E-sports have become mass market and big business, but can Taiwan leverage its advantages to make the most of the opportunities?

The arena’s star performers were bathed in laser lights as the music pumped and their ardent fans cheered them on, caught up in the thrill of competition. Big bucks were at stake. It had the look and feel of a major athletic contest or rock concert, but rather it was the e-sports segment of the annual Taipei Game Show organized by the Taipei Computer Association (TCA).

Held this year from January 28 to February 2 at the Taipei World Trade Center Hall I, the exhibition provides big league players in the field like Sony and Google Play – plus local entrants – the chance to show off their latest products. This year the big thing was virtual reality headsets.

However, it was the Intel Extreme Masters gaming finals that were the show’s highlight, burnished by the glitz of the big-name gamers and the glamour of models parading around in scanty costumes. The unmistakable message was that e-sports – or gaming – has come of age.

A huge portion of Taiwan’s population knew that already. According to Newzoo, the leading source for gaming industry information, there are 9.6 million gamers in the country, with around 600,000 serious competitive gamers. The vast majority, though, are social/casual players. Of these, a solid 6.8 million play games on their smartphones, while just over 22% play both online and off on all types of screens, including PCs, tablets, smartphones, and consoles.

Last year, Taiwan’s US$820 million in game revenues ranked it 15th in the world. It was also ranked one of the top five markets worldwide for Google Play. Not bad for a relatively small population. Newzoo’s latest projections, made in February, have the number of Taiwan gamers reaching 14.75 million by 2018, with annual revenue of US$1.06 billion. The mobile segment alone is expected to account for US$690 million of that total.

There are 9.6 million gamers in the country, with around 600,000 serious competitive gamers. Last year, Taiwan’s US$820 million in game revenues ranked it 15th in the world.

Given the country’s stellar background in the semiconductor industry, its gold status as a maker of PCs and electronics, plus a tech-savvy population, Taiwan seems well-positioned to continue to do well in the fast-developing e-sports arena – not just as gamers, but also as a developer of games and equipment.

Speaking at the opening ceremony of the Taipei Game Show, TCA manager Jesse Wen-jung Wu reported that the production value of Taiwan’s games industry in 2015 rose 5.1% from the previous year to reach US$1.77 billion. Of this amount, online games were worth US$520 million and smartphone games US$530 million. Founded in 1974, TCA represents software, hardware, semiconductor, and network communication companies. According to its website, the association’s members create 80% of the country’s information and communication technology (ICT) production value. TCA is also the co-organizer along with the Taiwan External Trade Development Council (TAITRA) of Computex Taipei, Asia’s biggest ICT show.

The Taipei Game Show, which has been running since 2002, this year saw record attendance of 500,000 people over its five days, with more than 130 game companies from all over the world represented. Running simultaneously was an Asia Pacific Game Summit for game producers, publishers, and distributors. Featuring 40 international speakers, the focus was on how Taiwan can act as a bridge between Northeast and Southeast Asia and as a gateway to the Asian game industry, especially China.

The Taipei Game Show, which has been running since 2002, this year saw record attendance of 500,000 people over its five days, with more than 130 game companies from all over the world represented.

The Taipei Game Show hosted two Intel Extreme Masters finals, a “Legacy of the Void” championship for the well-established StarCraft II, with US$20,000 on the line, and the up-and-coming CS:GO for prize money of US$50,000. Worth even more for the participants was the chance to compete in this year’s world championships in Katowice, Poland, scheduled for March 4-6, where the winning teams will earn US$500,000.

By comparison, The International Dota 2 (Defense of the Ancients) championship, the world’s largest e-sports tournament, offered US$18 million of prize money last year in Seattle. Betting company Unikrn predicts that the number of spectators for e-sports will equal that of the National Football League (NFL) by next year.

The Taipei Game Show finals were organized by ESL (Electronic Sports League), which calls itself “the world’s longest running global pro-gaming tour” and was founded in 2007. Sitting down after the Taipei finals, ESL Program Manager Bastian Veiser discussed just how big e-sports have become. To start, he addressed the commonly voiced opinion that e-sports aren’t really sports at all, but rather an activity for couch potatoes. “That’s what my parents used to tell me, but they don’t anymore,” said Veiser. “It’s all about competition. If you accept that chess is a sport, then it doesn’t take much of a leap to think of e-sports as the real deal.”

“The e-sports athlete has to have good hand-to-eye coordination, quick responses, and mental strength,” he continued. “They have to train just as much, maybe more, than any other athlete, analyze their games and come up with new strategies to win. Compared with traditional sports, you don’t have to have a certain body type to do well. It’s incredibly democratic and global.”

Veiser said the difference between now and a few years ago is that e-sports have gone mainstream. “It’s a bit weird, as we always thought it was big. Now everyone thinks the same. We are seeing crazy growth.”

George Woo, Intel’s event and sponsorship programs marketing manager, is certainly on board the e-sports train. He used to work with Formula 1 until Intel asked him to switch roles. At first, he admits, he didn’t get e-sports, but eventually realized their importance to Intel since “we are digital and social networking pioneers.”

“Now it’s the NFL and traditional sports that are trying to learn from us,” he observes. Woo said it’s obvious why Intel wanted to get involved, given that its chips power the machines that make e-sports possible. Since the consumer doesn’t see inside the system, Woo said, the company needs to find ways to promote its connection. “E-sports gives us access to eyeballs so we can sell our products,” he says. “We rely on the whole ecosystem of computers, like gaming, so we support it and hope to move our silicon inside as a result.”

The role of Twitch

Also encountered at the Taipei Game Show was Raiford C. Cockfield III, director of APAC Partnerships at Twitch, which describes itself as the world’s leading video platform and community for gamers. A product of the Stanford University Graduate School of Business and a former investment banker with Lehman Brothers, he now looks the part of an e-sports entrepreneur, casually dressed in a branded T-shirt and hoodie, bleached-out jeans, and hipster glasses, and with a big mop of hair.

Twitch provides a live-streaming platform enabling gamers to broadcast, watch, chat, compete, and learn. Bought out by e-retailer Amazon in 2014, Twitch announced last year that it had more 100 million visitors per month and 1.5 million broadcasters.

Cockfield was brought in to expand Twitch in Asia. “Twitch is the video-gaming equivalent of a new economy entity like Uber,” he explains. “Amazon picked up on live streaming and Twitch was the highest quality platform. I was brought in to help bring it into the mainstream.”

“Twitch is the video-gaming equivalent of a new economy entity like Uber,” he explains. “Amazon picked up on live streaming and Twitch was the highest quality platform. I was brought in to help bring it into the mainstream.”

Twitch considers Taiwan to be a “key market” and regards the “Twitch community” here to be “very strong,” says Cockfield. “It’s a mirror of the country itself and naturally we want to see it grow. We deal mainly with user-generated content, so it’s active and social – and it’s hard to tell whether it will mainly be growing vertically (more gaming content) or horizontally (into other areas like education). So, we have to think laterally and work out how we can become the focus in the living room” no matter what direction the market takes.

Last year, one-fifth of Taiwan’s population (about 4.5 million people) tuned into Twitch every month. In Taipei, viewers streamed more than 1 billion minutes a month, which made it the company’s top city worldwide in terms of viewers.

As a result, the National Development Council invited Twitch COO Kevin Lin to visit Taipei last October to meet with gaming companies. Speaking at a networking event during the trip, Lin attributed the large usage in Taipei to Taiwan’s being one of the world’s biggest users of broadband bandwidth and having a broad acceptance of e-sports. (Taipei Mayor Ko Wen-je posts videos of his gameplay, is a massive League of Legends fan, and even dresses up in character on occasion).

Last year, one-fifth of Taiwan’s population (about 4.5 million people) tuned into Twitch every month.

Lin said local gaming hardware makers like Asus, Acer, and BenQ have also helped boost e-sports. But he stressed the importance of building on this momentum so as not to risk losing the advantage. While Taipei’s department of economic development last year proposed that gaming be made an “official sport,” the idea was not accepted by the Sports Administration, which said the International Olympic Committee and the Chinese Taipei Olympic Committee would have to approve. But e-sports giants like South Korea, China, and the United States have already given gaming official recognition as a sport and provide financial support and visa waivers for e-sport athletes.

While Taiwan is unlikely to ever have a world-beating soccer team or bask in the glory of having multiple Olympic champions, it has already made its mark on e-sports. In fact, Taiwan can already boast of world champions – often to the dismay of China, especially when the e-athlete concerned raises the ROC national flag, which is what Tseng Jeng-cheng did at the World Cyber Games in Seoul in 2001.

After winning the League of Legends Season 2 World Championship in Los Angeles in 2012, the Taipei Assassins brought home winnings of US$1 million. Then there’s Hsiang Yu-lin, aka “GamerBee,” one of the world’s top fighting-game players, who was second at the 2015 Evolution Championship Series. Sponsored by AverMedia, the 36-year-old makes about NT$1 million a year (US$30,000), plus add-ons for winning tournaments and doing exhibitions.

Despite stiff competition, Taiwan undoubtedly has the base to develop more champions. Just visit one of the tens of thousands of internet cafes and other facilities dotted around the island. There’s the Taipei City Mall beneath Taipei Main Station, which is dedicated to e-sports enthusiasts; the video game arcades of Ximending; the country’s first public e-sports streaming workshop, Shir-youko Studio on ChengDu Road, where thousands regularly gather for events; as well as Guanghwa Digital Plaza for all the equipment and peripherals any aspiring champion might need.

There’s also a professional e-sports league, one of the top five in the world. The Taiwan e-sports League (TeSL) was founded in 2008 and has teams of professional players who live in a shared house and compete on weekends in matches broadcast by the Videoland Television Network.

This e-sports visibility is not translating into commercial dominance, however. Even though the government has offered incentives and tax reductions to promote the domestic online game industry, the market is still 70% dominated by foreign games.

The Taiwan game  market is still 70% dominated by foreign games.

“Domestic game developers lost the opportunity to grow because of…time delays in R&D capacity expansion and the game development and commercialization process,” wrote Wang Wei-yang of National Kaohsiung University of Applied Sciences and Tunghai University’s Tseng Ya-tsai in their paper Growth and Competition Dynamics of Online Game Market in Taiwan.

The pair outline how, after a promising start at the turn of the millennium, the Taiwanese developers lost ground to nimbler Chinese and South Korean rivals who put in more money and were prepared to issue a large number of games in the hope that one would be a hit. Taiwanese developers, on the other hand, would spend time trying to perfect their game, missing the window of opportunity in what is a fast-paced industry.

At the turn of the millennium, the Taiwanese developers lost ground to nimbler Chinese and South Korean rivals who put in more money and were prepared to issue a large number of games in the hope that one would be a hit.

Now, foreign game developers have built up such a lead that in the future it will be hard to overcome. Government assistance may be too little, too late, the report’s authors suggest.

Still, the swing in popularity to mobile games in Taiwan could provide another gilt-edged opportunity. According to Gamania Digital Entertainment, Taiwan’s biggest online game brand with a strong global presence, the number of domestic mobile phone users exceeds the population, with a penetration rate of 108%, among whom 71% are mobile internet users.

Gamania teamed up with the Japanese company GungHo Online Entertainment in October to leverage the smartphone gaming market, which TCA’s Wu Wen-jung predicted would see market growth of 70% in 2015 – but that turned out to be an underestimate. The final figure was more like 90%.

One young man who sees Taiwan’s potential in this field is Benjamin “BreAKer” Novotny, originally from Oklahoma, who goes by the handle Bin Ge (賓哥). He’s fluent in Chinese and wants to use his language ability and knowledge of gaming to build a career in the industry as a games commentator, known in the business as shoutcasters – because that’s what they do.

He could have gone to China, Hong Kong, or South Korea, but is impressed with the advantages of Taiwan, such as the “huge” bandwidth, population density, and the support of computer hardware manufacturers. He’s had a few jobs with domestic gaming companies and did the shoutcasting for the Taiwan Open.

Novotny’s just the sort of talent that Taiwan needs, but he’s been frustrated by the difficulty in getting a work permit for jobs other than teaching English, editing an English-language publication or starting a business. “It’s extremely hard to work here, though the government attitude seems to be changing a bit,” he says. Although shoutcasting is “what I do and what I love, 2016 may be the last shout for me.”