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Sustainable Development #1: Structure

This guest post was provided by Tom @ Universal Tuning.net

Since we were children we’ve been reassured time and time again (by gravity, our emotions, our parents, etc.) that anything that goes up must come down. It’s a law that was established at the dawn of time, and what this means is the currently booming e-sports industry surrounding Starcraft 2 will certainly fall at some point. Though what is uncertain is when and how. We may not be able to prevent its eventual downfall, but we can make sure it has a long and vibrant life.

It’s quite astounding how much and how fast the Starcraft 2 e-sports industry has grown in under a year. It’s got me thinking about how sustainable this all is. This is the first part to a series of articles dubbed Sustainable Development. Through these articles I will discuss the many aspects of the Starcraft 2 e-sports industry that play key roles in its development and sustainability. Sustainable development requires a harmonious interaction between Social, Environmental and Economical factors. Each part to this series will look into an aspect of each of these factors. We will first look at the industry structure of SC2 e-sports, as understanding this will be paramount in grasping the direction of these articles.

Industry structure is the organisation and interrelationship of different functions, forms, activities and components within an industry. Luckily for the Starcraft 2 an entire e-sports industry was establish well before its time, and with the decline of Warcraft 3, there was much space for Starcraft 2 to take up residency. Since we are always (unknowingly) engulfed by structure and naturally move through its pathways, it’s easy to forget or become oblivious existence. Industry structures are complex and difficult to explain, and the Starcraft 2 e-sports industry is no different, so I’ve put together this diagram:

This model is quite self-explanatory. Blizzard and investors are at the top of the hierarchy but their functions are quite different. One provides the human capital (aka the players), while the other provides the monetary capital, respectively. Keep in mind this model is heavily simplified – there are many nodes and connections left out of this model. The health of the industry is dependent on the flow of capital this structure.

Since our entire industry is based off of a product, as the producer, Blizzard is responsible for providing us the medium for this industry. However in this structure, Blizzard’s main purpose is producing a game that is attractive enough draw in the human capital, or player base. The other greater power in this structure is the investors. Investors become interested in the industry because they see it as a good medium to drive their products. They offer sponsorship and funding for popular organisations such as teams and tournaments, who are able to sheds good light on them and promote their products. Because e-sport is an entertainment industry, it is not able to produce capital goods, so our dependency on investors is huge.

Referring back to the diagram, you will see that the two sides begin to interact with each other as the green nodes branch into the purple nodes. In fact, the purple nodes only exist because of the interaction of both the Blizzard and investor branches exists. If you were to remove either of the branches, the other branch will remain, however the purple nodes will disappear, along with what they branch into. If we were to remove the investor branch, pro players would simply be ‘talented players’, there would be no tournaments to cast and nothing to spectate. Of course could argue that we would just watch the talented players duke it out and just cast those games. That’s fine but that doesn’t model an industry, that would simply be a community. This relationship between the human capital and monetary capital is critical in the existence of this industry.

The strength of the industry depends on the flow of capital within these two branches respectively. Imagine the tightening of monetary capital from the investor side. Its effects won’t crash the industry, instead it would effect the salaries of the pro players, the number of tournaments and prize money, and media production, among others. What if the flow of players decreased, the supply of labour in the industry would decrease – less raising players, less viewership, etc. Changes in the capital flow can prompt restructuring and new limits within different areas of the structure.

It’s important to have a constant flow of capital but it’s equally important for it to be balanced. An imbalance could cause a regression spiral, where neither side can trust each other. Investors lose interest or confidence in the market if the human capital cannot keep up, or there’s not enough money in the market to make a living so players look elsewhere. The intake of new players doesn’t necessarily have to be constant, it’s their presence in the purple nodes that make the difference.

At present, both these branches are booming, giving rise to the industry at an exponential rate. As long as Blizzard continues to address balance issues and maintain its services, the left branch should be able to hold. This in turn will attract the necessary investment capital to support the pro scene. This emphasis here is the relationship between the two branches, and that balance here is one of the keys to sustainability.

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