Esports was born 52 years ago, on 19 October 1972, at the Artificial Intelligence Laboratory at Stanford University. The game was Spacewar, and the competition, called the "Intergalactic Spacewar Olympics," involved 24 students (1). Esports is now as it was then, the act of competing in a computer game against one another for entertainment. It is a fundamentally simple concept which has grown into a billion-dollar industry. Over the years. it has accumulated a fair share of baggage, with some even questioning if it is a real genre in sports (2). As Hamlet tells us, "There is nothing either good or bad, but thinking makes it so." Esports is here to stay, whether we like it or not.

The Open Esports Initiative (OEI) White Paper is a four-part supporting the genre of esports, offering both a practical solution and a call to action. It aims to provide a framework for the development of esports, ensuring the continuation of its growth trajectory. The past year has shown us that the future success of esports is not guaranteed. In the Autumn of 2022, esports 1.0 (esports up until this point) faced a unique set of challenges. In a post-COVID world, the combination of fewer people engaging with computer games and a negative macroeconomic outlook (3) have brought the challenges facing the industry to the forefront. Consequently, we have seen established tournament organisers downsize (4) or shut down entirely (5), veteran teams close shop (6), leagues downsize (7), or disappear entirely (8). Esports faced a similar situation during the 2007-2008 financial crisis. If esports 2.0 is to weather future economic troughs, we need a business model which successfully engages consumers' wallets. Rather than be solely reliant on B2B or outside investment. For that, we need a steady stream of new products and services, something nearly impossible in esports 1.0. Why? Because of a fundamental flaw at the heart of esports 1.0: Game IP ownership.​







From an outsider's perspective, esports may appear to be the digital counterpart to traditional sports. Even fans of the genre may be unaware of the key differences to traditional sports. Traditional sports are a product of a sort of Darwinian selection process. An endless, non-random selection, driven by elemental forces to reflect the environment which the game inhabits - such that good traits have a higher chance of survival than bad traits. Esports, on the other hand, is the result of intelligent design whereby the game publisher usually controls the dials and vials, shaping their game’s esport into whatever form best represents their interests. Esports 1.0 primarily serves the needs of game publishers rather than the esport itself (9). Should esports 2.0 be more open, collaborative and serve the community more equitably? If it is to survive and thrive, it must.

In the early days of software development, it quickly became obvious that open collaboration resulted in better software. In the 1970s and thanks to the work of Richard Stallman, Christine Peterson, Bruce Perens and Eric Raymond amongst others, Open Source Software (OSS) was born. OSS encourages collaboration through the open sharing of software. Indeed, the internet’s infrastructure is built on OSS from Linux to Apache and everything in-between. Tim Berners-Lee’s, the inventor of the world wide web (www.) acknowledged decentralisation as a core part of his thesis: “This is a principle of the design of distributed systems, including societies. It points out that any single common point which is involved in any operation tends to limit the way the system scales, and produce a single point of complete failure.”(10) 

​As a product of the internet, esports ought to follow the founding principles of collaboration and decentralisation to expand. The OEI echoes the spirit of OSS (11), fostering an environment where the community can freely develop esports products and services. By empowering the gaming and esports communities, this initiative paves the way for a more decentralised and collaborative future, allowing stakeholders to shape their own destiny, and the destiny of esports itself.

An open and competitive market for products and services is at the core of any healthy economy. It fosters innovation, consumer choice whilst encouraging businesses to improve their offerings whilst keeping prices low. If you have an idea, you are free, even encouraged, to bring it to life (12). However, in the world of esports, this is not the case. If you wish to create a product or service centred around a particular game, you must first obtain permission from the game’s publisher. Consider this scenario: a tournament organiser, aiming for sustainable business growth, explores options like pay-per-view or subscription-based broadcasts. However, for most game titles, this approach will not be approved by the publishers, as it involves introducing a paywall. Introducing a paywall which may counter their own ambitions for esports, which predominantly fall around using it as a marketing tool. This of course contrasts with the publishers' own practices of using paywalls in their games. This scenario highlights conflict of interest and dynamics in esports, whereby conventional and proven business models often struggle to see the light of day.

From the publisher's perspective, they cannot hide from their responsibilities as owners of the game's intellectual property (IP). Publishers really care about their games, and typically the ones that are most suitable for esports are their golden geese, and therefore want to protect at all costs. Any harm to the brand that a third party could inflict is unacceptable. Additionally, publishers are legally accountable, and cater for the concerns of parents. Moreover, they have direct access to the game and its community, making them anecdotally ideal candidates for building their game’s esports program, even if it means limiting opportunities for third parties. ​

Publishers who decide to organise their own esports competitions face a conflict of priorities. Game publishing and esports represent two distinct businesses. For a game publisher, the primary focus remains on game development and publishing and esports aims to provide entertainment through competition. This conflict ensures that game publishers can never fully orient themselves around esports. Game publishers have direct access to the in-game community and can build directly on the game, while no one else can. Esports companies lack this direct access but possess the will, know-how and can prioritise esports. This fundamental paradoxical flaw lies at the heart of the current predicament esports finds itself in.

To illustrate this flaw, take a look at this example. First, a publisher decides they are best equipped to manage the esports ecosystem for their game. By virtue of owning the game's intellectual property, they appoint themselves as the sole arbiters of the game's esports ecosystem, potentially excluding or diminishing the roles of other esports organisations. It is important to note that esports is not simply a component of a game in the same way the game’s core loop is; it exists within the broader meta-game sphere, including streaming, Discord servers, fan pages, Reddit communities, YouTube content, Twitch content, and everything in between. A publisher assuming exclusive control over esports, is akin to banning all non-publisher content related to the game on platforms such as YouTube and Twitch.

This harms esports for several reasons: operating as a monopoly stifles competition and innovation (13), creates misaligned priorities between the esports and game teams, provides access to significant non-esport revenues which artificially inflates the scope of competitor products in other games, treats esports as merely a component of marketing rather than a standalone business, and shields itself from the realities of the esports market feedback, among other issues.

Game publishers often struggle to reconcile the different business models of esports and game publishing. Esports and game teams operate separately, both competing for the same resources but with very different business models. The ideas that have the greatest impact win, esports only touches a tiny proportion of their play-base (often less than 1%). As a result, esports ideas lose out (14) leading to neither the publisher nor third parties being able to fully tap into the game's esports potential.

Even if a game publisher decides not to run their own esport program, they still have a duty of care towards their brand and players and must be involved. This issue is inherently challenging and fundamental; it's not anyone's fault—neither the tournament operators, teams nor the publishers—it's just the way it is.

Take the Overwatch or Call of Duty Leagues as an obvious example of how esports 1.0 can lead to negative outcomes for the space. Rather than undergoing the multi-year, market-driven trial and error process, Activision Blizzard chose to expedite it by artificially constructing an esport. The result was a product that didn’t align with the game's nature or market demands. This has come to a head with Optic’s Hector “H3CZ” Rodriguez taking Activision Blizzard to court, citing ATVI as having an “unlawful monopoly” over Call of Duty esports (15).

A less obvious example is Counter Strike. Valve is often praised for its laissez-faire approach to CS esports, and rightly so. A game that, over the decades, has cemented itself as a top competitive title, largely thanks to non-publisher esport organisations like ESL, Starladder, PGL, HLTV, Blast and FACEIT among countless others. Unlike other major esport titles, Valve sets the pitch for others to play, but does not play themselves; there’s no Valve-owned and operated Counter Strike tournament. However, despite this relative freedom, you would be hard pressed to find a Counter Strike organisation that has found success financially. The reason is predominantly because both teams and tournament operators do not have direct access to the game to build, market and develop ways to directly monetise their brands. Valve only allows a select few teams this opportunity during majors, through the sale of team-branded in-game items. Furthermore, Valve recently announced (16) a series of changes to the competitive ecosystem for Counter-Strike 2, including the discontinuation of the franchise leagues. This move illustrates how a game publisher can, at any time, dictate and disrupt the minutiae of how esports organisations run their businesses.
The long term viability of esports depends on an equitable distribution of value amongst all stakeholders, one which does not purely favour games publishers (17). The OEI looks to solve this by giving the community full control over their games’ ecosystems, both in and out of the server.

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Is esports worth saving? Does esports add more value to the world than it takes away? Or, more simply, is esports enough of a significant and positive force to warrant survival? We explore these topics in the following section.

Reflecting on the early experiences in esports from approximately 15 years ago, reveals that much of what players were doing occurred without significant institutional support. The efforts were largely community-driven, with matches being organised through forums, TeamSpeak, and IRC. They were broadcasted (pre Twitch) using tools such as Shoutcast, Octoshape or put on YouTube as VODs. Prize pools were limited and salaries derisory. Nonetheless, esports survived through the passion of those competing and supporting the space. Today, the community has access to far more powerful tools to broadcast and monetise. Tools such as Twitch, YouTube, FACEIT, Overwolf, OBS, Battlefy, toornament and more. However, for esports to move beyond mere survival, the missing piece of the puzzle remains the ability of the community to directly craft competitive gameplay experiences. Traditionally, esports organisations have solely focused on off-game aspects such as broadcasts and events, whilst game publishers have concentrated on development itself. This disjointed approach creates misalignment. For esports to thrive, we need to empower individuals and entities to own and combine both facets. This would unify interests and priorities, placing esports at the forefront.

How popular is esports today, and what value do fans currently get? Four out of the top 10 most watched esports tournaments were in 2023 (18). Including the highest viewed esports tournament of all time - The League of Legends World Championship 2023 with 6.4 million peak concurrent viewers. Total esports hours watched also increased from 2.65bn in 2022 to 2.76bn in 2023, a year-over-year uptick of 4% (19). Whilst we have established that esports has a viewer base and continues to grow. It is not enough to simply attract viewers; the core challenge in esports is how to effectively convert viewership into revenue. While boasting record figures like the most-watched sports tournament in 2023, Riot Games still faced workforce cuts in early 2024 (20). Viewership numbers ring hollow without a self-sustaining business model. On the positive side, the audience is undeniably real and growing. Esports also benefits from a strong gaming industry, which boasted 3.38 billion gamers in 2023 (21) – that's 40% of the global population!  






As many have experienced, anytime you speak to someone from Gen X or older about esports. People tend to get the same remark, “Why would anyone want to watch someone else play a computer game?” This stark generational divide, with the statement seeming Luddite to the young and reasonable to the older, tells us that esports is fighting a war against demographics. The reality is, many countries, especially the developed countries, have a population that skews older. Taking Europe as an example, the median age is 44.4 years (22), that means 50% of Europe’s population is older than 44. They are the pre-internet generation, or at least they grew up in a time where internet use was still limited. The concept of watching someone play a computer game is alien to them. In the next 10 years, the young people from the 1990s, and those brought up on the internet and computer games will not only make up the majority of the population but be the boardroom decision-makers. This view is shared by industry leaders and those taking a long-term position on esports. These include the ESL FACEIT Group (EFG) and Saudi Arabia’s Public Investment Fund (PiF)’s Savvy Games Group. As Craig Levine, the Co-CEO of EFG said when asked what attracted them to Savvy Games Group “What was really compelling for us all together, was the opportunity to have a shareholder with a long term investment horizon”. He continues “...knowing how nascent the esports industry is and how dynamic the game industry is” (23). The logic is, that as the population skews towards a state where the majority were brought up and around the internet, and its various forms of entertainment, most notably games. There will be such a critical mass of people exposed to gaming, that esports will inevitably see significant growth and subsequently, acceptance as a mainstream form of entertainment.

​As we have already established, gaming is already a huge market, the issue is converting the everyday gamer into a casual viewer or better, an esports enthusiast. Out of those 3.38 billion gamers, approximately 250-300 million are esports enthusiasts, with another 250-300 million being occasional viewers, taking the total number of esports fans to 500-600 million (24). On the generous end, that means 18% of gamers are esports fans. However, a more realistic estimate is around 9-10%. This means 90%+ of gamers do not convert to esports fans. The challenge, then, is to convert a sizeable chunk of the remaining 90% into committed esports followers. However, simply maximising esports viewers is not the endgame. The industry must prioritise building a sustainable business model whereby fan-engagement directly contributes to its financial stability, thereby reducing reliance on external investment.

Some of you may ask: why is it that 90% of gamers do not convert into fans of esports? Surely, if gaming has grown into a juggernaut industry, esports should have as well? The fact that it hasn’t, suggests there are some core issues hindering the growth of esports. The OEI believes that the most fundamental issue is the stifling of the free market and conflict of interest issues surrounding the ownership of game IP. The OEI aims to do just that, by resolving the IP rights issue and thus unlocking the community to build their own competitive gaming communities.
 
If esports is not on the same growth trajectory as gaming, which trajectory is it on? And how does it compare to traditional sports? To gain an understanding of where esports is today, it is worth looking at sports from an anthropological perspective. Ball games have evolved over thousands of years from simple origins to what football is today (25), a part of the global fabric of society. It took until the industrial revolution and globalisation for sports to truly take off, where they have been exported mostly from the UK to shape the cultures and identities of countless countries. Many point towards the long growth cycles of traditional sports as examples to how long it will take individual esport’s to grow. However, within the context of the global and hyperconnected nature of the internet. Where we see internet based industries going from zero-to-billions of dollars in revenue in a matter of a few years (including gaming). Esports should benefit from a far shorter growth timescale.
 
Governance is crucial in the development of all sports. Both public, commercial and game publisher driven sports governance systems have their challenges. Sports federations and game publishers typically exert centralised control over the development, rules, and competitions of their sports. By contrast, the OEI proposes a decentralised model where control and ownership are spread across the community, leading to more democratic and equitable governance. 
Furthermore, traditional sports federations are hampered by bureaucratic processes that slow down decision-making and innovation (26). Our model, by emphasising community-driven decision-making and open-source development, aims to be more agile and responsive to the community's needs and desires, potentially leading to faster innovation and adaptation (27). Finally, federations often control the pathways to competition and professionalisation within their sports, and often fail to deliver for participants and other stakeholders (28). OEI lowers these barriers by embedding competitive infrastructure into games from the start and allowing anyone to organise and participate in tournaments.


 
The OEI, presents a revolutionary new model for the esports industry, addressing many of the existing governance challenges by emphasising community involvement, open-source development, and a more democratic governance structure. By focusing on inclusivity, creativity, and competition whilst blurring the lines between players, developers, and viewers, we are setting the stage for a significant shift in how esports are consumed, developed, and crucially, governed. The OEI offers flexibility, allowing the community to choose the governance system they prefer for their game.






For years, the game development landscape has been dominated by large AAA publishers. These giants, like Activision Blizzard, Tencent, EA, and Ubisoft, hold immense financial power, allowing them to create top-tier titles with massive budgets. However, a shift is underway. Despite representing only 5% of available games on Steam, these AAA giants account for a staggering 60% of all sales (29).  This imbalance is being challenged by a surge in successful releases from independent studios. Games like Baldur's Gate 3 and Helldivers 2 exemplify this trend.
 
This changing landscape is being played out in the stock prices of major publishers. Since 2021, Tencent has seen a 60% drop, Ubisoft a 78% decline, and EA's stock remains stagnant. Industry-wide layoffs further underscore this shift, with over 20,000 roles eliminated since the start of 2023 (30). 
 
However, this is not a story purely of decline. Many laid-off developers have banded together, forming new studios. This, coupled with the rise of accessible AI technologies that empower smaller teams, has the potential to ignite a gaming renaissance. The OEI predicts that User-Generated-Content (UGC) style games will play a pivotal role in this new era.  
 
As a small, agile development team, you may not have the resources to cater for millions of players in a live-service game. However, UGC flips the script. Imagine empowering passionate gamers to create the experiences they crave. Incentivise and equip them with the tools they need to build their dream games (31). Gone would be the days of waiting for underwhelming patches or interminable release delays. With UGC, the power to build those experiences lies within their grasp, all from the comfort of their homes.
 
As we previously alluded to, not everything is rosy in the world of UGC. Many companies face difficulties in balancing the empowerment and exploitation of their communities for content. For example, 99.7% of Roblox developers receive less than $1,000 annually (32). Over half of those are under 18 (33). The millions of Roblox developers are locked into an ultra-competitive, hunger games style showdown with other developers, fighting for the few top spots where they can earn enough Robux to make a living. The crucial difference with OEI is, we do not pay people to build content for our platform, we simply provide them with the tools to create competitive, esports-ready games. They are not competing in an artificial marketplace of our design; they are engaging with the broader free market, contending alongside other game developers and platforms.
 
The OEI takes UGC a step further. Unlike other platforms that exploit creators to build games and extend longevity at their expense, OEI provides the foundation for people to build games for themselves. Here, ownership and control remain firmly in their hands (or if they wish, have no single owner at all, and anything in-between). Furthermore, OEI eliminates the burden of developing costly esports infrastructure – observer modes, game data APIs, and community-driven monetisation marketplaces are all built-in from the start.  
 
Why combine UGC with esports? Just as pure participation would not sustain traditional sports, competitive games need a thriving spectator scene to maintain long-term relevance. The multi-faceted engagement that allows individuals to be both players and fans is what keeps us hooked, long after our school days on the football pitch have gone. By building a competitive game within OEI, one is not merely crafting a game; one is laying the groundwork for a complete esports ecosystem with a solid foundation.​





There is no single solution to fix all of esports' challenges. Our goal with the OEI is to acknowledge these challenges and offer solutions to address them. If you think the OEI is something worth pursuing, the future of the project rests in your hands. If you believe this initiative holds value, we invite you to take the OEI pledge by filling out the form below. This will serve as a gauge, helping us understand the community's level of interest in this solution. With a positive response, we will move forward with building the OEI and unlock the next era for esports.