this problem. First by identifying some of the current governance problems; this will focus on the current core providers of governance, the publisher and certain ethical issues that are prominent. The second chapter will compare the role of governing authorities in traditional sports to how governance is taken care of in esports. Thirdly, this report will analyse the attempts at creating a Global Sports Organisation (GSO) for esports and their success. The final chapter will consist of recommendations for the future.

Esports in this article will be defined as institutionalised tournaments, held for entertainment purposes, that have the participation of players whose primary form of income comes from their job as a professional gamer.

This is a relatively narrow definition, which is necessary because not all of the issues outlined in this article are relevant for the lower levels of play, and there are issues unique to the lower levels of esports competition that do not occur on the professional level.

A concept that is brought up often in the article is that of legitimacy. Legitimacy is the acceptance of authority (Bodansky et al. 2012, 705). In the article two different types of legitimacy are important. Firstly, input legitimacy. This is legitimacy based upon participants and consensus. The other form of legitimacy that will frequently be mentioned is output legitimacy. Output legitimacy is legitimacy based upon outcomes and results (Skogstad 2003, 321–22).


1 | The Most Important Issues in the Esports Industry

As an emerging sector, the esports industry does not yet have a unified source of governance. Instead, the main parties providing governance are the games publishers themselves, each only governing the esports scene of their respective games.

This role is completely unchallenged in the industry as they have the most legitimacy to fulfil the role of a governing authority. This is completely based on input legitimacy gained by being the owners of the intellectual property that is a game, and not on the outcomes of their governance. The quality of the governance provided is thus irrelevant.

This is very different from the bodies that govern traditional sports. Even often criticised global sports organisations like FIFA[1] see a decrease in legitimacy when they are perceived to do a poor job governing the sport, and the organisation then must act in order to preserve credibility. This could be seen in the aftermath of the corruption scandal surrounding the choice to host a world championship in Qatar. A traditional GSO that has this pressure to a much larger degree than FIFA is the FIA[2]. The FIA was originally founded in order to increase the safety of motorsports, and this is still one of its main goals (FIA 2017; FIA 2016, 3). What can be seen after many of the very serious accidents in motorsport classes associated with the FIA, is that they investigate and see how a that type of accident can be prevented in the future. If regulations pushed by the FIA were to make the sport more dangerous, they would quickly lose their legitimacy whether the national car federations that make up the FIA’s members would leave or not. As seen with the introduction of the ‘Halo’ driver defence system into Formula 1, the FIA will push through safety devices they deem important, even if they are unpopular with fans and teams (Barretto and Rencken 2017).

Another important difference between traditional sports GSOs and games publishers is that the latter’s primary form of business is not esports. While the raison d’être of traditional GSOs is to govern a sport, games publishers are businesses aimed at selling video games and have often existed for much longer than an esport has. Esports is not the main source of revenue for publishers. Rather, costs associated with it are often part of their marketing budget. The largest games publishers, such as Valve, Activision Blizzard and Riot Games each make much more money than the total revenue of the esports industry combined.

This difference does not necessarily mean publishers would do a worse job than a traditional GSO. It does mean that publishers have fundamentally different interests than organisations whose primary form of income stems from the esports industry. The ramification of this difference is that policy adopted by games publishers can be bad for the sport, but be good for the publishers’ core business. While some traditional GSOs are accused of pushing policy that is only good for their organisation, ultimately, they need the sport and relationships with partners in the sport; publishers do not.

On top of the current source of governance being problematic, the esports industry has two other significant issues. These are the absence of regulations for competitive integrity, and the lack of regulations and policy about a duty of care towards players.

Competitive integrity regulations consist of all rules that ensure a level playing field, ensuring the better team of players wins a competition. Breaches of competitive integrity are among the most heavily punished infractions in traditional sports. On top of that, GSOs, like the International Olympic Committee work together with law enforcement agencies like Interpol to ensure the integrity of the sport. Violations of competitive integrity, such as match-fixing, are often linked to criminal networks (Interpol 2017).

One of the most glaring examples of this absence is the shortcoming of comprehensive gambling regulations. Since many esports businesses are active across multiple games, regulations are required on a supra-game level. Currently, even the existence of rules differs per game. Riot Games, the publisher behind League of Legends (LoL), has forbidden betting on any LoL matches for all professional players. This is relatively easy for Riot as they control almost the entire esports side of the game. This is not possible for all esports however, since not all publishers take this more controlling approach to esports. Valve, the developer behind Counterstrike: Global Offensive (CSGO) and Defence of The Ancients 2 (DOTA2) is far less involved with the esports side of the respective games. After a match-fixing scandal in CSGO in 2015, Valve made it very clear that they strongly frown upon betting by esports insiders in their games. Nevertheless, Valve has failed to translate their beliefs into action, even at their own tournaments. At the end of 2016 at the ‘Boston Major’ DOTA2 tournament, an Analyst for the team Ad Finem had placed bets on the outcomes of some matches. While this caused public outcry, Valve made no efforts to respond to the criticism. On top of that, Ad Finem’s manager stated that the team will continue to work with the analyst (Myers 2017). Valve’s failure to act upon this violation during their own tournament makes it seem unlikely the company will be a positive, proactive force for competitive integrity, as the majority of esports tournaments for Valve games are not organised by Valve.

Another aspect of esports that can potentially harm competitive integrity is multi-team ownership. In many esports this is allowed, with the exception being League of Legends, in which Riot forbade it (Riot Games 2015, 12). Some teams that are exclusive to CSGO, Astralis, Godsent, Heroic and Norse are all owned by the company RFRSH (Lewis 2017b). Natus Vincere and Virtus pro are teams that operate in multiple games but also have the same owner, namely Esforce (Lewis 2016a).

Something else for which barely any policy exists is player protection. Many esports players are very young, and thus in a more vulnerable position (Winkie 2015). Now that the norm in esports seems to be that people quit their jobs and studies in order to focus more on the game, this vulnerability increases. A prominent example of this is Jake ‘Stewie2K’ Yip, who was very open about ruining his school career in order to practice more (Yip 2017). The prevalence of team houses in esports makes players even more vulnerable. Team houses are often seen as invaluable for both practice and team bonding (ESL 2014). However, this leaves already vulnerable players in a position where teams control the salary and the living facilities (Lewis and Stemler 2016). In this environment, players are left open for potential abuse. This abuse is not just abuse by the teams towards the players, which can manifest in pressure for unreasonable working hours or to accept lower salaries. Players are also at a risk of being abused by fellow players and coaches in many different ways. This could include sexual abuse. Without proper control and a centralised, anonymous, reporting mechanism, it is extremely hard to prevent abuse.

[1] Fédération Internationale de Football Association (International Federation of Association Football)
[2] Fédération Internationale de l’Automobile (International Automobile Federation)


2 | The Role of Traditional GSOs Translated to Esports

Global Sports Organisations emerged in the 19th century amidst a general trend toward more organisation, standardisation and governance. They appeared shortly after the first major sports leagues were founded and the first national governing bodies were created (Forster 2016, 2).

GSOs fulfil many different roles in traditional sports. Perhaps the most important role is setting and enforcing the rules of the game. Statutes reflect this in statements like “draw up regulations and provisions governing the game of Football” and “interpreting and enforcing common rules applicable to the organisation and the fair and equitable running of motorsports competitions” (FIFA 2016, 6; FIA 2016, 3). Further key roles of traditional GSOs that are represented in their statutes are promotion and further development of the sport, often on both the recreational and competitive level (ITF 2017; FIA 2016, 3; UCI 2016, 3).

Esports fills these roles differently. The rules of an esport are largely limited by the game mechanics that are implemented by the development studio. As such, there is a much smaller role here for other parties. All behaviour that is allowed by the game mechanics is generally allowed in an esport. The only rules that can be set are for outside the game, for example, rules about competitive integrity, behaviour, and equipment. Currently, these rules are either set by the developer or by the tournament organisers, depending on the game.

Traditionally, the majority of promotion for esports is done by tournament organisers and teams. However, publishers are now getting increasingly involved. An esport is something that shows off their product in an exciting and engaging manner, and can thus be seen as a source of extra promotion and opportunities to expand their user base and profit potential.

However, traditional GSOs do not all fulfil the same roles. The specific role each GSO fulfils is what warrants the existence of multiple GSOs and shapes that sport to be or stay unique. An example is that the FIA is focused on increasing the safety in motorsports (FIA 2016, 3). Motorsports have seen may fatalities in their history, and the FIA’s safety regulations implemented in recent years have seen these fatalities drop dramatically. Similarly, after all the doping scandals in professional cycling, the UCI[3] puts a higher emphasis on preventing doping than many other GSOs do (UCI 2016, 3).

As this last ‘role’ is something unspecific, it is impossible to define what part that would be an esports GSO’s role is currently fulfilled by other actors. However, it is clear that the problems highlighted in the first chapter are currently not dealt with by any parties. An esports GSO would be the right organisation to step in and deal with these issues.

[3] Union Cycliste Internationale (International Cycling Union)


3 | What attempts at GSOs have there been?

Even though the esports industry might not have a GSO that currently provides governance, that does not mean that there are not organisations aiming to fill this gap or presenting themselves as the GSO for esports. This Chapter will cover the two most notable attempts, IeSf and WESA.

3.1 | International e-Sports Federation (IeSf)

Founded in 2008, the International e-Sports Federation claims to promote standardisation in esports, to provide esports oriented human resource training, and to continually promote esports and its values (IeSf 2016a, 2016b).

The IeSf has a structure closely resembling traditional GSOs. Its members are national esports federations (IeSf 2016a, 2). This organisational structure is not suited well for esports.

The most watched and most prominent esports competitions are not national competitions like in the majority of traditional sports. Thus, an international, centralised governing authority would be more effective.

Of all of IeSf’s member federations, the only two currently relevant federations are the Chinese and Korean ones, as their governments force teams to work with them (Chaloner 2017). Few, if any, of the prominent esports brands from other countries work with their national federations. Empowering these individual federations would therefore be a crucial step in making IeSf a relevant GSO. Efforts to make the global organisation more effective would ultimately be futile if this crucial part of their organisation was not fixed.

IeSf’s similarity to traditional GSOs is their main source of input legitimacy. IeSf is not just similar in its structure, but also in rules it applies to tournaments. In competitions associated with IeSf’s World Championships, teams need to consist of players with the same nationality and they aim to separate tournaments into men’s and women’s tournaments. The justification for this is that it improves esports’ legitimacy in the international sports community (Scimeca 2014). This method of attaining legitimacy seems to be mostly aimed at actors outside of the industry. If the community’s perception was more important to IeSf, it would have most likely changed some of its policy.

On the achievements and output legitimacy front, IeSf has mainly proven they can work for themselves, but not yet that they can work for the industry. While the organisation claims to have achieved a lot for esports, people outside of IeSf oppose this view (Chaloner 2017). One of IeSf’s most recent major achievements was a partnership with the Chinese corporation Alibaba. Through this, they are now involved with bringing esports to the 2022 Asian Games. While it would be expected that this increases the organisation’s output legitimacy, so far it does not appear to have had a great impact on their legitimacy within the industry. Mostly because it is questionable whether this really benefited the esports industry. Both of these achievements, like many others, would be achievements a tournament organiser, not necessarily for the organisation as governing organ.

3.2 | World Esports Association (WESA)

The World Esports Association was founded on 13 May 2016 by ESL and 8 multi-gaming organisations. Founded to both professionalise esports, and to introduce a revenue share between all parties involved with the project (Rosen 2017; WESA 2016a).

WESA’s executive board has two members chosen by ESL and two by the teams. The fifth member is the chair and is selected by the other board members (Bury 2016). This gives ESL a lot more influence than any other individual organisation within WESA. Whether they have really increased influence within the organisation depends on how well the teams are at being able to overcome differences in interests and act like a unit.

WESA aims to gain legitimacy by being an organisation founded and run by major esports brands. Many of the multi-gaming organisations have a long and successful history in multiple esports. ESL has also been a major player in the esports industry for a long time. This has thus garnered them input legitimacy. This is also the case for the second method WESA tries to create legitimacy through. Which is player involvement in the organisation, which can be seen through the inclusion of player comments in WESA’s initial founding press release as well as in later press releases (WESA 2016a, 2016b, 2016c).

These efforts have not been too successful. The community of the (currently) only esport WESA is active in, CSGO, do not necessarily hold the organisation in high regard, often viewing it as a tool for ESL. On top of that, journalists have also written negative pieces on the organisation (Lewis 2016b; Rosen 2017).

WESA has so far not had any major achievements that could give it output legitimacy. However, in 2017 it did adopt regulations that could have this effect in the future. These regulations prohibited the ownership of multiple teams. Multiple WESA teams are part of Esforce, and others had financial ties in the past (Lewis 2016a; Schnell 2016). Thus, these regulations could have a large impact. It is impossible to assess this right now, however, as all teams have 18 months to adjust (Lewis 2017a). Only after this period, it will be possible to see if WESA’s regulations have truly forced a change in the industry. If teams do not change their behaviour, the other core question is what the reaction of WESA’s executive board will be. As the regulations do not include punishments, the executive board will have to hand out punishments on a case-by-case basis (Rosen 2017). A weak reaction to violations would prove WESA is an organisation without teeth, and diminish any potential influence the organisation could have on the future of the industry.

This chapter previously included a section on the Professional Esports Association (PEA), which ultimately concluded the organisation now seems defunct. Since PEA’s website proesports.org is now offline, the section has been left out in order to shorten the summary.


4 | The future of Esports governance

This final chapter will feature a number of policy recommendations aimed at improving the governance of the esports industry.

Esports governance should move away from being guided by the actions of publishers and move towards a world in which a global sports organisation is the main governing force. A GSO would allow for more unified esports governance across different games than when different publishers govern their own games. It is also easier to bring the best practices and lessons learned in esports governance to newly emerging esports when the organisation that is responsible for this has been responsible for governing the other esports, rather than a publisher trying to do this. Economies of scale also come into play as the organisation grows, allowing for better and more effective control and reporting mechanisms. As previously presented in this article, it is also important to have a governing body that needs the esports industry to survive, as opposed to an actor for which it is only a minor occupation.

On the other hand, it is important for a governing body to recognize that each esport is different. An example of a traditional GSO that has done this is the FIM[4]. Even though different motorcycling classes are governed by one organisation, they ensure that the differences between each class are maintained.

In general, governing bodies should take their governing role much more seriously. Publishers are still the most legitimate authority, and their interventions are seen as the go-to solution for problems. The governing bodies seem satisfied with a secondary role, in which they can determine minor forms of policy or make deals that are only beneficial for their own members.

In order to become a true GSO, the organisation needs to be seen as more legitimate than a publisher. This is obviously difficult because, as was already mentioned, the publishers own the game studios that create a game. Where GSOs can step in, however, is by providing policy and governance in areas where publishers’ governance is lacking, for instance by tackling some of the problems mentioned in the first chapter. One positive consequence of this is that GSOs get some much-needed output legitimacy. Secondly, this also creates a framework that other organisations, whether they are a team, tournament organiser, or publisher, can easily subscribe to.

Out of IeSf and WESA, the latter is certainly the organisation with more potential to become a proper GSO. This is because WESA is actually an organisation that has several relevant actors as its stakeholders. It can be argued that IeSf is either one actor or consists of many irrelevant parties. On top of that, the type of organisation WESA is, with relevant international brands as stakeholders, is much more suiting for governing esports than an organisation rooted in traditional, nationality-based, sports governance.

A potential risk for governing organisations is that actors free-ride on their efforts. Free-riding is always a risk when providing goods that are non-excludable, and means that people enjoy the benefits of a good, without paying for it (Britannica Academic 2017). This is problematic because even governing bodies founded with purely altruistic motives need sources of funding. Since IeSf and WESA seem to operate with the interests of the organisation and members in mind, free-riding is of an even larger concern to them.

However, it can be argued that IeSf and WESA, or any (new) governing authority should not be too worried about free-rider behaviour. When providing governance on the subjects mentioned in chapter 1, free-riding is not a large risk, as these policies should be explicitly tied to the governing body, and any claims that these policies are being followed without being a member of the organisation are easily identified as illegitimate.

Ultimately, free-riding is only attractive and possible if the governing body sets up a structure that it does not maintain control of. An upcoming GSO with vision and policies and structures in place to tackle not-yet tackled issues is, in fact, an attractive partner to work with. It does not just provide legitimacy to the actor that needs it, but makes the organisation an attractive partner for publishers. Why would a publisher spend a lot of money and time trying to set up its own governing structure, if they could simply partner with a GSO?

[4] Fédération Internationale de Motorcyclisme


Conclusion

Currently, each esport is individually governed by a games publisher. They operate with complete legitimacy, based upon the fact that the game is their intellectual property. This means their legitimacy is not based on outcome, but rather on input. This is a major difference from governing bodies in traditional sports whose existence is at least to some degree based upon the outcomes. Another difference is that games publishers do not derive their existence from esports, but rather from selling games. For traditional GSOs the reliance on their sport is a small guarantee that they won’t act too strongly against the interests of the sport and actors within that sport. In esports that guarantee currently does not exist.

Other problems with esports governance are the absence of uniform policies directed at ensuring competitive integrity, and any policies defining a duty of care towards players.

While some games developers, such as Riot Games, have more rules in place about competitive integrity than others, it still is a problem that the rules are not uniform, as many actors operate across many different games.

The lack of policy for duty of care is highly problematic, for many esports players are young. The growth of esports has ensured they now often start a pro career without a degree or having pursued higher education. The prevalence of team houses in esports puts them in extra danger, as this means their employer controls both their salary and living space. An independent organisation is necessary in order to prevent abuse.

The most important roles of GSOs in traditional sports are to set the rules of the game, and promotion and further development of the sport. For esports, these roles are largely taken care of differently. Since esports are games, the game mechanics largely determine what the rules are, and a governing body would not have a large influence on this. Promotion is traditionally largely done by tournament organisers and teams, but recently games publishers have started to take part in this as well.

There have been two significant attempts at starting a GSO for esports, IeSf and WESA. Both organisations try to gain the large majority of their legitimacy through inputs rather than outputs. IeSf tries this by essentially copying the model of traditional GSOs, whereas WESA does this by having prominent esports brands as their members. Neither organisation has been responsible for any outcomes that are positive for the industry, rather than their own organisation. Out of the two WESA is more likely the organisation with potential to grow into a real esports GSO however. This is because IeSf consists of many national federations. This style of governance is badly suited to the industry.

Any GSO that is serious about governing the esports industry has to focus on providing positive outcomes for the esports industry, thus creating output legitimacy. This is because trying to create more input legitimacy than publishers is almost impossible since they own the intellectual property and have created the game. By creating policy for rules outside of the game, and that way providing real governance for actors in the industry, they can become the most legitimate actor and thus the go-to organisation when action has to be taken. If the governing bodies were to tie their policies to them, they would also not risk ‘free rider’s’ behaviour by other actors, as claiming to follow the GSO’s policy without working with the GSO would make an actor seem illegitimate.


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