Sport or Sellout? Debate Rages Over Medals for Video Games

(Bloomberg) -- Forget swimming goggles and running cleats. As athletes gather for Asia's biggest sporting event in Jakarta this week, much of the attention will be on computer mice and chunky headphones.

For the first time, the Asian Games -- the Olympics equivalent for the world's most populous continent -- will include computer game competitions alongside swimming and track-and-field. Contestants from Saudi Arabia to Japan will battle for national pride and bragging rights across six titles, including League of Legends and StarCraft II in a huge marketing coup for publishers like Tencent Holdings Ltd. and Activision Blizzard Inc.

Yet the move is generating furious controversy. Many athletes and fans contend computer games aren't truly sports, and no medals should be awarded for what's essentially skillful consumption of a corporate product. This week's games are the largest showcase yet for esports, an early test of whether it will be included at 2024 Paris Olympics.

“It's really a shift away from the Olympic ethos,” said Scott McGrory, 48, an Australian gold medalist in cycling and a sports broadcaster. “It's like saying, let's have a competition with the best accountants on the planet.”

Critics say it's about greed. The Olympic Charter historically stated that mental or mechanical-driven activities were not permitted as sports, one reason chess and car-racing were never included. But with Olympics attracting fewer viewers, especially among younger audiences, officials may be willing to bend the rules to welcome the $140 billion video game industry, which commands the attention of teenagers and millennials.

“They've got Olympic ideals and they use all these slogans, but at the end of the day this is a big money-making machine,” said Mathew Jessep, a sports and esports lawyer. “If the Olympics want to continue making the sort of money they've been making, they need to supplement the content. From a content play, esports is a definitive opportunity."

Olympic organizers also historically work with non-profit sports groups and are barred from dealing with for-profit companies like the game makers, Jessep says. But the games industry doesn't yet have an international, non-profit group that could fill that role.

Game makers stand to benefit. Unlike with basketball or fencing, the intellectual property of a video game is usually owned by a for-profit company. That means choosing a game from, say, Tencent or Electronic Arts Inc. has a direct impact on their profit. Skeptics say the selection process is rife with opportunities for favoritism and influence-peddling.

Asian Games organizers have yet to explain in detail how this year's six titles were chosen. The Asian Electronic Sports Federation, which oversaw the selection, said it was based on "stringent criteria," according to a statement in May. “The game must adhere to our vision of promoting integrity, ethics, and fair play,” AESF president Kenneth Fok said in the statement. AESF did not respond to multiple emails and phone calls.

In a panel discussion in July, Sheikh Ahmad Al-Fahad Al-Sabah, president of the Olympic Council of Asia, said the debate over esports in the Asian Games has been tough. While the International Olympic Committee questioned its inclusion, game makers were adamant about keeping control over their business, he said.

Twenty seven countries participated in qualifying for esports, with 135 players selected to live alongside athletes from traditional sports. Winners this year won't get medals, but gold, silver and bronze will be awarded from the 2022 games.

The selections heavily favor China's Tencent, with half of the six slots. Analysts say that gives the company an upper hand in establishing itself as the premier game in a specific genre, which should help boost sales and increase the audience. Tencent's battle arena title League of Legends is a direct rival to Valve Corp.'s Dota 2, which won't be part of this week's competition. Konami Holdings Corp.'s Pro Evolution Soccer series was picked for the Games over the much more popular FIFA from Electronic Arts.

“Being chosen as the de facto game for esports is a huge plus for publishers,” said Masaru Sugiyama, an analyst at Goldman Sachs Group Inc. “The rift between the top game and the second game in the same genre could widen.”

Karol Severin, co-founder of MIDiA Research, suggested one way of dealing with the dilemma is selecting genres -- strategy, shooting, virtual soccer -- instead of specific games, and then allowing multiple publishers to vie for a spot in that category. Organizers could also release Olympic-specific versions of a game, with royalties then shared among developers and organizers.

Esports-related revenue will more than triple to $3 billion by 2022 from this year, according to Goldman Sachs estimates. The sale of broadcasting rights will generate 40 percent of that as the audience watching matches grows to 276 million, according to the brokerage.

Sugiyama said big international tournaments like the Asian Games and the Olympics will be major factors in driving adoption and acceptance. That's why reaching a balance between sport and profit will be key to entertaining viewers without making the competition feel like a giant commercial.

“When a game becomes an Olympic sport, should it have an owner? Or should it be in the public domain?” said Sugiyama. “This is a question that must be answered.”

To contact the reporter on this story: Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Peter Elstrom

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