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A pending deal by League of Legends maker RIOT Games to sell the eSports distribution rights to their game for nearly $100M a year signals the start of a real eSports era. How can developers and investors get a piece of the action?

Ramin Shokrizade, Blogger

December 7, 2016

13 Min Read

[I have been reminded that SG was produced as a collaborative effort of many individuals on multiple continents, that not only didn't communicate with each other, but in many cases didn't even know the others existed. Thus when I say that I had a certain role in the game's development, I can't say I was the only person that may have had that role for the entire 3+ years of its development.]

Games like chess, backgammon, and Go have been popular and civil ways to compete with others for hundreds or thousands of years. But these never reached the scale or grandeur of the Olympic Games. When games started going digital with products like Dune, Command and Conquer, and Starcraft, games got much more complex and immersive. Still, the scale of how many people could be in a game at the same time was not much larger than chess. The possibility of having an Olympic-level competition on a computer wasn't realized until the development of Shattered Galaxy (Nexon, 2001), and largely has not been realized since.

Why has the industry stalled so dramatically in this area of cybersports, and why did they fail just as they were getting started? The answers might surprise you. In this paper I am going to do my best to sort that out, with the hope that understanding the past of cybersports will help us successfully navigate the future of cybersports. [Please note that I don't address human physical activity simulations here like riflery, dancing, or ping pong, even if the activity is being recorded/transmitted electronically. To me these are still physical sports and animating or transmitting them doesn't make them eSports. If you want to include them, then eventually all sports will be eSports and the distinction will become meaningless.].

In case you have not heard, RIOT recently signed a deal with MLB Advanced Media to distribute their League of Legends tournaments for about $90,000,000 a year. As far as I am concerned, that's enough zeros to finally get the attention of investors. This is critical, since it isn't game developers who ultimately decide what gets made or not, it's the investors that fund these projects.

Looking around, there really are not that many games that provide an eSports experience worth watching. Why is that? Starcraft (1998), League of Legends (2009), and World of Tanks (2010 for RU, 2011 for NA) are by far the most popular eSports games. These games are also very popular in Asia, but none of these games were made in Asia. Why is that?

Actually, the greatest eSports game of all time was made in Asia. Its name there was originally “Tactical Commanders”, made by Nexon in South Korea. An augmented version was English-localized and called Shattered Galaxy. SG was released in 2001, three months before Lineage, and thus SG was the first English-localized Asian MMO and also the world's first MMORTS.

I'm about to get into some history here, to put everything in context, and then I'm going to detail the primary obstacles to making a commercially successful eSports game. I've often been called out for being critical of prevailing game designs, but not explaining how to make them better. I'm not going to be stingy in this article, I'm going to detail the solutions to these same problems in substantial detail. I happen to have been on the development team making SG, and also consulted for the publisher, Tri Synergy. I've also worked extensively with Wargaming.net, as I will detail later. Thus I may have a bias, but since I am such a huge advocate of eSports I've gone to great lengths to attach myself to projects and companies that share this passion.

Back in late 1999 I was up to my eyeballs making more money than I had ever seen by selling virtual goods in a game called Everquest. It got so intense that I even partnered with Ashley Dunn at the Los Angeles Times to write the first mainstream article on virtual goods sales: http://articles.latimes.com/2000/apr/20/news/mn-21581

I went by “Lee”, my middle name, because I was working for SOE at the time and didn't want to get sued/fired/etc. After I saw the Shattered Galaxy beta, I stopped all that and quickly became one of the top players in that game. The thrill of play reminded me a lot of how I felt when I was engaged in “real space” professional athletics up until 1994 when I was hit by a drunk driver.

I played under the name Sarcerok, am generally regarded as one of the top 3 players in SG of all time, and got invited to join the development team as a volunteer, which I did. I worked on SG for close to 18 months (including post release date) balancing all the units, which was no small task.

So why do I gush over SG and suggest it is a better eSports game than the Big 3? Bouts were generally 15 on 15 with each player having up to around 100 units that they could deploy in groups of up to 12. Each individual unit could level up from L1 to L50 (this took months) and have several slots for equipment that could be customized such that every unit in a player's stable could be different (and changed later). Thus you are talking battles with literally thousands of completely unique units. There were at least 40 different types, and each unit could be countered easily with at least one other. There was no super unit, it was all about teamwork and outguessing/outmaneuvering your opponents.

You can see why balancing all of that was a full time job.

The Asian teams were very organized (as you can imagine) as they played together from school or internet cafe and knew exactly what to do with each unit and what to counter it with. This made them very easy for me to defeat because I would load my units often with the opposite of what they “should” be loaded with. This made them bad at what they were supposed to be good at, and great at killing the units they were supposed to die to. Or I would “accidentally” let one unit wander into their field of view, while the rest of my units (out of sight) were the counter to the counter for that unit, so that I could set traps. It was all very psychological and not at all a click fest.

So why wasn't SG a big hit? The wiki will say it was due to poor graphics. This isn't true, and I'm going to explain what happened to SG right now, probably for the first time in print. The first blow was that Nexon decided to experiment with a microtransaction in the game (which was subscription based). It was an overpowered unit aptly named the “Abomination”. The introduction of this unit screwed up the balance I had worked so hard to build. It generated immediate revenue but really damaged gameplay and made it boring when half the units in the game were now Abominations.

Shattered Galaxy (via sgalaxy.com)

The greatest blow was much more bizarre. We were dealing with hacks on a regular basis. Generally I would detect them first when I was playing, and our hack expert (another American volunteer) would then figure them out and produce fixes. An Asian team came up with a particularly effective hack that allowed them to freely enter battles but block those not using the hack from entering battles. Thus the Americans on the American server suddenly found out they could not join any battles anymore. We had it identified and “fixed” within 24 hours.

The problem came when Nexon told us there would be no fix. The Asian users of the hack had threatened to boycott Tactical Commanders in South Korea if the hack was fixed. Not wanting to lose their core audience, Nexon let Asian teams use the hack freely. Within a month (if not sooner) the game was dead in the USA as why would you pay for a game you can't play?

Nexon was putting all their eggs in their new Maplestory game, and pulled the plug on SG. This was a sad moment for me, but extremely educational. I could see that the new “free to play” model that Nexon had pioneered was very successful, but also made eSports impossible as you need a fair play environment to have competition, and that's not possible if one side can pay to win.

I didn't have a solution for the problem back then, so I helped Funcom and Mythic Entertainment next with their economies and with their Black Snow Interactive problem while the senior writer at Unknown Player.

By 2003 I was making $6000 a month as the top player in EVE Online, which I think again was an early form of cybersport, but paid by other players not by CCP. After a year studying the World of Warcraft economy I finally felt I was getting close to solving the business model and design problems with SG, World of Warcraft, and other popular multiplayer games. I dropped out of writing and game dev work, using my EVE earnings, and figured I could solve the problem in a year. It actually took me 4.5 years, as the issues involved were much more complex than I had hoped.

I was not the only one that wanted to improve on SG by making a huge real time persistent eSports game. LoL and WoT were out by 2011 but there was no social progression in LoL or WoT. There was nothing out there where you could battle and work your way from L1 to L50 in an MMORTS environment where your actions affected your teammates in a persistent way. Heck, in SG you could even become president (I worked on that too, the first version was too easy to cheat. We didn't want it to be THAT realistic...), a system that was copied widely in Asian games that came after.

Trion Worlds decided to step up and make End of Nations, the “spiritual successor to SG” in 2011. Maybe earlier but that's when I got involved. Knowing that what they were trying to do was likely a lot harder than they were hoping, I offered to help and even designed a full economy/progression/reward/monetization system for the game before waiting for an answer. That answer never came as they didn't want to talk to me. The alpha test group was mostly made up of SG vets, and I did the ultimate taboo action in the field of monetization:

I asked the players how they wanted to pay for the game.

The thread raced to over 2000 comments (more than 10 times the largest pinned developer thread) before being locked and deleted by Trion. This was a shame since that was a lot of good data lost. The testers were also starting to ask why Sarcerok (the name I went by between 2001 and 2011 due to race-related death threats) was not helping with the development. I'll never know the answer to that since they would not talk to me. EoN was officially canceled in 2014.

In February of 2012 I finished writing a paper I titled “Supremacy Goods”. I suggested it described a new microeconomic theory that explained consumer behavior in virtual worlds (which it did). What I didn't say at the time is that it was basically a guide on how to build the business models and related design systems for competitive eSports games. I didn't call it that back then because outside of RIOT and Wargaming there didn't seem to be any serious interest in eSports being generated by developers. There was plenty of demand from consumers, that was just not being met.

So I offered to let the teams from both RIOT and Wargaming read the paper (but not keep it) at the 2012 E3 convention. RIOT refused to talk to me (some deja vu there) which was a shame since I was born and raised in Santa Monica a few blocks from the studio. The vice president of Wargaming, on the other hand, stopped what he was doing and sat down with me and the paper for 2 hours right in the middle of the convention. I'm sure he had lots of other really important things to do so I was really honored. In following months he kept asking me for a copy but instead I published it here on Gamasutra in August of 2012.

This got me a ton of job offers. Weeks after the paper went live I was secretly hired by Microsoft to guide them in the design of their first internally produced F2P game, and ultimately was hired by Wargaming to use my models to optimize most of their games (many still not announced) for eSports. Supremacy Goods is the largest paper I have ever published, and I am grateful that Gamasutra allowed me to do so despite its length. You can find it...


Now that it is almost 2017, just pretend the title is “How to build an eSports Game”. The Asian obsession with pay to win prevents Eastern developers from developing a functional eSports game, and this is why you have not seen any such products originating from Asia since 2001. TenCent's purchase of RIOT shows there is interest, and so perhaps this will change in the near future. TenCent is an industry powerhouse and they can unilaterally change the rules of engagement in our industry if they choose to.

When I built the progression, reward, economic, and monetization systems for World of Tanks: Blitz, I used the rules I penned in Supremacy Goods. I made it fair, less complex, optimized the matchmaker, added some other secret sauce, and adapted it to use on mobile devices. It only took two months. I lost the battle to have premium ammo removed, and this seems to be the primary complaint when I read Steam reviews of the recent port to PC. Players seem to really appreciate the changes to the matchmaker. I was able to successfully keep premium ammo out of World of Warships but the impending Austin studio closure prevented me from making the final optimizations I wanted to.

When asked if I could boost the performance of WoT by improving upon the game's social metasystem (guild battles) to boost revenues, the answer was yes. The problem was that once you have a big hit that pays the salaries of 4000 employees, it's almost impossible to make a major change without risking those jobs if the change is a failure. This problem also applies to all flagship products from other game developers. This makes it very difficult to optimize existing games, and typically it's much easier to include major design changes in new products. Note that this is a political constraint, not a technical constraint.

The just announced RIOT eSports streaming deal and recent comments by RIOT lead game designer Greg Street make me feel like my 16 year dream of eSports for the masses, rivaling “real sports”, is soon to be realized. I am very excited! My early experiences in the 1984 and 1988 Olympics showed me just how powerful a vehicle sports can be for bringing people all over the world together, regardless of what politics might be brewing back home. I think the monetization potential of cybersports (and here I mean actually participating in them, not watching them) is massive, even eclipsing the potential of AR (alternate reality). Of course having both in a game would be even better, but the technology for large scale eSports is already here. We've had it since 2001. There are no technological barriers now, only design and funding barriers. I hope that by reintroducing Supremacy Goods in this context, I can lower the barrier to entry for new studios wanting to make these sorts of products, and help convince investors to fund this path which has been the source of unmet consumer demand for so long.

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