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I, [Name of the Author], declare that the research study is purely work, and the resources and international publications used during the research study has been cited. I also declare that information extracted from the internet and articles have been cited.
The purpose of the research study was to investigate the level of competition in the E-Sports gaming industry with reference to the business model of DOTA 2. For the very reason, the researcher relied upon the use of both qualitative and quantitative data. The research instrument that was used by the researcher was questionnaire, which was distributed to the participants over the Steam account. The researcher found that the popularity of DOTA 2 was the resultant of its business model, which eventually resulted in the extreme popularity among professional gamers.
Chapter 1: Introduction 5
Research Background and Context 5
Thesis Statement 6
Research Objectives 6
Nature of the Research Study 7
Anticipated Outcome 7
Chapter 2: Literature Review 8
Competition in the E-Sports Gaming Industry 11
DOTA 2 Business Model 11
Chapter 3: Research Methodology 13
Research Design 13
Qualitative Research 13
Quantitative Research 13
Research Approach 14
Inductive Research 14
Data Collection Methods 14
Primary Data 14
Secondary Data 14
Research Instrument 15
Sample Size and Sample Population 15
Ethical Considerations 15
Chapter 4: Research Findings and Discussion 16
Years of Experience 16
Preferred Game over Steam 17
Reason for Selecting the Game 17
DOTA 2 Business Model 17
Future of DOTA 2 17
Chapter 5: Conclusion and Recommendations 18
Limitations of the Study 18
Recommendations for Future Researches 18
Appendix A – Questionnaire 21
Chapter 1: Introduction
Research Background and Context
Electronic Sports (E-Sports) or competitive gaming has become a buzz term for organized professional gamers, and is considered as a composed feature amusement rivalries. In the 21st century, competitive gaming has not just been limited to real-time strategy online games, but has also expanded in the genres like first-person shooter, multiplayer battle arena (MOBA), and fighting. Considering the rise of interest in competitive gaming, several tournaments have been organized over the years including; The International, the Evolution Championship Series, and the Intel Extreme Masters that not only give cash prizes to the winners, but also give equally live telecasts of the opposition. In particular, South Korea has a TV channel that is completely dedicated to broadcast professional tournaments of League of Legends (LoL) and StarCraft II etc. The World Championship Season III of LoL was broadcasted over Twitch, which was watched online by approximately by a total of 32 million fans, where 26.5 percent (representing 8.5 million viewers) watched it at the same time. This is an interesting fact that reflects the interest of people from all walks of life towards competitive gaming.
Despite the facts that E-Sports have long been a member of game diversion society, rivalries have seen an extensive surge in prevalence as of late. Though, rivalries before around the year 2000 were generally between novices, the expansion of expert rivalries and developing viewership now underpins countless players and groups, and numerous feature amusement engineers now incorporate peculiarities with their amusements intended to encourage such rivalry. This can be observed from the rise in the level of sponsorship. The League of Legends (LoL) tournaments are sponsored by multinational corporations including Samsung, Coca Cola, Nissan, and American Express. According to Zancy (2012), competitive gaming has experienced significant increase in the level of rivalries among prominent titles. For instance, DOTA 2 along with League of Legends and StarCraft II were among the prominent titles in the year 2012; whereas Call of Duty emerged as the prominent title in the year 2013 and 2014.
In the technologically advanced era, the E-Sports have brought significant changes in the traditional gaming industry. There are several genres of games, and each of them is somewhat similar to the real indoor sports. For instance, Counter Strike is relevant with Football in terms of teamwork and moving forwards; meanwhile DOTA 2 is similar to Chess. Every move in DOTA 2 can cause the player to earn gold and experience, and has an impact on the outcome of the game. In this regards, people from all walks of life have shown their interest in E-Sports in one way or another. Since the gaming industry has attracted a lot of people towards it, gamers are now working for further development of the industry worldwide. According to Kalle (2010), the number of professional leagues and organisations representing E-Sports has significantly increased over the years, which is yet another development in the field of competitive gaming. By doing so, professional gamers can earn up to hundreds and thousands of dollars in a fiscal year, and they are supported by investors and other shareholders including; commentators, spectators, organizers, and multinational firms. In other words, E-Sports can be regarded as the new wave in sports gaming industry, which has not even reached its potential yet .
On the contrary, Riot Games; an American-based Chinese-owned video game publisher, indicated the existence of significant competition in the E-Sports industry, which is the reason why the company has failed to reap impressive profit over the years. However, E-Sports have been regarded as the new wave in the international gaming industry, where the target audience are the gamers, irrespective of their age and ethnicity. For instance, Sumail Hassan with the Team Evil Geniuses (EG) won the DOTA Asian Championship in China, and each team member received $1.2 million. Irrespective of the fact that Sumail belongs to Pakistan and was 15 years of age, he was taken into the team once his capabilities and potential of gaming techniques were analysed by the team members. This clearly suggests that age does not matter in competitive gaming, but what matters is the X-factor and potential of the gamer . In comparison to the year 2014, the pool prize for Worldwide Championship named ‘International’ was $5,000,000, and the team members of NewBee received $1 million each. More importantly, every professional DOTA 2 team has set their sights on The International 5, where the prize pool is expected to be over $10 million.
More importantly, there are several useful communities and programmes into action that provides every individual gamer with an equal opportunity to compete in online games. One particular community is STEAM that allows gamers to connect with the rest of the world, irrespective of their location. The introduction of such programs have influenced a lot on cyber sports industry and due to them it alluded to carry competitions on the next level and they become world-wide and international. In the year 2014, it was suggested that approximately 6,562,031 users have recently joined the Steam society, and more will join the society as soon as they hear about it (Steam & Game Stats, 2014).
The purpose of this research study is to critically investigate the level of competition in E-Sports gaming industry, and the level of influence on each gamer in the selection of competitive games.
On the basis of the delineated thesis statement, the researcher has outlined the following research objectives that will accomplish at the completion of the research study;
Following are the research hypothesis that the researcher will either accept or reject at the end of the research study;
H1o: Challenges in e-Sport has changed people`s understanding of gaming industry
H1a: Challenges in e-Sport has not changed people`s understanding of gaming industry
H2o: A lot of young people all over the world are willing to make a career in e-Sport industry
H2a: A lot of young people all over the world are not willing to make a career in e-Sport industry
H3o: Countries all over the world will open faculty of Cyber Sports in universities and it will become a real degree
H3a: Countries all over the world will not open faculty of Cyber Sports in universities and it will never become a real degree
H4o: The use of DOTA 2 business model will have significant impact on the popularity of other products in forthcoming years
H4a: The use of DOTA 2 business model will have no impact on the popularity of other products in forthcoming years
Nature of the Research Study
The research study incorporated quantitative and qualitative research design. The quantitative data for the research study was collected through the use of questionnaire, which was intended to investigate the level of competition in the E-Sports gaming industry. From qualitative perspective, the researcher has gathered the opinion of professional players in the gaming industry along with commentators and analytics for understanding the level of competition in the industry, and the motivational factors underlying the selection of games over the internet. The researcher has separated the target audience in different groups such as: users, professional players, analytics and organizers. It was important to divide them in order to gain information from all perspective, rather than limiting the scope of the study to just a single group.
With over 3 years of gaming experience, the researcher has anticipated that all of the delineated hypothesis would be proved by collecting strong evidence. Even though, the competitive industry is thought to be rather small, but actually it has been consistently growing at a rapid pace. The prize pool money of The Tournament can be considered as an example.
Chapter 2: Literature Review
E-Sports are competitive in nature that only requires strategy, but also coordination, reflexes, and exceptional technical skills to outperform others in the industry. The gaming industry has been in the centre of attention because of all the tournaments and competitions being held all over the world. Electronic Sports or E-Sports refer to an organized competition where professionals from all over the world compete with one another in games for either attaining the title or the prize pool.
In general, the viewership of E-Sports has drastically increased over the years. Considering the significant increase in viewership, it has been indicated that the revenue generation has doubled resulting in increased sponsorship . More importantly, the E-Sports industry has outpaced other industries even including the traditional sports. In the year 2011, a ground breaking record of 3.5 million viewers for StarCraft II championship, and 11.7 million viewers for Pro Circuit Championship in 2012 are just some statistics that have changed the face of the gaming industry .
Figure: Viewership of E-Sports
On the other hand, it has been indicated that the E-Sports industry is already worth $194 million, which will jump to $465 million in just two years. Like traditional sports, E-Sports have become a spectator sport that can be well compared with Ice Hockey and American Football . The following figure illustrates the growth in audience in E-Sports along with the revenue generation;
Figure: Growth in Audience and Revenues
In the digitally advanced era, the revenue generation of E-Sports and Sports is the key differentiator. In particular, it has been suggested that 34 percent of the revenues of E-Sports is the resultant of online advertisement, but the reliance on the investment of game publishers is extremely high . However, the recent change of events has attracted sponsors from all over the world to get on board; whereas the consumers have shown their willingness to contribute to the prize pool. Meanwhile, others are just willing to pay to attend the real-life event .
Figure: Sports and E-Sports Audience
At the same time, it has been estimated that the there are 1.6 billion global sport-playing population; whereas the global gaming community stands a little higher with 1.7 billion population . A total of 86 million E-Sports enthusiasts can be compared to people that daily watch swimming, but there is still a difference to be compared to American Football (151 million).
Figure: Revenue Generation per E-Sports Fan
Not only the revenue and fan-base exploded over the years, but the number of tournaments held in a fiscal year also exploded. In the year 2000, there were only 27 tournaments held for top players from all around the world, which significantly increased to 1895 in the 2014. At the same time, the prize money for each tournament also increased by approximately 70 times resulting in more and more attention of professional players. In the year 2000, all the 27 tournaments that were held barely topped $500,000, but in 2014 the prize money was more than $35 million, excluding the lucrative sponsorships from multinational organisations including; Ford, American Express, Coca Cola etc.
Figure: Prize Money in E-Sports Tournaments
Competition in the E-Sports Gaming Industry
The competition in the E-Sports gaming industry has become tougher than expected. It was expected by DFC Intelligence in the year 2014 that PC gaming market would hit $25 billion, where the leaders would be League of Legends and DOTA 2. This leading position of both MOBA games was the result of outstanding online gaming experience and servers, where the majority of the players were Asians.
Moreover, Breslau and Nordmark (2014) suggested in their article that League of Legends retained its leading position in MOBA; whereas the second position was retained by DOTA 2 with an outstanding growth that even surpassed LoL. Furthermore, it was indicated that the MOBA genre was by far the most dominating because of two games; League of Legends and DOTA 2; whereas the second position was held by PC first person shooting game; Counter Strike: Global Offensive. The third position was held by MMORPG’s Team Fortress 2 .
In the year 2014, Riot Games released some interesting statistics regarding the active players for League of Legends (LoL). For instance, it was indicated that there are 27 million active players of LoL (daily basis), and 67 million players per month. In the peak hours, LoL has a total of 7.5 million players making it the largest game in MOBA genre . On the other hand, it was indicated that more than 50 percent of gaming cafes in China had millions of LoL and DOTA 2 players.
DOTA 2 Business Model
Valve, the most successful game company, has ushered the idea of global distribution of games through its online application store; Steam, where the games developed by third parties are sold online to players. Games like Call of Duty and Skyrim are at the top of the list in terms of sales. However, the real value of Steam lies within the equal opportunity that it provides to independent publishers against multinational game makers. With the online gaming application, Valve has outmanoeuvred the titans in the gaming industry, and has attained the leading position in the E-Sports gaming industry .
Figure: List of Most Played MOBA Games on Steam
Chapter 3: Research Methodology
The chapter of research methodology highlights the adopted approach by the researcher, followed by the design and the instruments used for the collection of primary and secondary data.
Following is the brief explanation of the research design that the researcher has used for the completion of the research study;
The concept of qualitative research suggests that it is a non-quantifiable data aimed to develop, predict, and prove the hypothesis. In this research design, the researcher collects logical and objective type of data, mostly by investigating regarding the topic of interest directly from the respondent. This allows the researcher to understand the perception of the participants along with their opinion towards the topic. More importantly, it has been suggested that qualitative research design is mostly used for attaining information on innovative topics. Since the topic is to investigate and analyse the competitiveness in the E-Sports gaming industry, the researcher preferred to use qualitative research along with quantitative research design.
In other words, it can be stated that qualitative research design has been adopted by the researcher to discover the rising level of competition in the competitive gaming industry, along with the underlying reasons and assumptions for the selection of DOTA 2 and LoL as the prominent titles in the 21st century. According to Kaplan and Dunchon (1988), qualitative research design has significant advantage in terms of understanding what people like and want from the point of view statistics and numbers.
According to Bryman (2006), quantitative research is based on the traditional confirmatory scientific method, where the objective is to test the hypothesis and theories through the use of statistics and numbers (p. 98). Quantitative research design comprises of the scientific discovery that is rooted in the acceptance of outcomes through the use of statistics or the data gathered from the research participants. In this regards, Kerlinger (1964) stated that in a quantitative research, the researcher uses statistical approach for either accepting the hypothesis or rejecting it. The concept of quantitative as a research design suggests that it relies exclusively on the data gathered in the form of numbers and statistics that allows the researcher to investigate the research problem in a systematic manner.
Inductive research approach was used by the researcher considering the nature of the research study, which is briefly described as follows;
According to Goddard and Melville (2004), the inductive as the research approach initiates with observations, and based on the observations the researcher formulate theories at the end of the project. On the other hand, Bernard (2011) explained that ‘inductive research involves the search for pattern from observation and the development of explanations – theories – for those patterns through series of hypotheses’ (p. 7). Considering this, it has become prominent that no theories are formulated at the beginning of the research paper under inductive approach, which makes the researcher free from making any changes in the direction of the research once the process has commenced.
Data Collection Methods
Data collection is the process through which the researcher collects relevant and reliable information regarding the topic of interest, and for the achievement of research objectives, while ensuring that the defined hypothesis are either accepted or rejected. Following is a brief description of the data collection methods used by the researcher for the completion of the research study;
Primary data can be defined as the process of collecting first hand data and information regarding the topic of interest. Considering this, the primary data for the research study was collected through the use of survey, where the research instrument used by the researcher was questionnaire. In particular, the survey questionnaire was distributed to professional players over Steam, and against their responses the researcher gifted them ‘mythical clot’ for DOTA 2. The researcher had to purchase the gifting item for 100 participants, which accounted for 50 pounds in total.
On the other hand, primary data regarding the level of competition in the online gaming industry was also collected through the use of interviews. The researcher interviewed some professional players, commentators and analytics for understanding the depth of the gaming industry. Since the target audience for the interview was somewhat different from questionnaire, the researcher has separated the target audience in different groups such as: users, professional players, analytics and organizers. It was important to divide them in order to gain information from the different points of view.
The concept of secondary data suggests that it is the data collected by some other researchers but the research was somewhat similar to the topic of interest. Considering this, the researcher collected secondary data through the use of past publications over the internet. Secondary data was collected for its associated advantage of extensive reduction in cost and time associated with collecting information regarding the problem at hand.
Since the research study is both qualitative and quantitative in nature, the researcher used Likert scale ranging from ‘strongly agree’ to ‘strongly disagree’; whereas the factor of neutrality was not provided by the researcher to ensure that appropriate and reliable data was collected for the research study.
Sample Size and Sample Population
There are over millions of gamers, but keeping in mind the limited time frame the researcher selected the sample size of 100 participants. Keeping in mind the research objective, the sample population was professional gamers. The research participants were selected randomly over Steam.
Generally, there are five ethical concerns that the researcher considered during the process of survey research. In this regards, the most highlighted concerns that the researcher prioritised were; voluntary participation of the research participants, ensuring the confidentiality and anonymity of the research participants, no harm to the participants, identification of the research purpose, and the objectives of the research. The researcher informed the participants regarding the objective and purpose of collecting the data.
Chapter 4: Research Findings and Discussion
In this chapter of research findings, the researcher has provided the first-hand information attained from the participants, which is as follows;
The question inquiring the gender of the research participant was the first demographic question incorporated into the questionnaire. Considering the rise of E-Sports, the researcher has observed that both males and females are equally into gaming, and both take online gaming quite seriously. In this regards, the researcher incorporated the question regarding gender into the researcher study. It was quite fascinating to find that 43 percent of the participants were females; whereas 57 of the participants were males. The researcher was somewhat shocked to find such significant figures for females.
The next demographic question that the researcher incorporated into the questionnaire was regarding the age group of the participants. Since the questionnaire was distributed to the participants over the Steam, the researcher was unable to find the actual age group of the participants. It was quite fascinating for the researcher to find that 23 percent of the participants were between the age group of 17 and 21. This age group is usually associated with young teenagers and young adults. This might be the influence of Sumail, who was just 15 years of age when he won the DOTA 2 tournament with Team EG. On the other hand, the researcher also found that the majority of MOBA games are played by individuals between the age group of 22 and 26, as they have more leisure time as compared to others. In particular, 39 percent of the participants belonged to the delineated age group.
The next age group also had significant contribution in the world of online gaming. The researcher found that approximately 21 percent of the participants were between 27 and 32 years of age, and had been playing online multiplayer games for approximately 24 hours in a week. Lastly, the age group between 33 and 37 had also limited contribution to online multiplayer gaming. 17 of the research participants belonged to this age group.
Years of Experience
The purpose of incorporating this question into the questionnaire was to evaluate the years of experience the participant had in multiplayer gaming. Since the participants were surveyed over Steam, the researcher was able to check their level and was quite relieved that majority of the participants had more than 25 level.
Only 12 percent of the participant had less than a year gaming experience, which suggested the researcher that these individuals had recently joined Steam. On the contrary, 56 of the participant had 2 years of gaming experience. This suggested that these players were able to play ranked matches with greater MMR over Steam. 11 percent of the participant had more than 3 years of experience. These can be regarded as professionals with more experience than others over the Steam. Lastly, 21 percent of the participants had 4 and more than four years of experience.
Preferred Game over Steam
Steam is an application that connects people from all over the world to connect and play online games. Therefore, it was important to inquire what kind of game was preferred by them over Steam. As expected by the researcher, the majority of the participants played DOTA 2 over Steam, and did not switch over to any other game over Steam. In particular, 71 percent of the participants were engaged in DOTA 2. It might either be the gifts that an individual receives at the end of the game, or the excitement that follows in the game. On the other hand, the researcher also found that 19 percent of the participants were engaged in Skyrim V: The Elder Scroll. With 3 years of gaming experience, it can be added that DOTA 2 and Skyrim are addictive games, and very difficult for gamers to live without it.
The remaining participants were engaged in Team Fortress 2 and Counter Strike. A total of 6 individuals were engaged in Team Fortress 2, and the remaining 4 percent were engaged in Counter Strike.
Reason for Selecting the Game
The next question inquired about the underlying reason for the selection of the game. It was quite fascinating to find that majority of the participants preferred to play DOTA 2, because it was a continuation of DOTA 1, which was quite familiar to them. At the same time, the researcher found that DOTA 2 required extensive skills and techniques to overcome the opponent. Since the game is played in 2 teams with 5 members each, it was quite difficult for the team members to coordinate with one another, but the satisfaction and happiness after killing the opponent was unable to be described in words.
Another reason that the researcher found was the graphics. As mentioned earlier, DOTA 2 is an extension of DOTA 1, which had low graphics but outstanding game play. The participants indicated that the outstanding graphics and the gifts following victory was the reason for selecting the game.
DOTA 2 Business Model
When the participants were inquired about the recent development in the business model of DOTA 2, it was found that the transformation from pay-to-play to free-to-play had significant impact on the number of gamers playing other online games. In particular, a total of 59 participants stated that the recent change in the DOTA 2 business model was able to retain them; otherwise they would have to select another online game over DOTA 2. In addition, 19 percent of the participants indicated that the play-to-win business model was quite encouraging for the online professional and amateur players, because they were given an opportunity to win gifts for free; all they had to do was to win the game over the other team.
On the other hand, 22 percent of the participants were dissatisfied with the recent development in the business model. They indicated that they had to purchase the game key, and it was injustice to them as others were able to play DOTA 2 for free
Future of DOTA 2
When the research participants were inquired about the future of DOTA 2, it was indicated that DOTA 2 is among the most commonly played game over the internet. It was further predicted by the research participants that the online multiplayer game had quite an interesting future, as the game has continually evolved considering the requirements of online players.
Chapter 5: Conclusion and Recommendations
Conclusively, it can be stated that E-Sports gaming industry has an outstanding future against other industries. The outstanding future in the industry has also resulted in significant increase in the level of competition. There are several games competing for the title of most prominent game of the year. League of Legends and DOTA 2 are the only games that have been able to retain the title for more than years. Currently, there is a tough competition, but as per the recent development in DOTA 2, it can be predicted that the most prominent game for the year 2015 and 2016 would be DOTA 2.
Considering the rise of gamers’ interest in DOTA 2, the company had transformed its business model from pay-to-play to play-to-win. In particular, the company has offered the victorious team with gift that is only given to a single player based on probability. In earlier years, the entire winning team was offered the gift, but the recent changes had made it quite clear that only the most outstanding player would be offered the entire set of a random character.
Even though, the business model of DOTA 2 can be imitated by other online games, but they might fail to achieve the height of success that the game has achieved in just years. This makes it quite clear that DOTA 2 is among the most addictive games in the 21st century, with no competition close to its popularity and success.
Limitations of the Study
The research study had several limitations. The foremost limitation of the research study was the limited time-frame. The research was conducted with limited time frame, which made it extremely difficult to obtain responses from no more than 100 participants. The selection of the sample size was another limitation of the research study. As mentioned in the earlier section, the questionnaire was distributed to the participants over the Steam, which made it extremely difficult to track the gender, level of experience etc.
Recommendations for Future Researches
The number of research studies focusing exclusively upon E-Sports Gaming industry is quite scarce. Therefore, the research study can be considered as the pioneer, and can be used for future research studies. The research study focuses extensively upon the business model of DOTA 2, and its impact upon the future of the game in the gaming industry. In this regards, future researcher would be recommended to investigate the business model of other popular games over the internet, and whether the selected games can come close to DOTA 2 in forthcoming years.
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Appendix A – Questionnaire
17 to 21 years
22 to 26 years
27 to 32 years
33 to 37 years
Years of Gaming Experience
Less than a year
Which game do you prefer to play over Steam?
Call of Duty
Skyrim V: The Elder Scroll
Team Fortress 2
What is the reason for the selecting the game?
Tactics and Strategies
Does the change in the DOTA 2 business model have any impact on the selection of it?
Do you believe that DOTA 2 would be able to retain its popularity and ranking in the forthcoming years based on its business model?